Strategic Decoupling of Financial and ESG Stability: Evidence from Persistence

This study examines whether the relationship between financial stability and sustainability performance may serve as an empirical indicator of managerial intent. Although previous studies have mostly concentrated on ESG performance metrics, there is limited understanding of how sustainability outcomes are integrated into the fundamental financial stability of organizations. A sample of 1,857 publicly listed companies from 2011 to 2019 is utilized to assess earnings quality via earnings persistence, while sustainability is evaluated through ESG persistence and long-term ESG development. A multivariate OLS model, accounting for business development, profitability dynamics, and industry effects, examines whether these dimensions demonstrate synchronized stability. The findings indicate no statistically significant relationship between earnings persistence and either ESG persistence or ESG development. Financial stability is primarily influenced by fundamental economic factors, especially the growth of firms and the volatility of profitability. These findings corroborate strategic decoupling theory, indicating that sustainability programs frequently function as an independent strategic domain. The study offers a dynamic viewpoint on ESG integration and underscores the significance of examining long-term alignment in measuring company resilience.