Table 3.
Analysis of discriminant validity.
| Panel A: Discriminant validity through Fornell-Larcker criterion | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Variables | FD | CL | ESG | SIZE | LEV | AGE | ROA | COV | SEC |
| FD | 1.000 | ||||||||
| CL | −0.488*** | 1.000 | |||||||
| ESG | −0.034 | 0.019 | 1.000 | ||||||
| SIZE | 0.140*** | −0.128*** | 0.101*** | 1.000 | |||||
| LEV | 0.480*** | −0.326*** | 0.083*** | 0.176 | 1.000 | ||||
| AGE | 0.032 | −0.038* | 0.013 | 0.019 | 0.112*** | 1.000 | |||
| ROA | −0.462*** | 0.351*** | 0.013 | −0.106 | −0.373*** | −0.029 | 1.000 | ||
| COV | 0.070*** | −0.048** | 0.000 | 0.034 | 0.031 | 0.000 | −0.047** | 1.000 | |
| SEC | −0.222*** | 0.201*** | −0.001 | −0.074** | −0.092*** | 0.023 | 0.120*** | 0.000 | 1.000 |
| Panel B: Multicollinearity test | |||||||||
| Criterion | ESG | CL | SIZE | LEV | AGE | ROA | COV | SEC | |
| VIF | 1.22 | 2.19 | 1.74 | 1.76 | 1.12 | 2.27 | 1.01 | 1.11 | |
| Tolerance | 0.818 | 0.456 | 0.576 | 0.569 | 0.889 | 0.440 | 0.990 | 0.904 | |
Note: *, **, and *** denote significance at the 10%, 5%, and 1% levels, respectively. This table reports the discriminant validity of the variables used in this study through the Fornell-Larcker criterion. The variables include financial distress (FD), environmental, social, and governance (ESG), cost leadership (CL), firm size (SIZE), firm leverage (LEV), firm age (AGE), return on assets (ROA), coronavirus crisis (COV), and sector classification (SEC). The discriminant validity ratios are below the threshold of 0.85. Therefore, we can conclude that the measurement model is satisfactory. Furthermore, the results showed no multicollinearity problems when calculating the variance inflation factor (VIF), as the highest value was 2.27. Similarly, the tolerance values of the variables ranged from 0.440 to 0.990. Thus, there was no multicollinearity concern among the latent variables.