The Impacts of Environmental, Social, and Governance Factors on Firm Performance: Panel Study of Malaysian Companies

Atan, Ruhaya; Alam, Md. Mahmudul; Said, Jamaliah; Zamri, Mohamed

doi:10.31235/osf.io/ntz52

Cited by 48 publications

(65 citation statements)

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“…Studies exist employing these methods in similar contexts (Lensink, Mersland, Vu and Zamore, 2018;Tebaldi, Nguyen and Zuluaga, 2018;Fufa and Kim, 2018). While many studies have used fixed effects and random effects model for panel data (for example, Glass, Cook and Ingersoll, 2016;Atan et al 2018), Athanasoglou, Brissimis, and Delis (2008) stated that perseverance of bank performance over the time might disturb the following year's return.…”

Section: Generalized Methods Of Moments (Gmm)mentioning

confidence: 99%

“…Previous studies found a mixed relationship between CSP and firm financial performance (Orlitzky, Schmidt, & Rynes, 2003). Majority of the studies found a positive relationship between CSP and financial performance (Atan, Alam, Said, & Zamri, 2018;Godfrey et al, 2009;Velte, 2017). However, CSP may influence the financial performance negatively due to stakeholders' negative perception over high emphasise on CSP (Utz, 2018)…”

Section: Social Performance and Financial Performancementioning

confidence: 99%

“…This study uses both operating and financial measures to define the bank performance based on previous studies (Atan et al, 2018;Buallay, 2019;Esteban-Sanchez et al, 2017;Velte, 2017). The return on assets (ROA) is used as a proxy to measure operational performance and return on equity (ROE) as a proxy to measure financial performance (Buallay, 2019;Esteban-Sanchez et al, 2017).…”

Section: Measurement Of Variablesmentioning

confidence: 99%

“…Bank size is calculated by taking the log of total assets. Previous studies found that firm performance may vary due to their size (Atan et al, 2018;Velte, 2017).…”

Section: Measurement Of Variablesmentioning

confidence: 99%

“…Hence, emerging economy banks should consider the environmental and social impacts before investing in any project that may harm the environment. Second, despite the existence of similar studies in the context of Malaysian companies (Atan, Alam, Said and Zamri, 2018) and European banks (Buallay, 2019), this study adds to the literature by adopting the generalized method of moments (GMM) which resolve the endogeneity issue expected in the study design. Finally, this study provides recommendations for the policymakers in emerging countries to consider the environmental and social issues seriously and tighten regulatory guidelines for banks.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks

Shakil

Mahmood

Tasnia

et al. 2019

MEQ

169

117

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Purpose Earlier firms were evaluated mostly from their financial performance perspective, but with the increasing attention to sustainability goals, environmental, social and governance (ESG) performance of firms became key concerns to stakeholders. The purpose of this paper is to explore the effects of ESG performance of banks on their financial performance, in the context of emerging markets. Design/methodology/approach This study employs the generalised method of moments technique for estimation purpose due to the dynamic nature of the data and to correct for endogeneity. This study uses the ESG performance data of 93 emerging market banks from 2015 to 2018, available in Asset4 ESG database of Refinitiv, formerly known as Thompson Reuters. The accounting and financial data are collected from Refinitiv Datastream database. Findings The findings indicate a positive association of emerging market banks’ environmental and social performance with their financial performance, but governance performance does not influence financial performance. Originality/value While many studies exist on the association of ESG concerns of an organisation with their financial profitability, the literature on in the context of banking is still limited. To the best of the authors’ knowledge, this is the first study that examines the effect of ESG practices of banks on their financial performance in the context of emerging economies.

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Section: Generalized Methods Of Moments (Gmm)mentioning

confidence: 99%

Section: Social Performance and Financial Performancementioning

confidence: 99%

Section: Measurement Of Variablesmentioning

confidence: 99%

“…Bank size is calculated by taking the log of total assets. Previous studies found that firm performance may vary due to their size (Atan et al, 2018;Velte, 2017).…”

Section: Measurement Of Variablesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks

Shakil

Mahmood

Tasnia

et al. 2019

MEQ

169

117

View full text Add to dashboard Cite

show abstract

Which diversity measures best capture public company value?

Foster

Manikas

Kroes

2022

Corp Soc Responsibility Env

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Prior research has shown that companies' diversity efforts lead to improved company performance and market value. However, measuring and comparing diversity is a challenge for firms since there is not a comprehensive, universally accepted method to measure firm diversity. This study evaluates three publicly available proxy measures (the Human Rights Campaign Foundation's Corporate Equality Index (CEI) ratings and Bloomberg's environmental, social, and governance (ESG) scores, and a Board of Directors gender diversity index) that report on various aspects of firm diversity to assess which are most closely associated with long‐term company value using panel regression. We find that higher CEI ratings and Bloomberg's ESG scores are significantly associated with higher Tobin's q levels. A Granger causality analysis found evidence that diversity efforts at firms lead to higher future market performance, not that firms with better market performance are more likely to increase their diversity.

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Applying sustainable development goals in financial forecasting using machine learning techniques

Chang,

Lee,

Lee

2023

Corp Soc Responsibility Env

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This study seeks to identify the impact of sustainable development goals (SDGs) in predicting corporate financial performance (CFP) in the information communications technology (ICT) industry. Data over the period of 2016–2020 that are relevant to financial reporting and corporate social responsibility (CSR) reporting have been extracted for 208 firms in the ICT industry. Important variables have been identified to help predict the financial performance in the following years upon the publication of CSR reports. Drawing on resource‐based view and stakeholder theory, the purpose of this study is to find the quintessential variables that influence the prediction accuracy of financial performance. To better forecast earnings per share (EPS), machine learning feature selection methods have been implemented. The findings suggest that certain variables such as return on total assets, SDGs adoption and whether the firm has established KPI for SDGs achievements can help enhance EPS prediction. With the various predictive models, the artificial neural network model is the most effective in predicting CFPs. Most importantly, the adoption of SDGs can be utilized to sharpen the forecast on financial performance as it enables firms to bolster stakeholder engagement and evaluate environmental, social, and corporate governance efforts.

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The Impacts of Environmental, Social, and Governance Factors on Firm Performance: Panel Study of Malaysian Companies

Cited by 48 publications

References 0 publications

Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks

Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks

Which diversity measures best capture public company value?

Applying sustainable development goals in financial forecasting using machine learning techniques

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