Sustainable performance and cost of capital: the mediating role of corporate risk

Salimi, Mehdi

doi:10.22034/necsbm.2024.457581.1055

Sustainable performance and cost of capital: the mediating role of corporate risk

Document Type : Original Article

Author

Mehdi Salimi

Ph.D candidate, Financial Management Department, Central Tehran Branch, Islamic Azad University, Tehran, Iran.

10.22034/necsbm.2024.457581.1055

Abstract

In the current business environment, given the increasing number of professional investors, the non-financial performance of companies has garnered growing attention. Professional investors believe that a company's profitability alone is insufficient for its long-term growth. Sustainability reporting, which incorporates environmental and social considerations, enhances corporate transparency, risk management, and improves relationships with shareholders and stakeholders. Therefore, this study examines the relationship between corporate sustainability performance and the cost of capital, considering the mediating role of risk. This research is applied in nature and employs regression models to analyze the relationships between the components of the model. To this end, 89 companies listed on the Tehran Stock Exchange were selected and analyzed over an 8-year period from 2013 to 2020. The results of the study indicate a significant inverse relationship between corporate sustainability performance and the cost of capital. Additionally, the mediating role of risk in the relationship between corporate sustainability performance and the cost of capital was confirmed.

Keywords

Corporate sustainability performance

Corporate risk

cost of capital

Corporate Social Responsibility

Subjects

Accounting

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