ABSTRACT This study investigates how Environmental, Social, and Governance (ESG) performance, product sustainability strategies, and national culture contexts influence the relationship between financial leverage and customer satisfaction. Using Zellner's Seemingly Unrelated Regression within a multilevel framework, we analyze 7678 firm‐year observations from 47 countries between 2016 and 2019. The results indicate that higher financial leverage diminishes customer satisfaction and further decreases a firm's value. However, this adverse effect is mitigated when firms intensify their engagement in Environmental practices, Social practices, and product sustainability strategies. Moreover, analysis of Hofstede's cultural dimensions reveals that indulgence weakens the negative effect of leverage on customer satisfaction, whereas uncertainty avoidance strengthens it. Important practical implications are also discussed.
Liu et al. (Fri,) studied this question.