ESG Integrity and Financial Performance: The Interplay Between Sustainability and Earnings Management

Abstract

There is substantial empirical heterogeneity in the literature on the intersection between ESG performance and financial outcomes. To address this fragmentation, we foreground ESG integrity, the alignment between sustainability claims and high-quality financial reporting, as the mechanism through which ESG is translated into value. Using Scopus and Web of Science, the study identifies and screens 205 peer-reviewed articles published until October 2025 that jointly address ESG, earnings management, and financial performance. Using VOSviewer and Bibliometrix, we map the conceptual and intellectual structure and synthesize the evidence via interdisciplinary integration. We identify four primary intellectual pillars that govern the ESG–financial performance relationship: national institutions, governance architectures, disclosure quality, and earnings quality. The results suggest a “conditional chain” where ESG tends to be associated with sustained financial value when anchored in rigorous internal governance and high-quality reporting. Conversely, in weak institutional settings, ESG often serves as a “masking” mechanism for managerial opportunism and earnings management. The study reveals a significant shift in the literature from broad corporate social responsibility narratives toward material ESG metrics, gender diversity, and the “Twin Transition” (green and digital). This paper moves beyond traditional descriptive reviews by introducing a conceptual framework to mitigate “construct conflation” between governance and ESG. It provides a critical roadmap for future research, emphasizing the need for causal identification and granular measurement of real versus accrual-based earnings management.