Do sustainability ethics explain the impact of country-level corporate governance on financial stability in developing economies?

Daniel Ofori-Sasu, George Nana Agyekum Donkor and Joshua Yindenaba Abor

Journal of Sustainable Finance & Investment, 2023, vol. 13, issue 4, 1415-1450

Abstract: The study presents an empirical evidence on how sustainability ethics affect the relationship between country-level corporate governance and financial stability in developing countries. Employing the dynamic system Generalized Method of Moments on a panel dataset of 137 developing countries over the period, 2006–2019, the study found that the positive effect of country-level corporate governance framework on financial stability is not instantaneous. We find that internal and external corporate governance frameworks have a strong positive synergistic effect on financial stability. We confirm that corporate governance measures substitute sustainability ethics to yield a desirable outcome of financial stability. Finally, the study finds evidence to support that sustainability ethics reduce the negative impact of country-level corporate governance on financial stability. The study recommends that the build-up of quality sustainability ethics can help tame the reductive effect of the country-level corporate governance framework on financial stability in developing countries.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jsustf:v:13:y:2023:i:4:p:1415-1450

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DOI: 10.1080/20430795.2023.2226791

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