Assessing the Impact of Policy Uncertainty, Geopolitical Risk, and Sustainable Disclosure on Corporate Performance

Abstract

This study explores the impact of policy uncertainty, geopolitical risk, and sustainable disclosure (ESG) on corporate performance for the period 2014–21 across 23 countries. Using the System GMM technique, it uncovers a negative link between policy uncertainty, geopolitical risk, and corporate performance. Sustainable disclosure mitigates the influence of economic uncertainty and geopolitical risk on firm performance. The results are robust across the various other econometric methods (i.e. fixed effect, random effect and feasible generalized least squares) and alternative proxy used for sustainability disclosure. These findings have implications for policymakers and managers, highlighting the importance of aligning policies with sustainable disclosure practices. This study contributes to the literature by examining these factors on a cross-country scale, potentially among the first of its kind.