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Corporate Finance and ESG: Shaping the Future of Sustainable Business
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Corporate Finance and ESG: Shaping the Future of Sustainable Business

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Sustainability and Finance".

Deadline for manuscript submissions: 31 May 2026 | Viewed by 5054

Special Issue Editor

Dr. Yuanyuan Hu

E-Mail Website
Guest Editor
School of Accountancy, Massey Business School, Massey University, Private Bag 11222, Palmerston North, New Zealand
Interests: corporate social responsibility; firm ethical behaviour; executive behaviour; management accounting; corporate governance; accounting education

Special Issue Information

Dear Colleagues,

In recent years, corporate finance decisions have increasingly factored in environmental, social, and governance (ESG) criteria, driven by pressure from investors, regulators, and consumers. The World Bank reports that sustainable bond issuance hit USD 1.1 trillion in 2024, up 5% from 2023. This reflects a growing recognition that ESG directly influences corporate finance, shaping how companies allocate resources, manage risks, and engage with stakeholders.

It appears that most of the literature focuses on how ESG firms invest, borrow, or manage risks. However, gaps remain in understanding the role of multiple large shareholders, institutional investors, corporate leaders’ psychological traits, supply chains, government regulations, culture, and other factors in ESG-related financial decisions. Additionally, future research should examine the choice between public and private debt in socially responsible firms and the transmission mechanisms between finance and sustainability.

This Special Issue explores the link between corporate finance decisions and ESG performance, aiming to deepen our understanding of their interplay. It seeks to advance theory and provide insights for policymakers, academics, practitioners, and corporate leaders. We invite submissions that bring novel perspectives and robust analyses on the relationship between corporate finance decisions and ESG and welcome diverse methodologies, including empirical studies, theoretical frameworks, case analyses, and experimental research.

Dr. Yuanyuan Hu
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 250 words) can be sent to the Editorial Office for assessment.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1600 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • corporate finance decisions
  • ESG
  • CSR
  • sustainable finance
  • green finance
  • corporate bonds
  • sustainability
  • investment
  • risk management

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Published Papers (5 papers)

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Research

23 pages, 312 KB  
Article
Managerial Overconfidence and ESG Performance: Financial Policy Channels in an Emerging Market
by Melvien Deisie Christin Welang, Juli Hendri and Sung Suk Kim
J. Risk Financial Manag. 2026, 19(5), 374; https://doi.org/10.3390/jrfm19050374 (registering DOI) - 21 May 2026
Abstract
This study examines the relationship between managerial overconfidence and environmental, social, and governance (ESG) performance through firm-level financial policy channels in an emerging-market context. Using panel data from non-financial firms listed on the Indonesia Stock Exchange during 2015–2024, this study adopts a multidimensional [...] Read more.
This study examines the relationship between managerial overconfidence and environmental, social, and governance (ESG) performance through firm-level financial policy channels in an emerging-market context. Using panel data from non-financial firms listed on the Indonesia Stock Exchange during 2015–2024, this study adopts a multidimensional channel-based perspective in which managerial overconfidence is indirectly reflected through financing, liquidity, and investment decisions. Fixed-effects estimation with Driscoll–Kraay standard errors is employed as the baseline approach and complemented by lagged specifications, system GMM estimation, alternative measurements, and quantile regressions to assess robustness. The findings suggest that managerial overconfidence does not exert a direct and uniform influence on ESG performance but operates indirectly through heterogeneous financial policy behavior. The financing channel provides weak and unstable evidence, whereas the liquidity channel shows a relatively stronger positive association with ESG performance. The investment channel appears most sensitive to measurement and model specification, indicating that different operationalizations may capture distinct dimensions of managerial overconfidence. This study contributes to the behavioral corporate finance and ESG literature by showing that managerial overconfidence influences sustainability outcomes indirectly through heterogeneous financial policy mechanisms in an emerging market setting while highlighting the importance of temporal dynamics, endogeneity, and measurement sensitivity. Full article
(This article belongs to the Special Issue Corporate Finance and ESG: Shaping the Future of Sustainable Business)
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28 pages, 1349 KB  
Article
Family Ownership, ESG Strategies, and Corporate Risk: Evidence from Earning Volatility
by Angelo Leogrande, Marco Savorgnan, Alberto Costantiello, Carlo Drago and Massimo Arnone
J. Risk Financial Manag. 2026, 19(5), 305; https://doi.org/10.3390/jrfm19050305 - 23 Apr 2026
Viewed by 659
Abstract
In this article, we analyze the combined impact of sustainability activities and family governance on firm-level risk, measured by earning volatility, with particular attention to the timing of ESG involvement. Using panel regression models, we distinguish between short- and long-term ESG performance and [...] Read more.
In this article, we analyze the combined impact of sustainability activities and family governance on firm-level risk, measured by earning volatility, with particular attention to the timing of ESG involvement. Using panel regression models, we distinguish between short- and long-term ESG performance and between family ownership and family management. The empirical analysis reveals a negative correlation between long-term ESG performance and corporate risk, but short-term ESG impact is insignificant. Family ownership and having a family CEO both decrease firm risk; however, family ownership moderates the link between ESG risks and firm risk. Full article
(This article belongs to the Special Issue Corporate Finance and ESG: Shaping the Future of Sustainable Business)
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27 pages, 701 KB  
Article
The Role of Corporate Green Accounting in Carbon Emission Disclosure: Evidence from an Emerging Economy
by Nurhastuty Kesumo Wardhani, Erly Supriyanti and Lewis Liu
J. Risk Financial Manag. 2026, 19(3), 176; https://doi.org/10.3390/jrfm19030176 - 2 Mar 2026
Viewed by 1148
Abstract
This study examines how green accounting, financial performance, market value, and board characteristics affect carbon emission disclosure, with a focus on the moderating role of foreign ownership. Using panel data from energy and basic materials firms listed aon the Indonesia Stock Exchange between [...] Read more.
This study examines how green accounting, financial performance, market value, and board characteristics affect carbon emission disclosure, with a focus on the moderating role of foreign ownership. Using panel data from energy and basic materials firms listed aon the Indonesia Stock Exchange between 2020 and 2023, the study draws on information from annual, financial, and sustainability reports. Multiple linear regression and moderated regression analysis are applied. The findings show that firms adopting green accounting practices and those with higher female board representation tend to disclose more carbon emission information. Financial performance and market value do not have a direct impact on disclosure. Foreign ownership strengthens the link between market value and carbon disclosure but weakens the effect of female board representation. Overall, the results highlight how foreign ownership shapes carbon disclosure practices in an emerging market context. Full article
(This article belongs to the Special Issue Corporate Finance and ESG: Shaping the Future of Sustainable Business)
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Figure 1

27 pages, 630 KB  
Article
Enforcing Good Deeds: Investment Efficiency of Indian Firms Going Through CSR Law
by Swati Kumaria Puri, Jiali Fang, Udomsak Wongchoti and Wei Hao
J. Risk Financial Manag. 2026, 19(1), 61; https://doi.org/10.3390/jrfm19010061 - 13 Jan 2026
Viewed by 937
Abstract
With the enactment of the 2013 government mandate, Indian corporations meeting specific criteria no longer have the discretion to forgo CSR expenditures. Previous studies have reported negative capital market reactions to this regulatory intervention. In contrast, our study offers a long-term perspective on [...] Read more.
With the enactment of the 2013 government mandate, Indian corporations meeting specific criteria no longer have the discretion to forgo CSR expenditures. Previous studies have reported negative capital market reactions to this regulatory intervention. In contrast, our study offers a long-term perspective on the impact of the CSR law on firms’ investment efficiency. Using a difference-in-differences framework, this study examines publicly listed Indian firms from 2011 to 2018, capturing a clean pre- and post-mandate window that isolates the structural impact of the CSR law while excluding confounding and shocks such as the COVID-19 crisis. Thus, the paper focuses on identifying the long-term institutional and structural effects of CSR rather than short-term cyclical fluctuations. We find that the CSR law leads to an increase in the investment efficiency of affected firms, driven primarily by reductions in agency conflicts and information asymmetry. This effect is more pronounced among firms with a strong presence of active monitoring groups, such as Hindu-owned promoters and institutional investors. Improved efficiency is also profound among firms located in areas with a lower Human Development Index (HDI) and Gender Diversity Index (GDI). Our findings demonstrate the positive impact of mandatory CSR law on capitalism and present insights for policymakers for regulators as ESG and CSR mandates are increasingly debated and adopted. Full article
(This article belongs to the Special Issue Corporate Finance and ESG: Shaping the Future of Sustainable Business)
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21 pages, 337 KB  
Article
Sustainable Environmental Governance and Corporate Environmental Performance: Empirical Evidence from Saudi Companies
by Jihene C. Soussi, Khaled S. Aljaaidi and Neef F. Alwadani
J. Risk Financial Manag. 2025, 18(11), 616; https://doi.org/10.3390/jrfm18110616 - 4 Nov 2025
Cited by 3 | Viewed by 1593
Abstract
This study investigates the internal governance mechanisms of sustainability and their influence on corporate environmental performance (CEP) from 2014 to 2021 in Saudi Arabia. The analysis centers on three primary mechanisms: the presence of a sustainability committee, issuance of sustainability reports, and external [...] Read more.
This study investigates the internal governance mechanisms of sustainability and their influence on corporate environmental performance (CEP) from 2014 to 2021 in Saudi Arabia. The analysis centers on three primary mechanisms: the presence of a sustainability committee, issuance of sustainability reports, and external assurance of these reports. Utilizing a sample of 188 firm-year observations from publicly listed companies, we evaluate each mechanism and their combined effect as predictors of CEP through ordinary least squares (OLS) regression analysis. We constructed a composite index of sustainability governance practices to assess the overall governance strength of the firm, referred to as the sustainability index. Our findings indicate that, while sustainability external assurance is positively associated with CEP, it is statistically insignificant. By contrast, the positive correlations of sustainability committees and sustainability reports with CEP were significant. The overall sustainable mechanisms’ composite index in the regression positively influences corporate environmental performance. This suggests that the composite sustainability index is more effective than individual sustainability mechanisms because of its complementary functions. This study aims to advance theories related to emerging markets in which institutional arrangements and stakeholder demands differ from those in developed countries. These results emphasize on the importance of corporate boards and policymakers in establishing dedicated sustainability committees, enhancing reporting quality, and integrating various governance systems to improve environmental performance which, in turn, promote responsible corporate behavior and ensure accountability towards environmental protection and sustainable development. This aligns with Saudi Arabia’s Vision 2030 and the Sustainable Development Goals, specifically Goals 12 and 13. Full article
(This article belongs to the Special Issue Corporate Finance and ESG: Shaping the Future of Sustainable Business)
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