Publication: Do financial constraints lead to environmental, social and governance controversies? The role of country context
Authors
Vargas-Santander, Karen Gloria ; Álvarez Díez, Susana ; Baixauli Soler, Juan Samuel ; Belda Ruiz, María
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Publisher
WILEY
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DOI
https://doi.org/10.1002/bse.4025
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info:eu-repo/semantics/article
Description
Abstract
The term sustainability and environmental, social and governance (ESG) criteria has gained greater importance globally in recent decades. As social and environmental issues increase, firms are advocating the need to be more sustainable. However, in this scenario, corporate controversies still persist, and an analysis of their causes is required. This study focuses on establishing the relationship between financial constraints (FC) and ESG controversies and on determining whether the country context might modify the controversial behaviours of financially constrained firms. Through a Tobit analysis for panel data—and using a sample of firms with headquarters in 47 countries—our results show a positive and significant influence of FC on ESG controversies. In addition, our evidence confirms that country context impacts relationships within the firm, and that opting for controversial activities is increasingly less viable for firms located in countries where there is institutionalized sustainability.
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Citation
Vargas‐Santander, K. G., Álvarez‐Diez, S., Baixauli‐Soler, S., & Belda‐Ruiz, M. (2025). Do financial constraints lead to environmental, social and governance controversies? The role of country context. Business Strategy and the Environment, 34(1), 965-981.
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