PURPOSE: This study examines whether corporate sustainability performance moderates the relationship between economic policy uncertainty and the investment of firms listed on the Tehran Stock Exchange.
DESIGN/METHODOLOGY/APPROACH: The study is applied in purpose and correlational, ex post facto in design. After applying the sample-selection criteria, 156 firms were analyzed over 2015–2024, yielding a balanced panel of 1,560 firm-year observations. Data were collected from financial statements, board of directors’ reports, and other public disclosures. Economic policy uncertainty is constructed from four macroeconomic indicators using principal component analysis, sustainability performance is measured by content analysis of a 56-item environmental, social, and governance disclosure checklist, and the hypotheses are tested with fixed-effects panel regressions using heteroskedasticity-robust standard errors.
FINDINGS: Economic policy uncertainty has a negative and statistically significant effect on corporate investment, indicating that greater ambiguity in economic policy reduces firms’ willingness to undertake new investment. The interaction between economic policy uncertainty and sustainability performance is positive and significant, indicating that sustainability performance weakens this negative relationship: firms with stronger environmental, social, and governance performance experience a smaller decline in investment when policy uncertainty rises.
RESEARCH IMPLICATIONS: Sustainability performance can serve as a mechanism that strengthens corporate resilience and mitigates the adverse effects of economic instability on investment, which is relevant to managers, investors, and policymakers in uncertain emerging-market environments.
ORIGINALITY/VALUE: The study provides evidence from Iran, a market characterized by persistent policy uncertainty, on the moderating role of sustainability performance in the uncertainty–investment relationship, a link that has received limited attention in prior research.