The moderating effect of economic policy uncertainty on the relationship between sustainability performance disclosure and the cost of borrowed capital for Egyptian firms

This research aims to examine the extent of the effect of fluctuations and uncertainty in the business environment on different business decisions. Where, the effect of sustainability performance disclosure on the cost of borrowed capital is examined in Egyptian firms. Moreover, it investigated the moderating effect of economic policy uncertainty on this relationship. The research sample consists of 60 Egyptian firms listed on the EGX 100 index, with 251 total observations for the period 2018–2022. The statistical analysis demonstrated that there is a nonlinear quadratic effect of sustainability performance disclosure on the borrowed cost of capital of the Egyptian firms; which it takes a U-shape. Where, there is a negative effect of sustainability performance disclosure, until it reaches approximately 85%, then it becomes positive after that. As well, results indicated that there is a linear negative effect of economic policy uncertainty on the cost of borrowed capital. Finally, results showed that economic policy uncertainty has a nonlinear quadratic effect on the relationship between sustainability performance disclosure and the cost of borrowed capital for Egyptian business firms, but with an inverted U-shape. Where there is a positive effect until it reaches approximately 134 points, then it becomes negative.