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Corporate ESG performance, Shariah-compliant status and cash holdings.
- Source :
- Journal of Islamic Accounting & Business Research; 2024, Vol. 15 Issue 3, p534-552, 19p
- Publication Year :
- 2024
-
Abstract
- Purpose: This study aims to examine the association between environmental, social and governance (ESG) performance and cash holdings, as well as whether this association is moderated by Shariah-compliant status. The aim was to test the joint effect of two ethical precepts, namely, the ESG and Shariah-compliant status, in explaining variations in cash holdings. Design/methodology/approach: A sample set that consisted of 9,244 firm-year observations from 25 countries from 2016 to 2020 was analysed using regression analysis. Firm-level data were sourced from Thomson Reuters and Refinitiv databases, while country-level data were derived from the World Bank and Hofstede Insights websites. Findings: Firms with greater ESG performances were found to have higher cash holdings. The positive association between ESG performance and cash holdings was greater for Shariah-compliant firms compared to non-Shariah-compliant firms. In support of the stakeholder theory, the evidence indicated that Shariah-compliant firms with higher ESG commitments also have higher cash holdings as part of their corporate strategy. Practical implications: These findings provided further comprehension to investors that ESG practices among Shariah-compliant firms are essential information during investment decision-making processes. Social implications: These findings highlighted ethical corporate practices through two frameworks, namely, ESG commitment and Shariah compliance; hence, contributing towards strategies to reach the Sustainable Development Goal 16 of promoting just, peaceful and inclusive societies. Originality/value: This study has focused on the motives for cash holdings by considering the ethical precepts embodying ESG and Shariah compliance to uphold the positive impact of high cash reserves. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 17590817
- Volume :
- 15
- Issue :
- 3
- Database :
- Complementary Index
- Journal :
- Journal of Islamic Accounting & Business Research
- Publication Type :
- Academic Journal
- Accession number :
- 175820995
- Full Text :
- https://doi.org/10.1108/JIABR-08-2022-0217