SUSTAINABLE FINANCE PRACTICES AND FIRM FINANCIAL PERFORMANCE UNDER THE INFLUENCE OF CORPORATE GOVERNANCE MECHANISMS

Abstract

The study investigates the relationship between sustainability-oriented financial practices and firm financial performance, with a particular focus on the moderating role of corporate governance. Drawing on stakeholder theory, the research aims to examine how firms can achieve superior performance by integrating sustainability into their financial strategies while leveraging effective governance mechanisms. A quantitative, cross-sectional research design is employed, with data collected from managers of small and medium-sized manufacturing enterprises in Pakistan. The study utilizes structured questionnaires and analyzes the data using SPSS and SmartPLS, applying partial least squares structural equation modeling to test the proposed hypotheses. The findings reveal that sustainability-oriented financial practices have a significant positive effect on firm financial performance. Furthermore, corporate governance is found to play a significant moderating role, strengthening the relationship between sustainability practices and performance outcomes. These results highlight the importance of integrating sustainability and governance within organizational strategies to achieve long-term success. The study contributes to the literature by providing empirical evidence from an emerging economy context and offers practical insights for managers and policymakers seeking to enhance firm performance through sustainable and well-governed practices.