ESG Disclosure and Firm Leverage: Pillar-Level Evidence from Italian Firms

Abstract

This study examines the association between Environmental, Governance, and Social (ESG) disclosure dimensions and Firm Leverage among Italian firms over the period 2014–2023. Using a quantitative panel-data design, the analysis draws on Eikon ESG scores for a final sample of 70 firms and measures Firm Leverage as Total Debt divided by Total Assets, with Firm Size included as a control variable. Four panel regression specifications are estimated to assess the individual and joint relationships between ESG disclosure dimensions and leverage. Fixed-effects estimation is adopted following the Hausman procedure. The findings reveal substantial heterogeneity across ESG pillars. Environmental Disclosure is positively and statistically significantly associated with Firm Leverage, supporting H3, while Governance Disclosure also exhibits a positive and statistically significant association, supporting H2. Social Disclosure has a positive but statistically non-significant association with leverage, and H1 is therefore not supported. The reported joint-significance test further indicates that the Environmental, Governance, and Social dimensions collectively contribute significantly to explaining Firm Leverage, supporting H4. Firm Size exhibits a consistently negative and statistically significant association with leverage across the reported specifications. The findings suggest that ESG disclosure should not necessarily be treated as a homogeneous financing construct. The study contributes pillar-level longitudinal evidence from Italy and highlights the potential relevance of environmental and governance information in creditor assessment, corporate financing analysis, and sustainability-reporting practice