B Corp certification and investment-cash flow sensitivity: evidence from unlisted European firms

Purpose This study examines whether B Corp certified firms present lower investment-cash flow sensitivity than non-certified firms, and whether this differential varies with B Impact Assessment scores or firm size. Design/methodology/approach A fixed-effects panel data analysis is conducted on 2,945 unlisted firms from five European countries over 2014–2022, of which 407 were certified during the period. Control firms were matched by size, sector, and country. Findings Certified firms exhibit significantly lower investment-cash flow sensitivity than non-certified firms, a pattern consistent with lower information asymmetries and agency conflicts. No significant differences are detected between firms scoring above and below the country-year mean on the B Impact Assessment, and size-related differences in sensitivity are of a similar magnitude in both groups. This lower sensitivity is already observable before certification. Research limitations/implications Certification is not random, so the findings should be interpreted as associations consistent with the proposed mechanisms rather than as strictly causal effects. Practical implications B Corp status identifies firms whose investment depends less on internally generated funds, which is informative for investors and lenders that assess certified firms. Social implications The findings support policy efforts to promote social enterprise models as instruments of sustainable and inclusive economic development. Originality/value This is the first study to relate B Corp certification to investment-cash flow sensitivity, in a sample of unlisted European firms, separating certification status from performance within the process.