The Sustainability–Liquidity Nexus: Insight of ESG Disclosure and Working Capital from Saudi Listed Firms

This study investigates the influence of working capital determinants on ESG disclosure. Using data on Saudi listed firms for 2018–2022, we find that working capital is generally positively associated with a firm’s ESG disclosure. Furthermore, we observe that the positive association between working capital and ESG disclosure exists predominantly in larger firms and during the COVID-19 pandemic. Additionally, we find that during the COVID-19 pandemic, firms exhibited superior equity, debt, and cash holdings, which enhanced sustainability reporting practices. Our research provides imperative evidence about the effect of working capital on ESG disclosure from a risk management and financial flexibility perspective in emerging markets.