ESG Performance and Corporate Financialization: The Roles of Enterprise Risk Management and Firm Value in Canada

Abstract

This study investigates the relationship between ESG performance and corporate financialization among Canadian listed firms from 2010 to 2023. Using panel regression models, the results show that ESG performance is negatively associated with corporate financialization, indicating that firms with stronger ESG engagement allocate fewer resources to financial assets. The findings further reveal that enterprise risk management and firm value significantly moderate this relationship. These results suggest that the effect of ESG on financialization depends on firms' risk-management capability and value-creation capacity. The research broadens the existing literature on ESG and corporate financial conduct by presenting evidence from Canada and suggests ramifications for sustainable corporate governance and investment strategies.