Purpose: Employing a large sample consisting of 3,701 corporations domiciled in developed and emerging countries, this paper aims to analyze the mediating role of investment efficiency in the association between business sustainability performance and corporate financial performance.Design/methodology/approach: Four different aspects of corporate sustainability offered by the ASSET4 database are used as proxies for business sustainability performance, including economic, corporate governance, social and environmental dimensions. In addition to these aspects, the aggregate measure of business sustainability performance is also employed. In order to test the association between business sustainability and corporate performance via investment efficiency, ordinary least squares, fixed-effect, random-effect and generalized method of moments statistical models were employed.Findings: The results suggest that business sustainability performance is positively associated with corporate financial performance, indicating that sustainable corporations enjoy higher financial performance. Moreover, Sobel, Aroian and Goodman tests confirm that investment efficiency mediates the positive relationship between business sustainability performance and financial performance. Finally, further analyses show that the positive association between sustainability performance and investment efficiency is stronger for those firms headquartered in developed countries than in those located in emerging nations.Originality/value: This paper contributes to the literature by investigating how growth opportunities advance the influence of business sustainability to corporate financial performance using a large sample from 43 countries.

Purpose: The purpose of this paper is to investigate the relation between debt structure and future external financing and investment. Furthermore, it aims to analyze the association between debt structure and future financial performance.Design/methodology/approach: Volume, maturity, possessing collateral and having priority at the settlement date are the dimensions of debt structure that have been employed in this paper. The sample consists of 1,060 firm-year observations from Tehran Stock Exchange corporations during the period 2009–2018.Findings: The findings reveal that greater reliance on financial leverage (debt volume) and short-term debt are associated with increases in future debt financing as well as future equity financing. Moreover, these two dimensions of debt structure are positively related to future investment. This paper also shows that the positive impact of financial leverage and short-term debt on future financing and investment can finally lead to a favorable financial performance. Regarding other dimensions of debt structure, the results suggest that although collateralized debt with the priority option at the settlement date enhances future external financing, this type of debt can ultimately lead to a reduction in future investment and financial performance. Finally, the findings indicate that uncollateralized debt exacerbates future financial performance.Research limitations/implications: Financial performance can be affected by several factors, including available funds, investment amount, investment efficiency and managerial capability. However, this paper only considers the investment amount and external financing as the channels through which debt structure improves future financial performance. This study has the potential to contribute to one of the most important issues in finance and business fields, despite its probable trivial drawbacks.Practical implications: Financing strategies as one of the most controversial topics have been meticulously scrutinized in this paper and practical implications are made to facilitate the process of decision-making regarding the optimal type of debt financing.Originality/value: This study extends the literature by analyzing the direct link between debt structure and firm performance in firms domiciled in developing markets.

Purpose: Previous literature posits that corporate governance and information asymmetry are the main factors in making efficient investments. Meanwhile, a growing body of studies is of the opinion that corporate governance can also mitigate the problem of information asymmetry and consequently exerts significant impacts on the association between information asymmetry and investment efficiency. This study aims to analyze the impact of corporate governance and information asymmetry on investment efficiency. It also tests the moderating role of corporate governance in the relationship between information asymmetry and investment efficiency.Design/methodology/approach: The sample consists of 4,082 firms domiciled in 20 developed countries over the years from 2003 to 2019, including 33,812 firm-year observations. The bid–ask spread is used as a proxy for information asymmetry. To measure corporate governance performance, a proxy provided by ASSET4 is employed, and to determine the optimal levels of investments, we relied on the growth opportunity. To estimate the models, ordinary least squares and generalized method of moment are used.Findings: The results reveal that information asymmetry is inversely related to investment efficiency, and, corporate governance mitigates this negative association.Originality/value: This paper sheds light on the role of corporate governance in firms as a lever for mitigating information asymmetry and tries out information asymmetry and agency theories in relation to the impact of information asymmetry on investment efficiency. It also confirms the theory stating that corporate governance can be considered as a determinant of investment efficiency.

This study investigates the impact of outsiders’ demand for more information (or transparency) on corporate social responsibility (CSR) initiatives. Drawing on a dataset of U.S. companies from 2010 to 2023, CSR performance is measured using ASSET4 ratings, while CSR disclosure levels are captured through the number of words and sentences in reports. Utilizing within-industry and -firm OLS regressions, our analyses reveal a positive relationship between the demand for more information and future CSR investments, showing that firms with higher demand for information not only enhance their CSR performance but also expand the length of their CSR reports. These results suggest that increased pressures for information encourage organizations to engage more deeply with social responsibility, resulting in more robust CSR activities and more comprehensive reporting practices. This study contributes to the existing literature by highlighting the strong predictive role of outsiders’ demand for more information in promoting CSR investment and disclosure, and by offering important insights for policymakers and practitioners on fostering corporate responsibility through enhanced transparency.

We examine whether higher levels of environmental, social, and governance (ESG) sustainability disclosures are attained under voluntary or mandatory disclosure regimes. We use the regulatory differences between the United States (US) and European Union (EU) settings, as firms in the US are currently disclosing ESG information voluntarily whereas their counterparts in the EU are required to disclose such information starting the fiscal year 2017. Our three main findings are (1) for the full sample period, EU firms have an overall higher ESG disclosure relative to US firms; (2) EU firms outperform US firms under voluntary disclosure requirements (2007-2016); (3) after 2017, the ESG disclosure of EU firms further improves relative to US firms. Taken together, our results suggest that the 2017 adoption of disclosure guidelines in the EU is associated with improvements in EU firms’ ESG disclosure. Our results regarding the value-relevance of ESG sustainability disclosure support a move toward mandatory ESG disclosure in the context of integrated sustainability reporting promoted by international organizations. Results support current initiatives that have been taken by global regulators and stock exchanges in recommending and/or requiring global listed companies to disclose their ESG sustainability information to portray an accurate and comprehensive corporate reporting. Results also further our understanding of how firms from the different institutional environments may have disclosed their ESG practices and thus provide opportunities and suggestions for future research.