TY - JOUR
T1 - Sovereign ESG and corporate investment
T2 - New insights from the United Kingdom
AU - Zhang, Dongna
AU - Zhao, Zuoxiang
AU - Lau, Chi Keung
PY - 2022/10/1
Y1 - 2022/10/1
N2 - This paper examines the nexus between sovereign environmental, social and corporate governance (ESG) issues and corporate investment decisions from a sustainable perspective. By utilising firm-level balance sheets data, country-level governance and policy uncertainty data, we find country governance has a significant positive effect on firm investment. Moreover, this paper shows that climate and migration policy uncertainty has a statistically and economically significant dampening impact on corporate investment, indicating that environmental and social prospect plays a key role in promoting business investment in the United Kingdom. In addition, the empirical evidence on the moderation analysis of corporate leverage suggests that superior environmental, social, and governance performance can help businesses relieve the burden of debt overhang on firm investment. These results provide several important implications on climate change with the objectives of the COP26 conference.
AB - This paper examines the nexus between sovereign environmental, social and corporate governance (ESG) issues and corporate investment decisions from a sustainable perspective. By utilising firm-level balance sheets data, country-level governance and policy uncertainty data, we find country governance has a significant positive effect on firm investment. Moreover, this paper shows that climate and migration policy uncertainty has a statistically and economically significant dampening impact on corporate investment, indicating that environmental and social prospect plays a key role in promoting business investment in the United Kingdom. In addition, the empirical evidence on the moderation analysis of corporate leverage suggests that superior environmental, social, and governance performance can help businesses relieve the burden of debt overhang on firm investment. These results provide several important implications on climate change with the objectives of the COP26 conference.
KW - Climate change uncertainty
KW - Sovereign ESG
KW - Country governance
KW - Corporate investments
KW - Leverage effect
U2 - 10.1016/j.techfore.2022.121899
DO - 10.1016/j.techfore.2022.121899
M3 - Article
VL - 183
JO - Technological Forecasting and Social Change
JF - Technological Forecasting and Social Change
SN - 0040-1625
M1 - 121899
ER -
