Environmental, social, and governance aspects are becoming increasingly crucial factors for investors decisions. This paper examines the effect of sovereign environmental, social, and governance (SESG) practices on the cash-holding decisions of firms in the Gulf Cooperation Council (GCC) region. Utilizing firm-level data from 2010 to 2022, we find that improved SESG standards lead firms to reduce their cash holdings. The results are robust to sample selection, additional control variables, different estimation methods, and endogeneity concerns. Furthermore, we show a negative relationship between each SESG pillar (environmental, social, and governance) and corporate cash holdings. These findings offer valuable empirical implications for various stakeholders. Regulators can consider the potential impact of SESG standards on corporate financial health, potentially informing future regulations. Shareholders can leverage these findings to assess the potential financial benefits of strong SESG adherence by the companies in which they invest.

中文翻译：

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主权 ESG 是否会影响新兴市场的企业现金管理？


环境、社会和治理方面正成为投资者决策中越来越重要的因素。本文探讨了主权环境、社会和治理 (SESG) 实践对海湾合作委员会 (GCC) 地区企业现金持有决策的影响。利用 2010 年至 2022 年的公司层面数据，我们发现 SESG 标准的提高导致公司减少现金持有量。结果对于样本选择、附加控制变量、不同的估计方法和内生性问题是稳健的。此外，我们还发现 SESG 的各个支柱（环境、​​社会和治理）与企业现金持有量之间存在负相关关系。这些发现为各个利益相关者提供了宝贵的经验意义。监管机构可以考虑 SESG 标准对企业财务健康的潜在影响，从而为未来的监管提供信息。股东可以利用这些发现来评估其投资的公司严格遵守 SESG 所带来的潜在财务收益。