The Impact of Sustainable Development on Stock Price Crash Risk: The Moderating Role of ESG Performance

In recent years, the integration of sustainability and environmental, social, and governance (ESG) criteria into corporate strategies has become a focal point for market participants seeking to mitigate extreme downside volatility. This study empirically investigates the direct impact of sustainable development on future stock price crash risk, while uniquely examining the moderating role of ESG performance within this dynamic. Utilizing a comprehensive panel dataset comprising ۱۳۳ non-financial firms continuously listed on the Tehran Stock Exchange (TSE) over a ten-year period from ۲۰۱۴ to ۲۰۲۳, the research employs multivariate regression models to rigorously test the hypotheses. The empirical findings reveal a statistically significant negative relationship between sustainable development and stock price crash risk. This indicates that firms embedding robust sustainable practices into their core operations effectively reduce information asymmetry and are consequently less prone to sudden, catastrophic declines in equity valuation. Crucially, the analysis demonstrates that ESG performance acts as a powerful and significant moderator; high ESG performance structurally amplifies the inhibitory effect of sustainable development on crash risk. These results suggest that the mere adoption of broad sustainability goals is optimized only when coupled with active, high-quality ESG execution, which prevents the opportunistic hoarding of bad news by management. The findings offer profound implications for investors, corporate boards, and regulatory authorities in emerging markets, highlighting sustainable development and ESG performance not merely as ethical mandates, but as vital, value-preserving instruments for financial risk management and market stability.In recent years, the integration of sustainability and environmental, social, and governance (ESG) criteria into corporate strategies has become a focal point for market participants seeking to mitigate extreme downside volatility. This study empirically investigates the direct impact of sustainable development on future stock price crash risk, while uniquely examining the moderating role of ESG performance within this dynamic. Utilizing a comprehensive panel dataset comprising ۱۳۳ non-financial firms continuously listed on the Tehran Stock Exchange (TSE) over a ten-year period from ۲۰۱۴ to ۲۰۲۳, the research employs multivariate regression models to rigorously test the hypotheses. The empirical findings reveal a statistically significant negative relationship between sustainable development and stock price crash risk. This indicates that firms embedding robust sustainable practices into their core operations effectively reduce information asymmetry and are consequently less prone to sudden, catastrophic declines in equity valuation. Crucially, the analysis demonstrates that ESG performance acts as a powerful and significant moderator; high ESG performance structurally amplifies the inhibitory effect of sustainable development on crash risk. These results suggest that the mere adoption of broad sustainability goals is optimized only when coupled with active, high-quality ESG execution, which prevents the opportunistic hoarding of bad news by management. The findings offer profound implications for investors, corporate boards, and regulatory authorities in emerging markets, highlighting sustainable development and ESG performance not merely as ethical mandates, but as vital, value-preserving instruments for financial risk management and market stability.

کلیدواژه ها:

Sustainable Development ، Stock Price Crash Risk ، ESG Performance ، Downside Risk ، Information Asymmetry