Board Sustainability Expertise and the Cost of Capital: The Mediating Role of ESG Performance and the Moderating Role of Ownership Concentration

This study examines whether board sustainability expertise is associated with a lower cost of capital through stronger environmental, social and governance (ESG) performance and whether ownership concentration conditions the conversion of board expertise into ESG outcomes. The analysis is developed for the Vietnamese corporate setting, where sustainability expectations are rising while ownership remains comparatively concentrated and capital-market pricing of ESG information is still developing. Using 384 usable questionnaire responses from managers and professionals with knowledge of governance, sustainability and financing conditions, the study estimates a moderated-mediation model with partial least squares structural equation modelling (PLS-SEM). Board sustainability expertise is positively associated with ESG performance (β = 0.543), while ESG performance is negatively associated with perceived cost of capital (β = -0.328). Board sustainability expertise also has a negative direct association with cost of capital (β = -0.225), and ESG performance mediates this relationship (indirect effect β = -0.178, 95% bootstrap CI [- 0.247, -0.116]). Ownership concentration weakens the board expertise–ESG relationship (β = - 0.079, p = .040), indicating that concentrated control can constrain the extent to which specialist board knowledge is translated into firm-level sustainability outcomes. The study contributes by connecting board human capital, ESG performance and financing consequences within a single moderated-mediation framework and by treating ownership concentration as a governance boundary condition rather than only a control variable. The findings provide implications for board nomination, ESG governance and investor communication in emerging capital markets.