Sovereign ESG and corporate investment: New insights from the United Kingdom

Zhang, Dongna, Zhao, Zuoxiang and Lau, Chi Keung Marco (2022) Sovereign ESG and corporate investment: New insights from the United Kingdom. Technological Forecasting and Social Change, 183. p. 121899. ISSN 0040-1625

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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.

Item Type: Article
Uncontrolled Keywords: Climate change uncertainty, Sovereign ESG, Country governance, Leverage effect
Subjects: N100 Business studies
N900 Others in Business and Administrative studies
Department: Faculties > Business and Law > Newcastle Business School > Accounting and Finance
Depositing User: Rachel Branson
Date Deposited: 13 Sep 2022 13:41
Last Modified: 13 Sep 2022 13:45

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