Cash is sovereign: ESG performance, cash holdings and the strategic influence of gender-diverse boards in Europe
Husni Samara et al.
Abstract
Purpose This study examines the relationship between environmental, social and governance (ESG) performance and corporate cash holdings in EU-listed firms, along with the moderating role of board gender diversity. It goes beyond prior studies by jointly modeling ESG–liquidity dynamics and board diversity within a unified theoretical framework, using one of the largest multi-country EU datasets post-CSRD implementation. Design/methodology/approach Using regression analysis and mixed-effects (REML) regression models, the study analyzes 4,365 firm-year observations from 14 EU countries. Findings Firms with higher ESG scores hold larger cash reserves, and gender-diverse boards amplify this relationship, supporting agency and stakeholder theories. The resource-based view is extended, showing gender diversity enhances board capabilities for liquidity strategies. Contrary to some literature, ESG does not deplete liquidity in the EU's regulatory context. Research limitations/implications Reliance on self-reported ESG scores may introduce subjectivity, and the EU focus limits generalizability. Future research could explore non-European markets or alternative governance and liquidity proxies. Practical implications Firms need to integrate ESG and gender equality into their governance in order to support financial resilience. Policymakers need to support ESG disclosure and diversity policies, and investment managers need to use factors to evaluate prudence in finance, while corporate leaders can use board diversity as a governance lever to strengthen liquidity buffers without compromising sustainability commitments. Originality/value The originality of this study lies in its integrated analysis of ESG performance and corporate cash-holding behavior under the moderating influence of board gender diversity, a perspective rarely examined in EU settings after CSRD enforcement. It advances agency, stakeholder and resource-based theories by showing how inclusive governance transforms ESG practices into financial resilience.
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.50 × 0.4 = 0.20 |
| M · momentum | 0.50 × 0.15 = 0.07 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.