THE MEDIATING ROLE OF INTELLECTUAL CAPITAL IN THE ESG - PERFORMANCE RELATIONSHIP: EVIDENCE FROM THE U.S. IT INDUSTRY

Abstract

Purpose- This study aims to empirically investigate the relationship between Environmental, Social, and Governance (ESG) performance and financial performance, with a particular focus on the mediating role of intellectual capital (IC) in publicly traded IT firms in the United States. Methodology- The research uses a sample of 204 U.S.-based publicly listed IT firms, covering 917 firm-year observations from 2011 to 2022. Descriptive statistics, correlation analysis, and multiple regression models were employed to test the proposed hypotheses and assess the impact of ESG on Return on Assets (ROA) and the potential mediating role of intellectual capital (IC). Findings- The results indicate that intellectual capital partially mediates the relationship between ESG performance and financial performance. While IC contributes significantly to explaining the effect of ESG on ROA, it does not fully account for the relationship. Conclusion- This study highlights the importance of considering intellectual capital as a strategic asset in enhancing the financial returns of sustainability-oriented initiatives. The findings provide actionable insights for corporate leaders and policymakers seeking to align ESG practices with long-term financial goals.

Keywords

• ESG
• intellectual capital
• financial performance
• IT sector
• United States

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