ESG and financial performance of listed firms in hotel industry: The moderating role of the Human Development Index

Abstract

This study evaluates the impact of Environmental, Social, and Governance (ESG) practices on the financial performance of hotel businesses while examining the moderating role of the Human Development Index (HDI). The research data were collected from 2,034 observations across 46 countries between 2014 and 2022. ESG scores were calculated using a machine learning-based methodology, combined with financial and corporate governance data from Refinitiv Eikon platform. A panel data regression model with fixed effects was applied to examine the relationship between ESG and financial performance (ROA). The results indicate that ESG has a positive and statistically significant impact on ROA, confirming that hotels with stronger ESG performance tend to achieve higher financial performance. Notably, this effect is significantly amplified when moderated by HDI, particularly in countries with medium and high HDI compared to those with very high HDI. This study provides crucial empirical evidence for investors, businesses, and policymakers, aiding in the optimization of ESG strategies and sustainable development in the global hospitality sector.