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Environmental performance and financial constraints in emerging markets

Agyei-Boapeah, Henry; Ciftci, Neytullah; Malagila, John Kalimilo; Brodmann, Jennifer; Fosu, Samuel


Henry Agyei-Boapeah

Neytullah Ciftci

John Kalimilo Malagila

Jennifer Brodmann

Samuel Fosu


We examine how corporate environmental performance relates to financial constraints in an environment likely to face high global pressure to address climate change. Using multivariate regressions and a large dataset of over 8,500 firm-years from 24 emerging market countries during 2003 to 2020, we find superior environmental performance (especially relating to carbon emissions) to be associated with significantly lower levels of financial constraints. This finding is robust to an alternative measure of financial constraint, different sample compositions, and to endogeneity concerns. Further analyses reveal that the reductions in financial constraints are significantly higher for firms: (i) in high carbon-emitting countries; (ii) in countries that adopted the 2015 Paris Climate Agreement early; and (iii) that cross-list onto foreign stock exchanges. Finally, we provide evidence to suggest that the environmental aspects of a firm’s CSR efforts mitigate its financial constraints more than can be attained by the other major CSR dimensions. Overall, the findings imply that stakeholders (capital providers) of emerging market firms prioritise environmental concerns and, therefore, reward environmentally responsible firms with cheaper and easier access to financing, especially when global environmental concerns are high.


Agyei-Boapeah, H., Ciftci, N., Malagila, J. K., Brodmann, J., & Fosu, S. (in press). Environmental performance and financial constraints in emerging markets. Accounting Forum, 1-33.

Journal Article Type Article
Acceptance Date Jan 15, 2023
Online Publication Date Mar 22, 2023
Deposit Date Jan 25, 2023
Publicly Available Date Sep 23, 2024
Journal Accounting Forum
Print ISSN 0155-9982
Electronic ISSN 1467-6303
Peer Reviewed Peer Reviewed
Pages 1-33
Keywords Environmental performance; Financial constraints; Carbon emission; Emerging economies
Public URL
Publisher URL


This file is under embargo until Sep 23, 2024 due to copyright restrictions.

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