The Influence of Environmental, Social and Governance Reporting on Firm Value: Malaysian Evidence

Abstract

Companies are expected to be more proactive in offering accurate and useful knowledge to their stakeholders. Consequently, companies must integrate Environmental, Social and Governance (ESG) elements into their business behaviour while ensuring the corporation earns long-term sustainable financial returns. Nevertheless, minimal studies are being performed to investigate the implications of incorporating the ESG components directly in financial areas on the efficiency of companies. ESG reporting are indicators of non-financial performance which will assist to determine the financial performance of the company. Hence, this paper aims to identify the standard of transparency based on various regulatory criteria for information on ESG reporting while exploring its impact on the firm value of the company among public listed companies in Malaysia. A total of 65 companies are selected from Bursa Malaysia for the financial data from 2017 to 2019 inclusive. The results indicate that there is a relationship between environmental practices and governance practices on firm value but no relationship between social practices on firm value. This study also showed that there is an improvement in ESG practices among the public listed companies in Malaysia over the three-year period. This study sheds light in the understanding of ESG reporting in the future.

Sustainable investing drive by ESG performance

“…The results of research that show negative results include those presented by ((Duque-Grisales & Aguilera-Caracuel, 2021); (Jeanice & Kim, 2023)). Meanwhile, empirical research on the relationship between ESG and firm value which provides mixed results on several measures of firm value, among others, is presented ((Raja Ahmad et al, 2021); (Yeh & Guo, 2019); (Dincă et al, 2022); (Ahmad et al, 2021); (Yordudom & Suttipun, 2020); (Ningwati et al, 2022); (Kong et al, 2023); (Aydoğmuş et al, 2022)).…”