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Growing Science » Accounting » Agency cost effects of ESG risk on working capital and cash conversion cycle: Evidence from Japan, France and United Kingdom

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Accounting

ISSN 2369-7407 (Online) - ISSN 2369-7393 (Print)
Quarterly Publication
Volume 12 Issue 2 pp. 103-114 , 2026

Agency cost effects of ESG risk on working capital and cash conversion cycle: Evidence from Japan, France and United Kingdom Pages 103-114 Right click to download the paper Download PDF

Authors: Subrata Roy, Shubham Kumar

DOI: 10.5267/j.ac.2025.9.005

Keywords: Corporate governance, ESG risk, Working capital, Agency costs, Cash conversion cycle

Abstract: The present study has considered securities data and Environmental, Social and Governance (ESG) measures of firms from France, Japan and the United Kingdom. Securities data and ESG measures are subjected to cross-sectional OLS regressions of working capital and cash conversion cycle on ESG risk ratings. Agency cost effects have been found, as ESG risk increased working capital, while reducing the cash conversion cycle. Results are consistent across all three countries. It has been concluded that failure to meet ESG goals increases firm risk. The increase in risk may be met by increasing short-term liquidity. The unnecessary increase in short-term liquidity limits the firm’s ability to employ funds to exploit growth opportunities and maximize shareholder wealth.

How to cite this paper
Roy, S & Kumar, S. (2026). Agency cost effects of ESG risk on working capital and cash conversion cycle: Evidence from Japan, France and United Kingdom.Accounting, 12(2), 103-114.

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Journal: Accounting | Year: 2026 | Volume: 12 | Issue: 2 | Views: 78 | Reviews: 0

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