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Environmental, Social and Governance Performance: Continuous Improvement Matters

Author

Listed:
  • Woei Chyuan Wong

    (Universiti Utara Malaysia)

  • Abd Halim Ahmad

    (Universiti Utara Malaysia)

  • Shamsul Bahrain Mohamed-Arshad

    (Universiti Utara Malaysia)

  • Sabariah Nordin

    (Universiti Utara Malaysia)

  • Azira Abdul Adzis

    (Universiti Utara Malaysia)

Abstract

This paper examines the determinants of Malaysian listed firms’ environmental, social and governance (ESG) performance during the period 2005–2018. We focus on individual firms’ continuous efforts to improve their ESG scores once they are ESG rated. Panel fixed effect results reveal that the number of years since a firm was first included in Bloomberg’s ESG score is positive and significantly related to its ESG performance. We interpret this as evidence of firms’ deliberate efforts to improve their ESG scores once they fall under the radar of a third-party ESG rating agency. This finding underscores the importance of third-party rating agency in fostering greater corporate sustainability. We contribute to the literature that posits that ESG third-party rating agency can lead to higher level of ESG practices of the rated firms.

Suggested Citation

  • Woei Chyuan Wong & Abd Halim Ahmad & Shamsul Bahrain Mohamed-Arshad & Sabariah Nordin & Azira Abdul Adzis, 2022. "Environmental, Social and Governance Performance: Continuous Improvement Matters," Malaysian Journal of Economic Studies, Faculty of Business and Economics, University of Malaya & Malaysian Economic Association, vol. 59(1), pages 49-69, June.
    • Handle: RePEc:mjr:journl:v:59:y:2022:i:1:p:49-69
    DOI: 10.22452/MJES.vol59no1.3
    as

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    More about this item

    Keywords

    Corporate social responsibility; emerging markets; environmental social and governance (ESG); certification; Malaysia;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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