Corporate Sustainability Performance and Liquidity: International Evidence
Year: 2025
Type: article
Abstract: ABSTRACT Does corporate sustainability performance (CSP) affect stock liquidity? While prior studies provide some single‐country evidence of this correlation, they fail to establish a causal relationship. In this paper, using data covering 28 countries from 2002 to 2016, we study the impact of CSP on stock liquidity and how this impact is influenced by country‐level institutions and firm‐level ESG disclosure. We provide robust and causal evidence that CSP has a significantly positive impact on stock liquidity. Furthermore, this positive effect is strengthened for firms operating in countries with high religiosity but weakened for those that disclose more of their ESG information. Finally, our channel tests show that information transparency and financial distress risk are the mechanisms through which CSP affects stock liquidity. JEL Classification: G15, G32, G41
DOI: 10.1111/jifm.70003
Institutions: University of Da Nang, RMIT University
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W4414245642