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This study systematically reviews how ESG (Environmental, Social, and Governance) factors influence corporate capital structure, integrating the Trade-off and Performance Feedback theories. The objective is to propose an integrated framework that explains the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) standards. Using the SPIDER tool, we selected 33 articles from Scopus and Web of Science (2020–2025) that applied Intrinsic Data Quality (IDQ) criteria. Results show that ESG affects financial risk perception, leverage adjustments, and cost of capital, intensifying the structure of capital volatility described by DeAngelo (2015) in the Trade-off Theory. Furthermore, the Performance Feedback Theory suggests that ESG pressures influence managerial aspirations, leading to dynamic changes in a firm’s capital structure. The findings suggest that ESG serves as both an external pressure and a strategic driver, challenging traditional assumptions about the stability of capital structure. We conclude that combining Trade-off and Performance Feedback Theories offers a more robust explanation for corporate financial behavior in ESG-driven environments, suggesting important future empirical research directions.

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The Relationship Between ESG and Capital Structure: A Systematic Review of Trade-Off and Performance Feedback Theories

  • 会议论文

  • 发表日期：

    2026年

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  • Fernando Ramos dos Reis,
  • Mara Teresa da Silva Madaleno,
  • Johan Hendrik Poker Junior

摘要

This study systematically reviews how ESG (Environmental, Social, and Governance) factors influence corporate capital structure, integrating the Trade-off and Performance Feedback theories. The objective is to propose an integrated framework that explains the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) standards. Using the SPIDER tool, we selected 33 articles from Scopus and Web of Science (2020–2025) that applied Intrinsic Data Quality (IDQ) criteria. Results show that ESG affects financial risk perception, leverage adjustments, and cost of capital, intensifying the structure of capital volatility described by DeAngelo (2015) in the Trade-off Theory. Furthermore, the Performance Feedback Theory suggests that ESG pressures influence managerial aspirations, leading to dynamic changes in a firm’s capital structure. The findings suggest that ESG serves as both an external pressure and a strategic driver, challenging traditional assumptions about the stability of capital structure. We conclude that combining Trade-off and Performance Feedback Theories offers a more robust explanation for corporate financial behavior in ESG-driven environments, suggesting important future empirical research directions.