Influence of profitability and ESG performance on firm value: evidence from the coal mining industry

Abstract This study examines how profitability influences the relationship between Environmental, Social, and Governance (ESG) performance and firm value in the coal mining sector. Using a quantitative method, moderated regression analysis (MRA) was conducted on a sample of coal mining companies listed in Côte d'Ivoire from 2019 to 2023, selected through purposive sampling based on data availability. The findings show that ESG performance has a positive and significant impact on firm value. However, profitability, measured by ROA, negatively moderates this relationship, indicating a saturation effect in which the additional benefits of ESG disclosures diminish for highly profitable companies in this capital-intensive industry. This contributes to the existing literature by emphasizing the conditional influence of financial performance on the ESG value link in emerging mining markets. The study suggests that coal mining firms should carefully balance profitability with genuine ESG efforts to maintain long-term value, and regulators could improve disclosure standards to reduce short-term focus. While ESG has a positive and significant effect on firm value, the adverse moderating effect of profitability implies that the signaling and legitimacy benefits of ESG disclosures decrease in highly profitable firms. This contributes to the literature by revealing a saturation effect in ESG valuation in capital-intensive industries such as coal mining.