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The nexus between policy uncertainty, sustainability disclosure and firm performance

Author

Listed:
  • Tanveer Ahsan

    (ESC [Rennes] - ESC Rennes School of Business)

  • Muhammad Azeem Qureshi

    (OsloMet - Oslo Metropolitan University)

Abstract
Policy uncertainty (PU), and sustainability disclosure, influence the performance of the firms. We use European data to extend the nascent literature on sustainability disclosure, and economic policy uncertainty by investigating the moderating impact of sustainability disclosure on the relationship between economic policy uncertainty and firm performance. We find overwhelming evidence that policy uncertainty reduces firm performance; however, sustainability disclosure moderates this destructing impact of policy uncertainty on firm performance. Our results show that environmental and social disclosure by the European firms enhances their reputation and help these firms in reducing the policy-induced uncertainty. A higher governance disclosure representing efficient corporate governance also help European firms to moderate the negative effect of policy uncertainty on their performance. Our results are robust to alternate proxies of firm performance as well as endogeneity issues.

Suggested Citation

  • Tanveer Ahsan & Muhammad Azeem Qureshi, 2021. "The nexus between policy uncertainty, sustainability disclosure and firm performance," Post-Print hal-03163927, HAL.
    • Handle: RePEc:hal:journl:hal-03163927
    DOI: 10.1080/00036846.2020.1808178
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    Citations

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    Cited by:

    1. Weihua Yu & Xin Jin, 2024. "Economic policy uncertainty and firm performance: Evidence from the energy-intensive industry in China," Energy & Environment, , vol. 35(2), pages 815-832, March.
    2. Lu, Chao & Yang, Meng & Xia, Xiaoxue, 2023. "Economic policy uncertainty and default risk: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 821-836.
    3. Chai Bin‐Feng & Sultan Sikandar Mirza & Tanveer Ahsan & Muhammad Azeem Qureshi, 2024. "How uncertainty can determine corporate ESG performance?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 2290-2310, May.
    4. Saurabh Mishra & Sachin B. Modi & Michael A. Wiles, 2022. "Economic policy uncertainty and shareholder wealth: the role of marketing, operations, and R&D capabilities," Journal of the Academy of Marketing Science, Springer, vol. 50(5), pages 1011-1031, September.
    5. Gull, Ammar Ali & Ahsan, Tanveer & Qureshi, Muhammad Azeem & Mushtaq, Rizwan, 2023. "Striving to safeguard shareholders or maintain sustainability in periods of high uncertainty: A multi-country evidence," Technological Forecasting and Social Change, Elsevier, vol. 188(C).
    6. Alberto Barroso del Toro & Laura Vivas Crisol & Xavier Tort-Martorell, 2022. "Comparing the Impacts of Sustainability Narratives on American and European Energy Shareholders: A Multi-Event Study Analysing Reactions to News before and during COVID-19," Sustainability, MDPI, vol. 14(23), pages 1-18, November.
    7. Shabir, Mohsin & Jiang, Ping & Shahab, Yasir & Wang, Peng, 2023. "Geopolitical, economic uncertainty and bank risk: Do CEO power and board strength matter?," International Review of Financial Analysis, Elsevier, vol. 87(C).
    8. Nguyen, Duc Nguyen & Nguyen, Canh Phuc & Dang, Le Phuong Xuan, 2022. "Uncertainty and corporate default risk: Novel evidence from emerging markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 78(C).
    9. Cristiane Gea & Marcelo Cabus Klotzle & Luciano Vereda & Antonio Carlos Figueiredo Pinto, 2023. "Pricing uncertainty in the Brazilian stock market: do size and sustainability matter?," SN Business & Economics, Springer, vol. 3(1), pages 1-37, January.
    10. Yahya, Habeeb, 2023. "The role of ESG performance in firms' resilience during the COVID-19 pandemic: Evidence from Nordic firms," Global Finance Journal, Elsevier, vol. 58(C).
    11. Quader, Syed Manzur, 2023. "The interplay between uncertainty, managerial decision making, and firm value: Evidence from Bangladesh," Journal of Economics and Business, Elsevier, vol. 123(C).
    12. Alberto Barroso Del Toro & Laura Vivas Crisol & Xavier Tort-Martorell, 2022. "The Sustainability Narrative: A Multi Study Using Event Studies to Analyse the American Energy Companies Shareholder’s Reaction to Sustainability News," IJERPH, MDPI, vol. 19(23), pages 1-17, November.
    13. Liang, Yuchao & Tan, Qi & Pang, Jun, 2024. "Bless or curse, how does extreme temperature shape heavy pollution companies' ESG performance?-Evidence from China," Energy Economics, Elsevier, vol. 131(C).

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