How financial performance influences investment in sustainable development initiatives in the airline industry: The moderation role of state-ownership

This study aims to broaden the research on the influence of financial performance (FP) on sustainable development activities proxied by environmental, social, and governance (ESG) disclosure in the airline industry. In addition, we examine the moderating effect of state-ownership on the FP-ESG relationship. Based on data collected from 36 airlines worldwide for the period 2008-2019, we found that ESG is negatively and significantly influenced by FP. This result implies that the willingness of airlines to contribute to ESG initiatives is diminished when economic conditions are favorable. State-ownership moderates the relationship between FP and ESG such that the negative relationship is weaker in presence of state shares. Our findings help to disentangle the roles of FP in its contribution to sustainability and are valuable in better understanding the topic in airline context. Also, our results have some important implications for how industry practitioners may act more effectively in the managerial social decision process and provide insights to assist investors who are considering eco-investing in the airline industry.