Corporate capital structure in BRICS economies: An integrated analysis of ESG, firm, industry, and macroeconomic determinants

Tanveer Bagh, Ahmed Hunjra (), Yongsheng Guo and Elie Bouri

International Journal of Finance & Economics, 2025, vol. 30, issue 3, 2682-2704

Abstract: In this study, we examine the effect of environmental, social, and governance (ESG) performance, firms, industry, macroeconomics, and financial determinants on corporate capital structure. Using a sample of 3420 listed firms from BRICS (Brazil, Russia, India, China, and South Africa) countries over the period 2013 to 2022, the key findings are summarised as follows: ESG performance negatively impacts market leverage, whereas it positively affects book leverage, implying that firms with a higher ESG score benefit from lower financing costs. Firm characteristics, such as the tangibility of assets and the size of the firm, have a positive impact on leverage, whereas profitability, growth opportunity, and business risk have a negative impact. Industry‐level determinants, such as munificence and industry concentration, negatively affect leverage, whereas dynamism has a positive effect. Additionally, higher GDP growth and lower inflation are negatively associated with leverage. Private credit positively impacts capital structure, while stock market development has a negative impact. A sub‐sample (country‐wise) analysis highlights varying impacts across BRICS countries, showing positive effects on book leverage. ESG scores have varying effects on leverage. The study findings have implications for firm managers and policymakers, stressing the need to align financing strategies with sustainability, firm characteristics, and economic conditions in these influential countries.

Date: 2025
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