The Green Investment Paradox: Toward a Contingency Framework of Financing Constraints and Corporate Financial Flexibility
DOI:
https://doi.org/10.59890/ijefbs.v4i5.51Keywords:
Green Investment, Financing Constraints, Corporate Financial Flexibility, Contingency Theory, Greenwashing Risk, Green BondsAbstract
Purpose: Financing-constraint theory predicts that informationally opaque, long-horizon investments should be starved of external capital, yet instruments designed to relieve this constraint for green investment show mixed results — the "Green Investment Paradox" this paper conceptualises.
Design/methodology/approach: An integrative theory-synthesis method combines financing-constraints theory, corporate financial flexibility, and green investment/greenwashing research into testable propositions and an integrated contingency framework.
Findings: Financing constraints negatively affect green investment; green financing instruments have an ambivalent effect, as greenwashing-risk scrutiny can reproduce the constraint; financial flexibility moderates both relationships; this moderation is contingent on institutional environment, life cycle, ownership, and reputational history.
Originality/value: The contingency framework reconciles conflicting green-finance findings, extends financing-constraints theory into green investment, and offers a testable research agenda.
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