ESG AND FIRM VALUE: EVIDENCE FROM MULTI-LEVEL GOVERNANCE IN ASEAN
DOI:
https://doi.org/10.9744/jmk.28.2.%25pKeywords:
firm value, board size, regulatory quality, ESG Score, ASEAN-6Abstract
This study examines the effect of Environmental, Social, and Governance (ESG) scores on firm value and investigates the moderating roles of Board Size and Regulatory Quality in the ASEAN-6 context. Using a sample of 3,047 firm-year observations from non-financial listed firms in Indonesia, Malaysia, Singapore, Thailand, the Philippines, and Vietnam during 2018-2023, the hypotheses are tested using a fixed-effects panel regression model. The results show that ESG scores are negatively associated with firm value, as measured by Tobin’s Q, suggesting that investors may perceive ESG-related improvements as imposing short-term adjustment costs that have yet to translate into immediate market benefits. Board Size is found to positively moderate this relationship, weakening the negative association between ESG scores and firm value, which underscores the role of internal monitoring mechanisms in supporting effective ESG implementation. Regulatory Quality is not found to significantly moderate the ESG scores and firm value relationship in the baseline model; however, robustness tests using one-year lagged ESG scores indicate a possible delayed institutional effect, suggesting that the influence of regulatory quality may take time to materialize. This study contributes to the literature by integrating firm-level and country-level governance mechanisms within a multi-level governance framework, offering new insights into the ESG and firm value relationship in emerging ASEAN markets.
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