The Effect of Corporate Sustainability Performance on Leverage Adjustments

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dc.citation.issue5
dc.citation.volume53
dc.contributor.authorHo L
dc.contributor.authorBai M
dc.contributor.authorLu Y
dc.contributor.authorQin Y
dc.date.accessioned2023-10-12T22:16:16Z
dc.date.available2021-09
dc.date.available2023-10-12T22:16:16Z
dc.date.issued2021-01-30
dc.description
dc.description
dc.description.abstractWe examine the impact of corporate sustainability performance (CSP) on the speed at which firms adjust their leverage ratios to the target levels for a large sample of 31 countries from 2002 to 2018. Using two proxies of CSP, we find that firms with superior CSP tend to adjust faster toward their target leverage ratios. In exploring the potential underlying economic mechanisms through which CSP affects leverage adjustments, we find that better CSP helps firms to ease information asymmetry, enhance stakeholder engagement, push up stock prices in the stock market, and improve competitive advantage in the product market. In the cross section, the positive association between CSP and leverage adjustment speed is less pronounced in countries with high-quality institutions. The results remain unchanged in robustness tests. Overall, this paper highlights the important role of CSP in shaping corporate capital structure dynamics and suggests implications for corporate strategic planning on the privately optimal levels of CSP activities.
dc.description.publication-statusPublished
dc.identifierhttp://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000703505400008&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=c5bb3b2499afac691c2e3c1a83ef6fef
dc.identifierARTN 100989
dc.identifier.citationBRITISH ACCOUNTING REVIEW, 2021, 53 (5)
dc.identifier.doi10.1016/j.bar.2021.100989
dc.identifier.eissn1095-8347
dc.identifier.elements-id440130
dc.identifier.harvestedMassey_Dark
dc.identifier.issn0890-8389
dc.identifier.urihttp://hdl.handle.net/10179/20207
dc.publisherElsevier
dc.relation.isPartOfBRITISH ACCOUNTING REVIEW
dc.rightsThe Author(s) CC BY-NC-ND
dc.rights.urihttps://creativecommons.org/licenses/by-nc-nd/4.0/
dc.subjectCorporate sustainability performance
dc.subjectLeverage SOA
dc.subjectDynamic trade-off theory
dc.subjectInstitutional environments
dc.subject.anzsrc1501 Accounting, Auditing and Accountability
dc.titleThe Effect of Corporate Sustainability Performance on Leverage Adjustments
dc.typeJournal article
pubs.notesNot known
pubs.organisational-group/Massey University
pubs.organisational-group/Massey University/Massey Business School
pubs.organisational-group/Massey University/Massey Business School/School of Economics and Finance
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