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Does environmental, social and governance (ESG) performance increase earnings informativeness? Evidence from ASEAN countries

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  • Khalid Ardhi Nurrahman
  • Aria Farah Mita

Abstract

This study aims to analyse the effect of corporate sustainability performance on earnings informativeness. The sustainability performance measured by the environmental, social and governance (ESG) disclosures is expected to improve the earnings informativeness. This study was conducted on 97 companies which have ESG score from Thomson Reuters for the period of 2012 to 2016 in ASEAN-5 countries: Indonesia, Malaysia, Philippines, Singapore, and Thailand. This study finds that ESG disclosures increase earnings informativeness. Company's with higher ESG score reflects higher earnings informativeness and the higher earnings informativeness reduces the information asymmetry. The ESG disclosures in ASEAN countries now are still voluntary. This study implies that the regulators in ASEAN shall consider the benefits of ESG disclosure for investors.

Suggested Citation

  • Khalid Ardhi Nurrahman & Aria Farah Mita, 2022. "Does environmental, social and governance (ESG) performance increase earnings informativeness? Evidence from ASEAN countries," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 15(3), pages 363-376.
    • Handle: RePEc:ids:ijtrgm:v:15:y:2022:i:3:p:363-376
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