University Of Tasmania

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Does external uncertainty matter in corporate sustainability performance?

journal contribution
posted on 2023-05-20, 18:44 authored by Jing JiaJing Jia, Li, Z
Motivated by the prevalence of corporate sustainability and the rise of uncertainty at the national level, we investigate the impact of three sources of uncertainty; namely, economic policy, climate change, and political instability, on firms' sustainability performance. Using a sample of 6804 firms from 72 countries spanning 15 years, our study revealed that uncertainty due to climate change, economic policy, and political instability negatively affects firms' sustainability performance. This finding is in line with the real options theory that uncertainty in an external environment discourages firms' long-term investment (e.g. investment in corporate sustainability). In addition, the results show that the option for delay in sustainability investment moderated the relation between uncertainty at the national level and firms' sustainability performance. Firms with better sustainability performance had higher firm value when facing uncertainty. Interestingly, firms with higher profitability performed better in sustainability when facing uncertainty at the national level.


Publication title

Journal of Corporate Finance










Elsevier Science Bv

Place of publication

Po Box 211, Amsterdam, Netherlands, 1000 Ae

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© 2020 Elsevier B.V. All rights reserved.

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Socio-economic Objectives

Environmentally sustainable information and communication services not elsewhere classified