The tangible impact of environmental, social, and governance (ESG) practices on firm profitability remains a subject of contention. Existing studies have tended to overlook the potential impact of information asymmetry within the tourism market, particularly in the communication of ESG practices between firms and consumers. This paper, utilizing panel data spanning from 2009 to 2022, employs a two-tier stochastic frontier model to delve into the relationship between ESG practices and firm profitability under information asymmetry. The findings show that the combined effect of ESG practices on firm profitability is adverse when considering information asymmetry between the firm and its consumers, which primarily facilitates the inhibitory facet. The inhibitory and promotional effects of ESG practices interplay here, resulting in the actual profitability level being lower than the benchmark level. Heterogeneity analysis underscores that the characteristics of state-owned enterprises serve to alleviate the inhibitory influence of ESG practices on the profitability of tourism firms.
AguinisH.RuppD. E.GlavasA. (2024). Corporate social responsibility and individual behaviour. Nature Human Behaviour, 8, 219–227. https://doi.org/10.1038/s41562-023-01802-7.
2.
AriciH. E.SaydamM. B.SökmenA.Cakmakoglu AriciN. (2024). Corporate social responsibility in hospitality and tourism: A systematic review. The Service Industries Journal. Advance online publication. https://doi.org/10.1080/02642069.2024.2345299
3.
AssafA. G.JosiassenA. (2016). Frontier analysis: A state-of-the-art review and meta-analysis. Journal of Travel Research, 55(5), 612–627. https://doi.org/10.1177/0047287515569776
4.
BackK. J. (2024). ESG for the hospitality and tourism research: Essential demanded research area for all. Tourism Management, 105, 104954. https://doi.org/10.1016/j.tourman.2024.104954
5.
BothelloJ.IoannouI.PorumbV. A.Zengin-KaraibrahimogluY. (2023). CSR decoupling within business groups and the risk of perceived greenwashing. Strategic Management Journal, 44(13), 3217–3251. https://doi.org/10.1002/smj.3532
6.
ChenM.-H.ChenC.-C.JiangY. (2022). Risk reduction effect of hospitality philanthropic giving: Theoretical framework and empirical evidence. International Journal of Hospitality Management, 103, 103224. https://doi.org/10.1016/j.ijhm.2022.103224
7.
ChenS.SongY.GaoP. (2023). Environmental, social, and governance (ESG) performance and financial outcomes: Analyzing the impact of ESG on financial performance. Journal of Environmental Management, 345, 118829. https://doi.org/10.1016/j.jenvman.2023.118829
8.
CornellB.ShapiroA. C. (1987). Corporate stakeholders and corporate finance. Financial Management, 16(1), 5–14. https://doi.org/10.2307/3665543
9.
DogruT.AkyildirimE.CepniO.OzdemirO.SharmaA.YilmazM. H. (2022). The effect of environmental, social and governance risks. Annals of Tourism Research, 95, 103432. https://doi.org/10.1016/j.annals.2022.103432
10.
GeremewY. M.HuangW.-J.HungK. (2024). Fuzzy-set qualitative comparative analysis as a mixed-method and analysis technique: A comprehensive systematic review. Journal of Travel Research, 63(1), 3–26. https://doi.org/10.1177/00472875231168619
11.
GinderW.KwonW. S.ByunS. E. (2021). Effects of internal-external congruence-based CSR positioning: An attribution theory approach. Journal of Business Ethics, 169, 355–369. https://doi.org/10.1007/s10551-019-04282-w
12.
HuB.ShenL.DongJ. (2020). The market value effect of corporate social responsibility of listed tourism enterprises in China: A perspective of marketing strategy. Tourism Tribune, 35(10), 15–27. https://doi.org/10.14134/j.cnki.cn33-1336/f.2024.09.006.
13.
HwangD. H. S.SongH. J.LeeS.KangK. H. (2024). The moderating role of national economic development on the relationship between ESG and firm performance in the global hospitality industry. International Journal of Hospitality Management, 120, 103788. https://doi.org/10.1016/j.ijhm.2024.103788
14.
JohnsenD. B. (2009). The ethics of “commercial bribery”: Integrative social contract theory meets transaction cost economics. Journal of Business Ethics, 88, 791–803. https://doi.org/10.1007/s10551-009-0323-6
15.
KimE.-H.LyonT. P. (2015). Greenwash vs. brownwash: Exaggeration and undue modesty in corporate sustainability disclosure. Organization Science, 26(3), 705–723. https://doi.org/10.1287/orsc.2014.0949
16.
KimJ. W.ParkC. K. (2023). Can ESG performance mitigate information asymmetry? Moderating effect of assurance services. Applied Economics, 55(26), 2993–3007. https://doi.org/10.1080/00036846.2022.2107991
17.
KimK.-H.KimM.QianC. (2018). Effects of corporate social responsibility on corporate financial performance: A competitive-action perspective. Journal of Management, 44(3), 1097–1118. https://doi.org/10.1177/0149206315602530
18.
KohY. (2024). The industry-academia gap on the corporate governance issues in tourism and hospitality: A critical review and future research suggestions. Journal of Travel & Tourism Marketing, 41(1), 3–19. https://doi.org/10.1080/10548408.2023.2229364
19.
KumbhakarS. C.ParmeterC. F. (2009). The effects of match uncertainty and bargaining on labor market outcomes: Evidence from firm and worker specific estimates. Journal of Productivity Analysis, 31, 1–14. https://doi.org/10.1007/s11123-008-0117-3
20.
LeeS.YeonJ.SongH. J. (2023). Current status and future perspective of the link of corporate social responsibility-corporate financial performance in the tourism and hospitality industry. Tourism Economics, 29(7), 1703–1735. https://doi.org/10.1177/13548166221140505
21.
LeeW.LuL. (2025). Good theories predict: Unveiling the untapped potential of “necessity” theorizing. Journal of Hospitality & Tourism Research, 49(2), 219–234. https://doi.org/10.1177/10963480231188666
22.
LegendreT. S.DingA.BackK.-J. (2024). A bibliometric analysis of the hospitality and tourism environmental, social, and governance (ESG) literature. Journal of Hospitality and Tourism Management, 58, 309–321. https://doi.org/10.1016/j.jhtm.2024.01.003
23.
LiH.WuD. (2024). Online investor attention and firm restructuring performance: Insights from an event-based DEA-Tobit model. Omega, 122, 102967. https://doi.org/10.1016/j.omega.2023.102967
24.
LiY.SingalM. (2022). Corporate governance in the hospitality and tourism industry: Theoretical foundations and future research. Journal of Hospitality & Tourism Research, 46(7), 1347–1383. https://doi.org/10.1177/10963480211011718
LinM. S.SharmaA.PanB.Quadri-FelittiD. (2023). Information asymmetry in the innovation adoption decision of tourism and hospitality SMEs in emerging markets: A mixed-method analysis. Tourism Management, 99, 104793. https://doi.org/10.1016/j.tourman.2023.104793
27.
LinM. S.ZhangH.LuoY.LiY. (2024a). Environmental, social, and governance (ESG) measurement in the tourism and hospitality industry: Views from a developing country. Journal of Travel & Tourism Marketing, 41(1), 154–168. https://doi.org/10.1080/10548408.2023.2293008
28.
LinY.LuZ.FanD.ZhengZ. (2024b). The bright and dark sides of ESG during the COVID-19 pandemic: Evidence from China hospitality industry. International Journal of Contemporary Hospitality Management, 36(4), 1393–1417. https://doi.org/10.1108/IJCHM-11-2022-1384
29.
LiuB.DengR.LuoC. (2024). A study of peer effects in the digital transformation of listed companies in tourism and related service enterprises. Tourism Tribune, 39(10), 49–69. https://doi.org/10.19765/j.cnki.1002-5006.2020.10.007
30.
MaR.LiuH.LiZ.MaY.FuS. (2024). Promoting sustainable development: Revisiting digital economy agglomeration and inclusive green growth through two-tier stochastic frontier model. Journal of Environmental Management, 355, 120491. https://doi.org/10.1016/j.jenvman.2024.120491
31.
MajeedS.KimW. G. (2023). A reflection of greenwashing practices in the hospitality industry: A scoping review. International Journal of Contemporary Hospitality Management, 35(3), 1125–1146. https://doi.org/10.1108/IJCHM-04-2022-0495
32.
MonevaJ. M.Bonilla-PriegoM. J.OrtasE. (2020). Corporate social responsibility and organisational performance in the tourism sector. Journal of Sustainable Tourism, 28(6), 853–872. https://doi.org/10.1080/09669582.2019.1707838
33.
MurèP.SpalloneM.MangoF.MarzioniS.BittucciL. (2021). ESG and reputation: The case of sanctioned Italian banks. Corporate Social Responsibility and Environmental Management, 28(1), 265–277. https://doi.org/10.1002/csr.2047
34.
NarulaR.RaoP.KumarS.PaltrinieriA. (2025). ESG investing & firm performance: Retrospections of past & reflections of future. Corporate Social Responsibility and Environmental Management, 32(1), 1096–1121. https://doi.org/10.1002/csr.2982
35.
NicolauJ. L.SellersR. (2010). The quality of quality awards: Diminishing information asymmetries in a hotel chain. Journal of Business Research, 63(8), 832–839. https://doi.org/10.1016/j.jbusres.2009.06.009
36.
OzdemirO.ErkmenE.HanW. (2023). EPU and financial performance in the hospitality and tourism industry: Moderating effect of CSR, institutional ownership and cash holding. Tourism Management, 98, 104769. https://doi.org/10.1016/j.tourman.2023.104769
37.
ParkJ.LeeH.KimC. (2014). Corporate social responsibilities, consumer trust and corporate reputation: South Korean consumers’ perspectives. Journal of Business Research, 67(3), 295–302. https://doi.org/10.1016/j.jbusres.2013.05.016
38.
PapadopoulosA. (2015). The half-normal specification for the two-tier stochastic frontier model. Journal of Productivity Analysis, 43, 225–230. https://doi.org/10.1007/s11123-014-0389-8
39.
PapagiannakisG. E.VlachosP. A.KoritosC. D.KassinisG. I. (2024). Are publicly traded tourism and hospitality providers greenwashing?Tourism Management, 103, 104893. https://doi.org/10.1016/j.tourman.2024.104893
40.
PengX.WangH.FangP.SongW.ZhouD. (2023). Mapping progress in hospitality CSR research: A bibliometric review from 2006 to 2023. Journal of Hospitality and Tourism Management, 57, 284–302. https://doi.org/10.1016/j.jhtm.2023.09.003
PrestonL. E.O’bannonD. P. (1997). The corporate social-financial performance relationship: A typology and analysis. Business & Society, 36(4), 419–429. https://doi.org/10.1177/000765039703600406
43.
QiuS. C.JiangJ.LiuX.ChenM.-H.YuanX. (2021). Can corporate social responsibility protect firm value during the COVID-19 pandemic?International Journal of Hospitality Management, 93, 102759. https://doi.org/10.1016/j.ijhm.2020.102759
44.
ShenH.LinH.HanW.WuH. (2023). ESG in China: A review of practice and research, and future research avenues. China Journal of Accounting Research, 16(3), 100325. https://doi.org/10.1016/j.cjar.2023.100325
45.
ShinH.SongH. J.KangK. H. (2024). The moderating effect of interest rates on the relationship between ESG and firm performance in the US restaurant industry. Journal of Sustainable Tourism. Advance online publication. https://doi.org/10.1080/09669582.2024.2382427
46.
SingalM. (2015). How is the hospitality and tourism industry different? An empirical test of some structural characteristics. International Journal of Hospitality Management, 47, 116–119. https://doi.org/10.1016/j.ijhm.2015.03.006
47.
SongH. J.YeonJ.LinM. S. (2024). The more diverse, the better? Exploring the moderating role of hospitality top management team diversity on CSR-FP link. International Journal of Hospitality Management, 117, 103650. https://doi.org/10.1016/j.ijhm.2023.103650
48.
SongW.HanX. (2022). The bilateral effects of foreign direct investment on green innovation efficiency: Evidence from 30 Chinese provinces. Energy, 261, 125332. https://doi.org/10.1016/j.energy.2022.125332
49.
TaddeoS.AgneseP.BusatoF. (2024). Rethinking the effect of ESG practices on profitability through cross-dimensional substitutability. Journal of Environmental Management, 352, 120115. https://doi.org/10.1016/j.jenvman.2024.120115
50.
TheodoulidisB.DiazD.CrottoF.RancatiE. (2017). Exploring corporate social responsibility and financial performance through stakeholder theory in the tourism industries. Tourism Management, 62, 173–188. https://doi.org/10.1016/j.tourman.2017.03.018
51.
TodaroD. L.TorelliR. (2024). From greenwashing to ESG-washing: A focus on the circular economy field. Corporate Social Responsibility and Environmental Management, 31(5), 4034–4046. https://doi.org/10.1002/csr.2786
52.
UllahS.AkhtarP.ZaefarianG. (2018). Dealing with endogeneity bias: The generalized method of moments (GMM) for panel data. Industrial Marketing Management, 71, 69–78. https://doi.org/10.1016/j.indmarman.2017.11.010
53.
WangJ.XiaW. (2022). Public attention and investment efficiency: Incentive effect or deterrent effect? Analysis on heterogeneous bilateral stochastic frontier model. Technological Forecasting and Social Change, 185, 122043. https://doi.org/10.1016/j.techfore.2022.122043
54.
WangL.ChenL. (2023). Impacts of digital economy agglomeration on carbon emission: A two-tier stochastic frontier and spatial decomposition analysis of China. Sustainable Cities and Society, 95, 104624. https://doi.org/10.1016/j.scs.2023.104624
55.
WongA. K. F.KöseogluM. A.KimS. S. (2021). The intellectual structure of corporate social responsibility research in tourism and hospitality: A citation/co-citation analysis. Journal of Hospitality and Tourism Management, 49, 270–284. https://doi.org/10.1016/j.jhtm.2021.09.015
56.
WuD.LiH.LiuY.-F. (2024). Doing well by doing right: Heterogeneous effects of tourism firms’ social responsibility on service productivity and profitability. Current Issues in Tourism, 27(24), 4693–4713. https://doi.org/10.1080/13683500.2023.2283558
57.
WuD.LiH.YangJ. (2023). How does social responsibility investment strategy contribute to hospitality firms’ recovery from public health emergencies? The case of COVID-19 pandemic. International Journal of Hospitality Management, 113, 103530. https://doi.org/10.1016/j.ijhm.2023.103530
58.
WuY.ZhangK.XieJ. (2020). Bad greenwashing, good greenwashing: Corporate social responsibility and information transparency. Management Science, 66(7), 3095–3112. https://doi.org/10.1287/mnsc.2019.3340
59.
XieJ.NozawaW.YagiM.FujiiH.ManagiS. (2019). Do environmental, social, and governance activities improve corporate financial performance?Business Strategy and the Environment, 28(2), 286–300. https://doi.org/10.1002/bse.2224
60.
YeX.FuY.-K.WangH.ZhouJ. (2023). Information asymmetry evaluation in hotel E-commerce market: Dynamics and pricing strategy under pandemic. Information Processing & Management, 60(1), 103117. https://doi.org/10.1016/j.ipm.2022.103117
ZhouG.LiuL.LuoS. (2022). Sustainable development, ESG performance and company market value: Mediating effect of financial performance. Business Strategy and the Environment, 31(7), 3371–3387. https://doi.org/10.1002/bse.3089
