Differential effects of ESG dimensions on firm leverage and capital structure amid COVID-19: moderating role of firm size

Purpose This study aims to examine whether environmental (E), social (S), and governance (G) scores differentially shape capital structure and leverage for Thai listed firms during 2020–2022, and whether firm size moderates these effects in a crisis context. Design/methodology/approach Using 288 firm-year observations, this study estimates fixed-effects regressions with comprehensive controls and interaction terms with size. This study additionally outlines and implements robustness checks. Findings Governance scores positively and significantly influence both capital structure and leverage, with a more pronounced effect in smaller firms. Larger firms can better leverage social initiatives to improve capital structure. In contrast, environmental performance shows no significant direct effect on capital structure and leverage. Practical implications The findings offer valuable insights for corporate managers, investors, and policymakers aiming to promote sustainable and resilient business practices, especially during periods of economic distress. Social implications This study highlights the importance of robust governance and social performance in enhancing financial stability, contributing to broader social and economic resilience during crises. Originality/value This study provides nuanced insights into the differential impacts of ESG components on corporate finance and highlighting the critical role of firm size in moderating these effects, particularly in times of crisis.