Disclosure of Environmental, Social, and Governance on Firm Performance Pre and Post Introduction of Integrated Reporting: Evidence from ASEAN Countries

Abstract

The debate among researchers is still on-going regarding the impact of ESG on firm performance. Therefore, this study aims to investigate the effect of Environmental, Social, and Governance (ESG) Disclosure towards Firm Performance in ASEAN countries before and after Integrated Reporting (<IR>) introduction. Also, this study aims to explore the <IR> whether it moderates the relationship between ESGD and FP. This study focused on ASEAN countries with the selected sample criteria using purposive sampling technique. The 190 samples are obtained from Thomson Reuters from 2006 – 2020 (exclude 2013) obtained from Stock Exchange of each country. The researcher uses multiple linear regression analysis with the fixed effect model. Due to having heteroscedasticity, the regression needs to be standardized by using Robust Standard Error. The findings indicate that the ESG Disclosure has insignificant impact to the Firm Performance although the coefficient shows the positive sign. The second findings are <IR> does not moderate the ESGD and FP however their relationship shows positive relationship. Although the result is not significant, the positive relationship may indicate that companies who implement <IR> have better firm value and improved in firm performance.

The Effect of Green Accounting Disclosure on the Firm Value of Listed Mining and Agriculture Companies in Southeast Asia Countries

“…This finding is in line with several previous studies that were conducted by Rokhmawati et al (2015), Gola et al (2022), Fernando et al (2022) where the firm value is not affected by ESG Disclosure which also has majority of environmental disclosure related to green accounting. However, this is contradictory or different from the findings done by Lestari and Restuningdiah (2021), Nor et al (2016), Al-Dhaimesh (2020), also where there is a significant effect on firm value from companies that implement or disclose green accounting.…”

“…We also control for LEVERAGE which is debt over equity whereas it measured the amount of money used to fund company assets towards the debt burden associated with it, while Size which is measured using the company Natural Assets (Ln) Total Assets which is a scale that can categorize the size of the company (Fernando, et al, 2022).…”

The Effect of ESG on ASEAN Public Companies’ Green Innovation per 2021

“…In contrast, sustainability rating organizations gather information from the society and directly from businesses to produce ESG scores with precise and advanced technique (Drempetic et al, 2020). ESG can be interpreted as environmental, social, and governance, thus the ESG score itself means high or low support and/or company participation in environmental, social and governance aspects (Fernando, Nurcholifah, & Pulunga, 2022).…”

ESG Score and Firm Performance: Study of Environmentally Sensitive Companies in Emerging Market Countries

“…Research that looks at the relationship between ESG score and corporate performance of emerging market companies in various industries and produces mixed results (Aboud & Diab, 2018;Fernando et al, 2022;Garcia et al, 2017;Järvinen, 2022;Khemir et al, 2019;Makhdalena et al, 2023;Naeem et al, 2022;Prabawati & Rahmawati, 2022). The majority of research findings indicate that there is no meaningful connection between business financial performance and ESG performance.…”