nach oben

Asia-Pacific Financial Markets

14.03.2024 | Original Research

Assessing the Impact of Policy Uncertainty, Geopolitical Risk, and Sustainable Disclosure on Corporate Performance

verfasst von: Siddhartha Barman, Jitendra Mahakud

Erschienen in: Asia-Pacific Financial Markets

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

This study explores the impact of policy uncertainty, geopolitical risk, and sustainable disclosure (ESG) on corporate performance for the period 2014–21 across 23 countries. Using the System GMM technique, it uncovers a negative link between policy uncertainty, geopolitical risk, and corporate performance. Sustainable disclosure mitigates the influence of economic uncertainty and geopolitical risk on firm performance. The results are robust across the various other econometric methods (i.e. fixed effect, random effect and feasible generalized least squares) and alternative proxy used for sustainability disclosure. These findings have implications for policymakers and managers, highlighting the importance of aligning policies with sustainable disclosure practices. This study contributes to the literature by examining these factors on a cross-country scale, potentially among the first of its kind.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Adra, S., Gao, Y., Huang, J., & Yuan, J. (2023). Geopolitical risk and corporate payout policy. International Review of Financial Analysis, 87, 102613.CrossRef

Agoraki, M. E. K., Kouretas, G. P., & Laopodis, N. T. (2022). Geopolitical risks, uncertainty, and stock market performance. Economic and Political Studies, 10(3), 253–265.CrossRef

Ahir, H., Bloom, N., & Furceri, D. (2022). Years of uncertainty. Finance & Development, 57(1), 58–60.

Ahsan, T., Al-Gamrh, B., & Mirza, S. S. (2022). Economic policy uncertainty and sustainable financial growth: Does business strategy matter? Finance Research Letters, 46, 102381.CrossRef

Ahsan, T., Mirza, S. S., Al-Gamrh, B., Bin-Feng, C., & Rao, Z. U. R. (2021). How to deal with policy uncertainty to attain sustainable growth: the role of corporate governance. Corporate Governance: The International Journal of Business in Society, 21(1), 78–91.

Ahsan, T., & Qureshi, M. A. (2021). The nexus between policy uncertainty, sustainability disclosure, and firm performance. Applied Economics, 53(4), 441–453.CrossRef

Alam, A. W., Houston, R., & Farjana, A. (2023). Geopolitical risk and corporate investment: How do politically connected firms respond? Finance Research Letters, 53, 103681.CrossRef

Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277–297.CrossRef

Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29–51.CrossRef

Arouri, M., Estay, C., Rault, C., & Roubaud, D. (2016). Economic policy uncertainty and stock markets: Long-run evidence from the US. Finance Research Letters, 18, 136–141.CrossRef

Ashwin Kumar, N. C., Smith, C., Badis, L., Wang, N., Ambrosy, P., & Tavares, R. (2016). ESG factors and risk-adjusted performance: A new quantitative model. Journal of Sustainable Finance & Investment, 6(4), 292–300.CrossRef

Atif, M., & Ali, S. (2021). Environmental, social and governance disclosure and default risk. Business Strategy and the Environment, 30(8), 3937–3959.CrossRef

Azqueta-Gavaldón, A. (2017). Developing news-based economic policy uncertainty index with unsupervised machine learning. Economics Letters, 158, 47–50.MathSciNetCrossRef

Azzimonti, M. (2018). Partisan conflict and private investment. Journal of Monetary Economics, 93, 114–131.CrossRef

Bahadori, N., Kaymak, T., & Seraj, M. (2021). Environmental, social, and governance factors in emerging markets: The impact on firm performance. Business Strategy & Development, 4(4), 411–422.CrossRef

Baker, S. R., Bloom, N., & Davis, S. J. (2016). Measuring economic policy uncertainty. The Quarterly Journal of Economics, 131(4), 1593–1636.CrossRef

Baltagi, B. H., Feng, Q., & Kao, C. (2012). A Lagrange Multiplier test for cross-sectional dependence in a fixed effects panel data model. Journal of Econometrics, 170(1), 164–177.MathSciNetCrossRef

Bernanke, B. S. (1983). Irreversibility, uncertainty, and cyclical investment. The Quarterly Journal of Economics, 98(1), 85–106.CrossRef

Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115–143.CrossRef

Bonaime, A., Gulen, H., & Ion, M. (2018). Does policy uncertainty affect mergers and acquisitions? Journal of Financial Economics, 129(3), 531–558.CrossRef

Boubakri, N., & Ghouma, H. (2010). Control/ownership structure, creditor rights protection, and the cost of debt financing: International evidence. Journal of Banking & Finance, 34(10), 2481–2499.CrossRef

Brammer, S., Jackson, G., & Matten, D. (2012). Corporate social responsibility and institutional theory: New perspectives on private governance. Socio-Economic Review, 10(1), 3–28.CrossRef

Brammer, S., & Pavelin, S. (2008). Factors influencing the quality of corporate environmental disclosure. Business Strategy and the Environment, 17(2), 120–136.CrossRef

Breusch, T. S., & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. The Review of Economic Studies, 47(1), 239–253.MathSciNetCrossRef

Brunnermeier, M. K., & Pedersen, L. H. (2009). Market liquidity and funding liquidity. The Review of Financial Studies, 22(6), 2201–2238.CrossRef

Caldara, D., & Iacoviello, M. (2022). Measuring geopolitical risk. American Economic Review, 112(4), 1194–1225.CrossRef

Chen, P. F., Lee, C. C., & Zeng, J. H. (2019). Economic policy uncertainty and firm investment: Evidence from the US market. Applied Economics, 51(31), 3423–3435.CrossRef

Cheng, B., Ioannou, I., & Serafeim, G. (2014). Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), 1–23.CrossRef

Chudik, A., & Pesaran, M. H. (2015). Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors. Journal of Econometrics, 188(2), 393–420.MathSciNetCrossRef

Çolak, G., Gungoraydinoglu, A., & Öztekin, Ö. (2018). Global leverage adjustments, uncertainty, and country institutional strength. Journal of Financial Intermediation, 35, 41–56.CrossRef

Dai, L., & Zhang, B. (2019). Political uncertainty and finance: A survey. Asia-Pacific Journal of Financial Studies, 48(3), 307–333.CrossRef

Demir, E., & Ersan, O. (2017). Economic policy uncertainty and cash holdings: Evidence from BRIC countries. Emerging Markets Review, 33, 189–200.CrossRef

Eccles, R. G., Serafeim, G., & Krzus, M. P. (2011). Market interest in nonfinancial information. Journal of Applied Corporate Finance, 23(4), 113–127.CrossRef

Feng, X., Luo, W., & Wang, Y. (2021). Economic policy uncertainty and firm performance: Evidence from China. Journal of the Asia Pacific Economy. https://doi.org/10.1080/13547860.2021.1962643CrossRef

Gelb, D. S., & Strawser, J. A. (2001). Corporate social responsibility and financial disclosures: An alternative explanation for increased disclosure. Journal of Business Ethics, 33, 1–13.CrossRef

Goddard, J., Tavakoli, M., & Wilson, J. O. (2005). Determinants of profitability in European manufacturing and services: Evidence from a dynamic panel model. Applied Financial Economics, 15(18), 1269–1282.CrossRef

Godfrey, P. C., Merrill, C. B., & Hansen, J. M. (2009). The relationship between corporate social responsibility and shareholder value: An empirical test of the risk management hypothesis. Strategic Management Journal, 30(4), 425–445.CrossRef

Graves, S. B., & Waddock, S. A. (2000). Beyond built to last… stakeholder relations in “built-to-last” companies. Business and Society Review, 105(4), 393–418.CrossRef

Gujarati, D. (2003). Basic Econometrics, 4th edition McGraw Hill.

Gulen, H., & Ion, M. (2016). Policy uncertainty and corporate investment. The Review of Financial Studies, 29(3), 523–564.

Gupta, A. K., & Gupta, N. (2020). Effect of corporate environmental sustainability on dimensions of firm performance–Towards sustainable development: Evidence from India. Journal of Cleaner Production, 253, 119948.CrossRef

Halbritter, G., & Dorfleitner, G. (2015). The wages of social responsibility: Where are they? A critical review of ESG investing. Review of Financial Economics, 26, 25–35.CrossRef

Hamrouni, A., Boussaada, R., & Toumi, N. B. F. (2019). Corporate social responsibility disclosure and debt financing. Journal of Applied Accounting Research, 20(4), 394–415.CrossRef

Higginson, N., Simmons, C., & Warsame, H. (2006). Environmental disclosure and legitimation in the annual report-Evidence from the joint solutions project. Journal of Applied Accounting Research, 8(2), 3–23.CrossRef

Hilal, O. A., & Tantawy, A. A. (2022). Entrepreneurial marketing and bank performance in Egypt: Is environmental turbulence a missing link? Journal of Entrepreneurship in Emerging Economies, 14(2), 252–273.CrossRef

Iqbal, U., Gan, C., & Nadeem, M. (2020). Economic policy uncertainty and firm performance. Applied Economics Letters, 27(10), 765–770.CrossRef

Iwata, H., & Okada, K. (2011). How does environmental performance affect financial performance? Evidence from Japanese manufacturing firms. Ecological Economics, 70(9), 1691–1700.CrossRef

Jiang, Y., Tian, G., Wu, Y., & Mo, B. (2022). Impacts of geopolitical risks and economic policy uncertainty on Chinese tourism-listed company stock. International Journal of Finance & Economics, 27(1), 320–333.CrossRef

Kang, W., Lee, K., & Ratti, R. A. (2014). Economic policy uncertainty and firm-level investment. Journal of Macroeconomics, 39, 42–53.CrossRef

Kang, W., & Ratti, R. A. (2013). Oil shocks, policy uncertainty, and stock market return. Journal of International Financial Markets, Institutions and Money, 26, 305–318.CrossRef

Khoo, J., & Cheung, A. (2022). Managerial ability and trade credit. Financial Review, 57(2), 429–451.CrossRef

Kim, S., & Chang, S. (2022). Construction project level-based environmental, social, and governance (C-ESG): A review. EPiC Series in Built Environment, 3, 236–244.CrossRef

Koh, H. K., Burnasheva, R., & Suh, Y. G. (2022). Perceived ESG (environmental, social, governance) and consumers’ responses: The mediating role of brand credibility, Brand Image, and perceived quality. Sustainability, 14(8), 4515.CrossRef

Koh, P. S., Qian, C., & Wang, H. (2014). Firm litigation risk and the insurance value of corporate social performance. Strategic Management Journal, 35(10), 1464–1482.CrossRef

Kothari, S., & Maneenop, S. (2020). Geopolitical risk and corporate cash holdings in the shipping industry. Transportation Research Part e: Logistics and Transportation Review, 136, 101862.CrossRef

Le, A. T., & Tran, T. P. (2021). Does geopolitical risk matter for corporate investment? Evidence from emerging countries in Asia. Journal of Multinational Financial Management, 62, 100703.CrossRef

Liu, G., & Zhang, C. (2020). Economic policy uncertainty and firms’ investment and financing decisions in China. China Economic Review, 63, 101279.CrossRef

Lokuwaduge, C. S. D. S., & Heenetigala, K. (2017). Integrating environmental, social and governance (ESG) disclosure for a sustainable development: An Australian study. Business Strategy and the Environment, 26(4), 438–450.CrossRef

Maneenop, S., Pringpong, S., & Jaroenjitrkam, A. (2023). Geopolitical risk and firm value: Evidence from emerging markets. The North American Journal of Economics and Finance, 63, 101951.

Meinen, P., & Röhe, O. (2017). On measuring uncertainty and its impact on investment: Cross-country evidence from the euro area. European Economic Review, 92, 161–179.CrossRef

Mirza, S. S., & Ahsan, T. (2020). Corporates’ strategic responses to economic policy uncertainty in China. Business Strategy and the Environment, 29(2), 375–389.CrossRef

Mittal, S. K. (2019). Impact of corporate governance disclosure policy on firm performance on Sensex listed 30 companies. Journal of Commerce and Accounting Research, 8(2), 20.

Oanh, H. K., & Hoang, K. (2020). The bright side of geopolitical risk: Evidence from Chinese firms. Journal of Financial Economic Policy, 13(3), 353–370.CrossRef

OECD, O. (2004). The OECD principles of corporate governance. Contaduría y Administración, (216).

Ozdemir, O., Erkmen, E., & Han, W. (2023). EPU and financial performance in the hospitality and tourism industry: Moderating effect of CSR, institutional ownership and cash holding. Tourism Management, 98, 104769.CrossRef

Park, J. S., & Newaz, M. K. (2018). Do terrorist attacks harm financial markets? A meta-analysis of event studies and the determinants of adverse impact. Global Finance Journal, 37, 227–247.CrossRef

Pástor, Ľ, & Veronesi, P. (2013). Political uncertainty and risk premia. Journal of Financial Economics, 110(3), 520–545.CrossRef

Peng, C., & Chau, K. Y. (2023). Independent audit quality and corporate cash holdings. Finance Research Letters, 58, 104405.CrossRef

Pereira da Silva, P. (2020). Crash Risk and ESG Disclosure Quality. Available at SSRN. https://doi.org/10.2139/ssrn.3791264CrossRef

Pesaran, M. H. (2021). General diagnostic tests for cross-sectional dependence in panels. Empirical Economics, 60(1), 13–50.CrossRef

Phan, D. H. B., Iyke, B. N., Sharma, S. S., & Affandi, Y. (2021). Economic policy uncertainty and financial stability–Is there a relation? Economic Modelling, 94, 1018–1029.CrossRef

Phan, D. H. B., Tran, V. T., & Iyke, B. N. (2022). Geopolitical risk and bank stability. Finance Research Letters, 46, 102453.CrossRef

Prasad, P., Sivasankaran, N., Paul, S., & Kannadhasan, M. (2019). Measuring impact of working capital efficiency on financial performance of a firm: An alternative approach. Journal of Indian Business Research, 11(1), 75–94.CrossRef

Qureshi, M. A., Kirkerud, S., Theresa, K., & Ahsan, T. (2020). The impact of sustainability (environmental, social, and governance) disclosure and board diversity on firm value: The moderating role of industry sensitivity. Business Strategy and the Environment, 29(3), 1199–1214.CrossRef

Rjiba, H., Jahmane, A., & Abid, I. (2020). Corporate social responsibility and firm value: Guiding through economic policy uncertainty. Finance Research Letters, 35, 101553.CrossRef

Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. The Stata Journal, 9(1), 86–136.CrossRef

Schadewitz, H., & Niskala, M. (2010). Communication via responsibility reporting and its effect on firm value in Finland. Corporate Social Responsibility and Environmental Management, 17(2), 96–106.CrossRef

Shane, P. B., & Spicer, B. H. (1983). Market response to environmental information produced outside the firm. Accounting Review, 521–538.

Shen, H., Liang, Y., Li, H., Liu, J., & Lu, G. (2021). Does geopolitical risk promote mergers and acquisitions of listed companies in energy and electric power industries. Energy Economics, 95, 105115.CrossRef

Wang, Z., & Sarkis, J. (2017). Corporate social responsibility governance, outcomes, and financial performance. Journal of Cleaner Production, 162, 1607–1616.CrossRef

Wong, W. C., Batten, J. A., Mohamed-Arshad, S. B., Nordin, S., & Adzis, A. A. (2021). Does ESG certification add firm value? Finance Research Letters, 39, 101593.CrossRef

Xie, J., Nozawa, W., Yagi, M., Fujii, H., & Managi, S. (2019). Do environmental, social, and governance activities improve corporate financial performance? Business Strategy and the Environment, 28(2), 286–300.CrossRef

Yu, E. P. Y., Guo, C. Q., & Luu, B. V. (2018). Environmental, social and governance transparency and firm value. Business Strategy and the Environment, 27(7), 987–1004.CrossRef

Zhou, G., Liu, L., & Luo, S. (2022). Sustainable development, ESG performance and company market value: Mediating effect of financial performance. Business Strategy and the Environment, 31(7), 3371–3387.CrossRef

Titel: Assessing the Impact of Policy Uncertainty, Geopolitical Risk, and Sustainable Disclosure on Corporate Performance
verfasst von: Siddhartha Barman
Jitendra Mahakud
Publikationsdatum: 14.03.2024
Verlag: Springer Japan
Erschienen in: Asia-Pacific Financial Markets
Print ISSN: 1387-2834
Elektronische ISSN: 1573-6946
DOI: https://doi.org/10.1007/s10690-024-09450-1