Corporate Sustainability Performance and Firm Value through Investment Efficiency

Maha Faisal Alsayegh, Rashidah Abdul Rahman () and Saeid Homayoun
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Maha Faisal Alsayegh: Accounting Department, Faculty of Economics and Administration, King Abdulaziz University, Jeddah 21589, Saudi Arabia
Rashidah Abdul Rahman: Accounting Department, Faculty of Economics and Administration, King Abdulaziz University, Jeddah 21589, Saudi Arabia
Saeid Homayoun: Department of Accounting, University of Gavle, SE-801 76 Gavle, Sweden

Sustainability, 2022, vol. 15, issue 1, 1-13

Abstract: This study investigates the influence of corporate sustainability performance ( CSP ) on firm value through investment efficiency. By applying a panel regression analysis using a large sample of 26,838 firm-year observations that represent 9218 Asian listed companies over the period of 2012–2019, we illustrate that high corporate sustainability performance ( CSP ) increases investment efficiency. This result coincides with both stakeholder theory and information asymmetry theory where economic, environmental, social, and governance involvements play a fundamental role in improving firm value. Our results further show that the social dimension significantly improves investment decisions, unlike dimensions associated with environment and governance, which show no significant effect on investment efficiency. These insights about the impact of CSP on investment decisions will be useful to stakeholders, decision-makers, policymakers, as well as academics to improve their awareness of the importance of corporate sustainability practices. Particularly, the positive relationship between the social dimension of CSP and investment efficiency should motivate managers to improve their corporate social responsibility policy formation and implementation, and the management of investment portfolios in enhancing firm value.

Keywords: corporate social sustainability performance; investment efficiency; firm value; Asian firms (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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