ESG activities and firm cash flow

Richard Paul Gregory

Global Finance Journal, 2022, vol. 52, issue C

Abstract: I measure the influence of ESG activities on Free Cash flow to the Firm and Free Cash Flow to Equity. I find that ESG activities primarily benefit the cash flows to creditors of firms in developed markets. The ESG effect predominantly comes from the excess spending of the firm on communicating how it integrates the economic (financial), social and environmental dimensions into its day-to-day decision-making processes. For developed market firms, the additional factor of excess spending on conditions for the workforce plays a role in boosting Free Cash Flow to the Firm.

Keywords: Free cash flow; Sustainability; Corporate financial performance; Corporate social responsibility (search for similar items in EconPapers)
JEL-codes: G30 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:52:y:2022:i:c:s104402832100096x

DOI: 10.1016/j.gfj.2021.100698

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