Green Accounting Practices, Corporate Social Responsibility and Corporate Financial Performance: Unpacking the Mediating and Moderating Mechanisms in an Emerging Economy

ABSTRACT: There is, however, discussion of an environmental accounting–firm performance relationship in sustainability finance research, especially in emerging economies where disclosure norms and institutional pressures are significantly distinct from those in developed economies. This study aims to provide a comprehensive empirical analysis on the effects of green accounting practices (GAP) on corporate financial performance (CFP) for non-financial year listed companies on Pakistan Stock Exchange (PSX) during 2015–2023 period. Based on an integrated theoretical perspective, which is based on Stakeholder theory and Institutional theory along with the resource based view (RBV) literature, the study suggests that corporate social responsibility (CSR) is a mediate chain in converting GAP into positive financial results, and corporate governance quality (CG) is a boundary condition that further intensifies the mediate chain. To deal with the endogeneity issue, PSX-listed non-financial firms data is pooled together to analyze the panel using System Generalized Method of Moments (System GMM) estimator in addition to Baron and Kenny mediation procedure and Sobel–Aroian bootstrapped indirect effects test. Moreover, the moderated Mediation pathway is tested by the help of the PROCESS macro Model 14. Results indicate that both direct and indirect effects of GAP have a significant and positive impact on CFP. More importantly, the quality of corporate governance (QoC) enhances the relationship between GAP–CSR linkage as the better the corporate governance structure, the more benefit that the CSR activities based on the information of green accounting disclosure of companies will bring them, which in turn will yield better financial performance. A sector level heterogeneity analysis finds effects are most prominent in energy intensive sectors. Originality/value of the study is this study: (i) introduces green accounting as a strategic institutional signal beyond a mere compliance mechanism; (ii) formal testing of conditionality of CSR mediation under different governance regimes; and (iii) provides the first multi-year, large-sample GMM based evidence on the above framework in Pakistan. The findings have direct implications for the Securities and Exchange Commission of Pakistan (SECP), PSX ESG framework developers, institutional investors, and corporate sustainability managers. Keywords: Green Accounting Practices (GAP); Corporate Social Responsibility (CSR); Corporate Financial Performance (CFP); Corporate Governance (CG); System GMM; Pakistan Stock Exchange (PSX); Sustainability Disclosure (SD); Emerging Markets; ESG Integration; Moderated Mediation Model.