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Does ESG Affect The Firm Value?

Author

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  • Agustin Palupi

    (Trisakti School of Management, Jl. Kyai Tapa No.20, Tomang, Kec. Grogol petamburan, 11440, Jakarta, Indonesia Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

" Objective - As the concept of sustainability develops in the industrial world, stakeholders are compelled to consider ESG performance when measuring company value. A company needs to increase its value and demonstrate its sustainability capabilities by publishing sustainability reports on ESG factors. This research aims to inquire whether ESG affects the firm's value. Methodology/Technique - The causality research is analyzed with Eviews using ASEAN panel data from 2019-2021 to measure the effect of ESG on firm value with a total of 738 firm years of data. Findings - Environmental performance is associated with high ecological costs in developing nations and is a burdensome additional expense that will deteriorate the company's financial condition. Disclosure of nonfinancial information jeopardizes the creation of company value, resulting from meeting the demands of stakeholders imposed on the company, thereby causing other agency conflicts. The relatively low level of investor confidence in the signal contributes to ESG performance that lowers the company's market value. Most investors respond negatively to these signals, assuming that the activities disclosed in ESG reporting are too costly and detrimental to their interests. They could be more enthralling in investing, decreasing market demand, and reducing the company's value. Novelty - This study explains the determinants of firm value from ESG scores and separate ESG scores in the ASEAN market. Type of Paper - Empirical."

Suggested Citation

  • Agustin Palupi, 2023. "Does ESG Affect The Firm Value?," GATR Journals afr224, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:afr224
    DOI: https://doi.org/10.35609/afr.2023.7.4(3)
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    References listed on IDEAS

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    1. Rachana Manoj Lunawat & Mahmoud Elmarzouky & Doaa Shohaieb, 2025. "Integrating Environmental, Social, and Governance (ESG) Factors into the Investment Returns of American Companies," Sustainability, MDPI, vol. 17(19), pages 1-20, September.
    2. Bochra Issa & Sana Ben Abdallah & Foued Badr Gabsi, 2025. "Relationship Between Socio-Efficiency, Eco-Efficiency, and Financial Performance of European Companies: A Sector Study," JRFM, MDPI, vol. 18(4), pages 1-15, March.

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    Keywords

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    JEL classification:

    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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