Nexus between ESG performance and financial flexibility: evidence from Asia

Abstract

Given the extreme severity of the COVID-19 pandemic, businesses must increase the effectiveness of their production and commercial operations by strengthening their financial flexibility. One tactic businesses may use to improve their financial flexibility in response to an increasingly uncertain climate and challenging sustainability circumstances is environmental, social, and governance (ESG) performance. A myriad of investors and lenders increasingly imply that ESG plays a crucial role in implementing and disclosing information, which can help them make decisions. These can impact the firm's capital inflow and financing capability, which can affect the company's financial flexibility. This study's primary goal is to investigate the impact of ESG performance on financial flexibility.