Corporate Sustainability and Cost of Equity Capital: Do Managerial Abilities Matter?

Abdelmajid Hmaittane (), Kais Bouslah, Bouchra M’Zali and Imane Ibariouen
Additional contact information
Abdelmajid Hmaittane: National School of Trade & Management (ENCG), Ibn Zohr University, Agadir 80000, Morocco
Kais Bouslah: African Chair of Innovation and Sustainable Management (CAIMD-UM6P), Mohammed VI Polytechnic University, Ben Guerir 43150, Morocco
Bouchra M’Zali: African Chair of Innovation and Sustainable Management (CAIMD-UM6P), Mohammed VI Polytechnic University, Ben Guerir 43150, Morocco
Imane Ibariouen: National School of Trade & Management (ENCG), Ibn Zohr University, Agadir 80000, Morocco

Sustainability, 2022, vol. 14, issue 18, 1-17

Abstract: This paper investigates whether a firm’s managerial ability affects the link between a firm’s cost of equity capital and corporate sustainability. We test our predictions by using a large U.S. sample of 17,389 firm-year observations. Our findings show that only when managerial ability is high, corporate sustainability significantly reduces a firm’s implied cost of equity capital. An important implication of our findings is that firms with high managerial abilities and limited sustainability commitment are encouraged to pursue or initiate more sustainability activities owing to their negative effect on a firm’s cost of equity capital.

Keywords: corporate sustainability; managerial abilities; implied cost of equity capital; CSR strengths; financial crisis (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/2071-1050/14/18/11363/pdf (application/pdf)
https://www.mdpi.com/2071-1050/14/18/11363/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:18:p:11363-:d:911688

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().