Abstract

Purpose- In imperfect capital markets, companies’ ability to access financing depends on various idiosyncratic factors, including corporate sustainability (CS). Despite much work on this relationship, mixed results under differing contexts and empirical techniques have necessitated their synthesis and comparison. Hence, this study undertakes a meta-analysis of the extant empirical findings. Design/methodology/approach- A meta-analysis of 83 effect sizes from 55 global studies representing a total sample of 134,428 firms is performed using the Hedges-Olkin (HOMA) procedure. First, an overall effect size is established, after which a sub-group analysis using categorical moderators is undertaken to investigate causes of heterogeneity based on methodological and contextual study-level moderators. Findings- CS has a significant negative impact on financial constraints, evidencing that CS helps alleviate market frictions and eases corporates’ access to capital. The sub-group moderator analyses revealed that weaker country-level ESG ecosystems and lower degrees of financial market development strengthen the relationship; that the relationship is strengthened over longer time periods; that financial constraint indices remain the most prominent measures of access to finance; and finally, that results vary across different measures of CS. Practical Implications- The study findings indicate that inculcating a culture of sustainability in companies can be financially strengthening for corporate managements. Further, financial market participants should be motivated to consider CS while undertaking investment decisions. Social Implications- The present study strengthens the business case for companies to contribute towards the United Nations Sustainable Development Goals (SDGs), notably SDG goal 12.6. Originality- Adopting a rigorous and transparent methodology, this study is a unique attempt to quantitatively consolidate insights on the CS-financial constraints link and explores numerous moderators that may inform decision-makers and guide future work on the topic.

Keywords: ESG, financial constraints, CSR, meta-analysis, corporate finance, sustainability

How to Cite:

Goel, K. K., Sapra, R., Sehrawat, N., Kumar, A., Paliwal, M. & S K, P., (2025) “Can Corporate Consciousness Attract Capital? Meta-Analysing the Link Between Corporate Sustainability and Access to Finance”, Australasian Accounting, Business and Finance Journal 19(4): 8. doi: https://doi.org/doi.org/10.14453/aabfj.v19i4.08

Rights: In Copyright