The Role of ESG Factors in Shaping Firm Performance: Insights from us Health Care Companies

Abstract

Corporate finance is continuously evolving, placing increased emphasis on various performance indicators. This research evaluates the financial performance of 60 healthcare companies listed on the S&P 500 index, using data from 2000 to 2024. By employing advanced analytical methods, including linear regression, nonlinear regression, and interaction-effect models, the study investigates the influence of key environmental, social, and governance components on corporate profitability. The findings indicate that total water consumption consistently exhibits a positive correlation with the financial performance of healthcare companies. Furthermore, the analysis identifies a specific threshold where this positive relationship changes in magnitude, indicating a turning point. Additionally, the proportion of female employees within companies also positively influences financial performance, with a similar threshold effect observed. During the global health crisis, the beneficial impact of women's representation in the workforce persisted and became statistically significant, emphasizing the robustness of this relationship under crisis conditions. Contrary to the initial hypothesis, the highest remuneration package did not negatively impact performance; instead, it demonstrated a positive correlation accompanied by a turning point at which the strength of this relationship shifted. Overall, this research enhances understanding of how diverse environmental, social, and governance strategies affect financial outcomes, operational transparency, and shareholder protection. The results emphasize the importance for companies to dynamically adapt their environmental, social, and governance policies to changing market conditions to maintain long-term financial health and effective corporate governance. UDC: [658.15:614.2]:556(73); JEL: G30, G34, G39