Sustainability Initiatives and Failure Risk of a Firm: How Are They Linked?

Kertu Lääts and Oliver Lukason ()
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Kertu Lääts: School of Economics and Business Administration, University of Tartu, 51009 Tartu, Estonia
Oliver Lukason: School of Economics and Business Administration, University of Tartu, 51009 Tartu, Estonia

JRFM, 2022, vol. 15, issue 11, 1-14

Abstract: This paper studies the link between corporate sustainability and failure risk. The two competing hypotheses rely on the controversies in the theoretical and empirical literature linking sustainability and financial performance. Analysis of a sample of Estonian non-listed companies of all sizes indicates that firms engaged in more sustainability initiatives exhibit a higher risk of failure in the short run. The results remain robust for different sustainability initiatives and periods, while being exclusively determined by firms active locally, not on foreign markets.

Keywords: corporate sustainability; environmental; social; failure risk; financial performance (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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