CAN ESG DISCLOSURE AFFECT FIRM PERFORMANCE IN ASEAN COMPANIES?

Abstract

This study examines the influence of Environmental, Social, and Governance disclosure on company performance in the ASEAN region during the 2020–2022 period. The study is motivated by the increasing relevance of sustainability issues in the ASEAN region, which is one of the most vulnerable to climate change impacts, as well as the inconsistency of previous research findings regarding the effect of ESG disclosure on firm performance. The sample consists of three hundred and thirty-two companies from five ASEAN countries identified from the OSIRIS and Refinitiv databases. Panel data regression analysis was employed to test the proposed hypotheses using Tobin's Q as the measure of company performance. The results indicate that the overall ESG score does not have a significant effect on company performance, suggesting that ESG disclosure has not yet been a factor strongly taken into account by stakeholders in investment decisions in the ASEAN region. Similarly, the environmental score and social score do not have significant effects on company performance. However, the governance score is found to have a significant negative effect on company performance, indicating that higher governance disclosure scores are associated with lower firm market valuation. Among the control variables, firm size and firm age are consistently negative and statistically significant. These findings suggest that ESG disclosure does not consistently improve company performance in the ASEAN context, with only the governance pillar showing a significant but negative relationship, indicating that increased governance disclosure may signal higher monitoring and compliance costs to investors.