Etikonomi

Volume 22 (1), 2023: 65 - 78

P-ISSN: 1412-8969; E-ISSN: 2461-0771

Environmental, Social, Governance and Firm Performance in

Developing Countries: Evidence from Southeast Asian

Makhdalena1*, Desi Zulvina2, Yani Zulvina3, Rizky Windar Amelia4,

Aditya Pandu Wicaksono5
Universitas Riau, Indonesia
1,3

Universitas Sebelas Maret, Indonesia

2

4
Universitas Widya Dharma, Indonesia
5
Universitas Islam Indonesia, Indonesia
E-mail: [email protected], [email protected],
3
[email protected], [email protected], [email protected]
Corresponding Author
*)

JEL Classification: Abstract

G30 Several studies primarily investigate the influence of environmental,
Q56 social, and governance on firm performance in a developed country
Q50 where markets have matured, and investors are aware of corporate
social responsibility activities. Therefore, studies in developing
Received: 21 March 2022 countries are still rare and mixed. This study examines the effect
of Environmental, Social, and Governance (ESG) information
1st Revision: 25 April 2022 on firm performance in ASEAN developing countries. We
observed companies in ASEAN developing countries (Indonesia,
2nd Revision: 19 June 2022 Malaysia, Philippines, Thailand, and Vietnam) during 2010-2020.
The information on ESG score and ROA as a proxy for firm
Accepted: 01 August 2022 performance measures ESG. Regression test results showed that
ESG has a positive effect on firm performance. We also found that
three components of ESG, environmental, Social, and Governance,
positively affect firm performance. Robustness test results showed
that overall ESG information, environmental information, and social
initiatives affect the firm’s market performance (Tobin’s Q). Research
originality in this study proves that developing countries have a
positive effect between ESG disclosure and company performance.
ESG, in the long term, would build effective governance and
increase shareholder value. The research implication is to suggest
a company has ESG information due to empirical testing that ESG
information enhances a firm operational and market performance.

Keywords:
sustainability; environment; corporate governance; social; firm
performance

How to Cite:
Makhdalena., Zulvina, D., Zulvina, Y., Amelia, R. W., & Wicaksono, A. P. (2023). Environmental, Social, Governance,
and Firm Performance in Developing Countries: Evidence from Southeast Asian. Etikonomi, 22(1), 65–78.
https://doi.org/10.15408/etk.v22i1.25271.
Makhdalena. Environmental, Social, Governance and Firm Performance

INTRODUCTION
Enhancing firm performance is always a concern for companies. Several studies have
tested the factors that can improve firm performance (Yoo & Managi, 2021; Qoyum et
al., 2021; Bodhanwala & Bodhanwala, 2021; Bhaskaran et al., 2021; Alareeni & Hamdan,
2020), and one of them is environmental, social, and governance (ESG) information
increase firm performance (Mohammad & Wasiuzzaman, 2021; Yoo & Managi, 2021;
Alareeni & Hamdan, 2020). Sustainable value like ESG information is created by
sustainable financial institutions focusing on long-term financial and economic benefits
(Bhaskaran et al., 2021). Because of increasing stakeholder expectations, corporations
must manage their societal impacts, including human rights, labor, and diversity.
Therefore, corporate sustainability entails respect for universal principles in these areas
and proactive support of a sustainability agenda. An interconnected environment nowadays
is characterized by ESG, networks of people, organizations, and devices continuously
interacting, conversing, and exchanging information in indicating information sharing,
signaling, and brand value creation have evolved in the past decade (Lee et al., 2022).
Qoyum et al. (2021) test firms in Indonesia and Malaysia, two emerging countries in
ASEAN (Association of Southeast Asian Nations), reveals that firms labeled Islamic have
better environmental and social performance but not governance performance.
A firm sustainability report is considered an effort of transparency and accountability
that can measure the company's concern for sustainability (Kim et al., 2018). ESG does
not only consider environmental and social factors but also involves aspects of corporate
governance. This condition is because managers and stakeholders worldwide perceive that
corporate governance is an issue along with encouraging global economic growth and
significant growth (Singh & Gaur, 2009). In addition, governance can also be used to
assist decision-making related to corporate governance (Singh & Gaur, 2013). Atan et
al. (2018) define the three aspects of ESG, namely: environmental aspects related to
nature protection, climate change, and environmental impacts resulting from business
operations; social aspects related to issues such as equality, diversity in the workplace,
human rights, and corporate social contribution; and governance aspects related to
board independence, ownership structure, minority shareholder rights, fair treatment of
shareholders, and transparency of company information. Environmental and social activity
assessment indicators and management mechanisms are still crucial for businesses and
other stakeholders (Abughniem et al., 2019).
The environmental aspect addresses many issues related to the business and
community environment (e.g., CO2 emissions, energy consumption, energy efficiency
policies, total waste, and emission reduction policies) (Alareeni & Hamdan, 2020). Several
studies have shown a positive influence between the environment and firm value (Yoo
& Managi, 2021; Qoyum et al., 2021; Alareeni & Hamdan, 2020).
The social aspect contains social information such as gender, number of employees,
turnover ratio, human rights, product safety, the ratio in management, and the ratio
of female employees (Alareeni & Hamdan, 2020). Yoo & Managi (2021) found that
corporate social scores positively affect company performance. Companies are starting

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Volume 22 (1), 2023: 65 - 78

to realize and consider corporate social responsibility practices as a driver of company

market performance (Alareeni & Hamdan, 2020).
The governance aspect reflects issues related to the corporate governance structure
(such as board independence, corruption, bribery, reporting and management, and
shareholder protection). Alareni & Hamdan (2020) find that higher governance practices
improve and positively affect operational and market performance. Companies that
adopt governance mechanisms will provide more helpful information to investors and
other users of financial statements to reduce the asymmetry of information (Alareeni &
Hamdan, 2020). The reputation of corporate social responsibility (CSR) is considered
a valuable tangible resource that can provide long-term benefits for the company
(Lourenço et al., 2014).
Providing disclosure on ESG aspects is essential to increase company value and show
the company's resilience and sustainability (Melinda & Wardhani, 2020). Mohammad &
Wasiuzzaman (2021) investigated the influence of ESG on firm performance in one of the
ASEAN developing countries, Malaysia, and found that ESG improves firm performance.
They said the company's disclosure of sustainability efforts could help efficiently manage
its resources and increase its value. ESG factors tend to treat them either as a way to
attract socially responsible asset owners or as a tool to reduce their portfolio companies'
regulatory or reputational risks. Their finding claim that Malaysian firms that disclose
their ESG efforts are found to generate long-term performance throughout this study.
Alareeni & Hamdan (2020) found that the higher disclosure of ESG enhances the
firm's operations. This condition may be because the yearly variation of the ESG disclosure
increases the positive image of firms and then performance. ESG performance could
mitigate financial risk during a financial crisis (Broadstock et al., 2020). Buallay (2018)
found that disclosing more information about ESG enhances a company's performance.
Buallay (2018) also found in each pillar of ESG that the environment positively impacts
firm performance, but social and governance disclosure negatively affects firm performance.
It indicates that social disclosure develops because executive management and boards
of directors work on social policies for their benefit (Buallay, 2018). If so, then three
possible outcomes are that these policies result in costs to the banks, costs that are
borne by stakeholders, which lower the market value (TQ), the equity (ROE), and the
efficiency of assets (ROA) (Buallay, 2018).
Atan et al. (2018) showed that ESG does not affect firm performance. Bodhanwala
& Bodhanwala (2021) also showed that corporate environmental performance has no
significant effect on firm performance (ROA). They also found that corporate social
performance has a negative effect on ROA. Meanwhile, corporate governance has a
positive relationship with firm performance. Khan et al. (2021) found that green process
innovation negatively affects returns on assets (ROA). This negative relationship is because
the shift in processes and services requires enormous investment. Ruan & Liu (2021)
found that corporate ESG activities significantly negatively impact firm performance in
China. They assumed that in emerging market countries where ESG activities are inactive,
the ESG information disclosure requirements for listed companies might evolve into a

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Makhdalena. Environmental, Social, Governance and Firm Performance

severe cost burden, leading to a significant negative correlation between ESG ratings
and firm performance.
Researchers studied the association between corporate social responsibility and
financial performance primarily based in developed countries where markets are mature,
and investors are well aware (Fahad & Busru, 2021). Studies in developed countries find
that the positive association between performance and ESG disclosure is due to lower
information risk associated with higher disclosure of ESG (Cormier & Magnan, 2007).
Firms that engage in ESG disclosures in the developed market are associated with lower
systematic market risks and idiosyncratic risks due to a lower possibility of litigation or
adverse market reaction (Sassen et al., 2016). Fahad & Busru (2021) investigated the
effect of CSR on firm performance of emerging markets listed in the BSE 500 index
India and they found that the negative effect of CSR disclosure on firm profitability and
firm value in India, this negative effect is mainly influenced by environmental disclosure
score and social disclosure score.
A study suggests that ESG disclosures reduce information asymmetry and improve
investors' perception and recognition of the firm's investment strategies (Fatemi et al.,
2018). Contrast findings found by Ting et al. (2019) that emerging market firms had
higher ESG initiatives regarding resource use, workforce, human rights, and CSR strategies.
Besides that, they found that ESG initiatives might lead to significant improvements
in firm valuation effects. Mohammad & Wasiuzzaman (2021) said that in an emerging
market, value creation through integrating ESG in a firm's long-term strategy with the
right vision would attract the best talent, build authentic customers via effective governance
structure and increase shareholder value. Therefore, studies on ESG in emerging markets
still need to be completed (Mohammad & Wasiuzzaman, 2021).
Baughn et al. (2007) mentioned that the diverse characteristics of a country have
a significant role in explaining the CSR practice, like culture, population, and country's
lifestyle. Bhatia & Makkar (2019) found that companies in developed economies give
less priority to community issues, and companies in developing countries are producing
CSR information either in annual reports or in separate stand-alone CSR reports, but
it needs more reliability and transparency.
Due to the impact of the US-China trade war, thereby moving all or part of
their production lines to Southeast Asia, ASEAN became an investment destination
country. Investors need further information regarding business activities, not only limited
to financial information but also non-financial information involving aspects, such
as ESG (Atan et al., 2018). Emerging market countries like developing countries in
ASEAN are still in the early stages of economic development to pay more attention
to the scale and speed of economic growth and related financial indicators, which
often lead to neglect of ESG issues (Ruan & Liu, 2021). This study investigates the
influence of environmental, social, and governance information on firm performance
in developing countries in ASEAN. This research contributes to the research context
in ASEAN developing countries.

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Prior studies have examined the association between ESG and firm performance.
Clark et al. (2015) mentioned that there are common types of ESG studies that have
been published. The scholars have directly examined individual dimensions of ESG
(e.g., governance), testing for correlations with firm performance, and claimed that 85
percent of ESG studies only examine one aspect of ESG and not all three aspects
simultaneously. Another contribution of this research is that we investigated the ESG
impact on firm performance and examined all three dimensions of ESG and its impact
on firm performance.

METHODS
This study examines the effect of ESG and its components on firm performance
in ASEAN: Indonesia, Malaysia, Philippines, Thailand, and Vietnam. This research uses
data from 2010 until 2020. The research sample was taken based on the companies
listed on the stock exchanges of each country and collected by the Thomson Reuters
database. The final total of the research sample was 1418 observations per firm-year.
Table 1 presents research sample information.

Table 1. Research Sample

Country Freq.

Indonesia 338

Malaysia 488

Philippines 203

Thailand 384

Vietnam 5

Total 1418

Our research data is an unbalanced data panel. Research data was collected from
the Thomson Reuters database, the company's website, and the website of the world
bank. The dependent variable is the firm performance measured by firm profitability,
namely return on assets (ROA) or the ratio of net income divided by total assets of book
value (Buallay, 2018). ROA data were collected from the Thomson Reuters database.
The independent variable of the study is ESG and each of its components, namely
Environmental, Social, and Governance which is measured using ESG scores collected
from the Thomson Reuters database (Velte, 2019).
The research uses leverage, firm size, firm age, and gross domestic product (GDP)
control variables. Leverage is measured by the ratio of total debt to company equity.
Leverage data is collected from the Thomson Reuters database. Company size is measured
using the logarithm of the company's total assets. This data is taken from the Thomson
Reuters database. The company's age is the length of the company since it was founded.
Company age information is obtained from the website of each company. The control

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Makhdalena. Environmental, Social, Governance and Firm Performance

variable GDP is used to control for country variations in the study. GDP is measured by
the logarithm of each country's GDP each year. GDP information is obtained from the
website of the world bank. Table 2 presents the operationalization of research variables.

Table 2. Operationalization of Research Variables

Variable Definition Measurement Source
Firm Performance Firm profitability is measured by Net income/total asset Thomson Reuters
(ROA) the ratio of net income divided Database
by total assets of book value
(Buallay, 2018).
ESG Information Environmental, social, and ESG Score Thomson Reuters
(ESG) governance performance scores (Alareeni & Database
were collated by the Asset4 Hamdan, 2020)
database by Thomson Reuters
(Velte, 2019)
Environmental Environmental performance score Environmental Score Thomson Reuters
(ENV) collated by the Asset4 database (Alareeni & Database
by Thomson Reuters (Velte, 2019) Hamdan, 2020)
Social Social performance obtained Social Score Thomson Reuters
(SOC) from Asset4 (Velte, 2019) (Alareeni & Database
Hamdan, 2020)
Governance Governance performance Skor governance Thomson Reuters
(GOV) obtained from Asset4 (Velte, (Alareeni & Database
2019) Hamdan, 2020)
Leverage The ratio of total debt divided by Thomson Reuters
(LEV) total equity (Khalil et al., 2019) Database
(Khalil et al., 2019)
Firm Size Natural logarithm of total assets SIZE = Ln(total asset) Thomson Reuters
(SIZE) (Velte, 2019) (Liao et al., 2015) Database
Firm Age Firm age since established Firm age since Company’s Website
(AGE) established
Gross Domestic The total of all value-added GDP = Ln(GDP) World Bank Website
Product (GDP) created in an economy

This study examines four research models by testing each independent variable on
the dependent variable. We defined our variables’ relationship in Figure 2.
(1)
(2)
(3)
(4)
Where:
ROA : Firm Performance
ESG : Environmental. Social, and Governance
ENV : Environmental
SOC : Social

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GOV : Governance
LEV : Leverage
SIZE : Firm Size
AGE : Firm Age
GDP : Gross Domestic Product

Figure 2. Research Framework

RESULT AND DISCUSSIONS

Descriptive Statistics
Descriptive statistics result is presented in table 3. The mean score of ROA is 0.079,
with a minimum score is -0.423, and a maximum score is 1.149. The average ESG score is
44.98. This score is in grade C. Grade ‘C’ indicates satisfactory relative ESG performance
and a moderate degree of transparency in reporting material ESG data publicly (Refinitiv,
2021). The maximum ESG score is 89.73. This score is in grade A. Grade ‘A’ indicates
excellent relative ESG performance and a high degree of transparency in reporting material
ESG data publicly. ESG’s minimum score is 2.77. This score is in grade D. Grade ‘D’
indicates poor relative ESG performance and an insufficient degree of transparency in
reporting material ESG data.

Table 3. Descriptive Statistic

Variable Mean Std. Dev. Min Max
ROA 0.079 0.098 -0.423 1.149
ESG 44.987 19.583 2.77 89.73
ENV 36.448 25.083 0 97.15
SOC 48.752 23.362 0.71 97.35
GOV 47.734 21.636 3.04 98.7
LEV 1.68 2.558 0.002 49.223
SIZE 31.39 1.116 27.763 34.712
AGE 40.334 27.786 1 186
GDP 26.849 0.461 26.048 27.744

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Makhdalena. Environmental, Social, Governance and Firm Performance

The average environmental score (ENV) is 36.44, with a minimum score of 0

and a maximum score of 97.15. the average environmental information is in grade C.
This result also showed that some companies had not disclosed their environmental
information. Therefore 0 scores are assigned to them (minimum score of ENV). The
average social score (SOC) is 48, with a minimum score of 0.71 and a maximum score
of 97.35. This average GOC score is also in grade C. Average governance score (GOV)
is 47.73, with a minimum score of 3.04 and a maximum score of 98.7. The average
score of GOV is in grace C too.

Regression Result
Table 4 shows the results of the regression test. Table 4 model 1 showed that
ESG has a significant positive effect on firm performance (ROA) with a significant
level of 0.041. It indicates that better ESG information increases firm performance.
This result aligns with prior research showing that ESG disclosure positively affects firm
performance (Buallay, 2018; Velte, 2019; Alareeni & Hamdan, 2020). There may be a
positive relationship between ESG and ROA because the yearly variation of the ESG
disclosure enhances the positive image of firms and then their performance (Alareeni
& Hamdan, 2020).

Table 4. Regression Results

ROA

(1) (2) (3) (4)

ESG 0.000384**
(0.041)

ENV 0.00029365**
(0.020)

SOC 0.000304**
(0.026)

GOV 0.000234**
(0.029)

LEV -0.003663*** -0.003768*** -0.003763*** -0.003884***

(0.000) (0.000) (0.000) (0.000)

SIZE 0.000 -0.027394*** -0.02661*** -0.025341***

(0.988) (0.000) (0.000) (0.000)

AGE 0.001 0.000526*** 0.000534*** 0.000537***

(0.921) (0.002) (0.000) (0.002)

GDP 0.086590* 0.029733*** 0.028494*** 0.028980***

(0.052) (0.005) (0.006) (0.006)

YEAR yes yes yes yes

*** p<.01, ** p<.05, * p<.1

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The results also found that each component of ESG, namely environmental,
social, and governance information, positively influences firm performance. It means
ENV increases firm performance (ROA). Model 2 showed that ENV has a significant
positive relationship with ROA with a significant level of 0.020. Model 3 showed that
SOC significantly positively affects ROA with a significant level of 0.026. That means
social information can enhance firm performance. Model 4 showed that GOV has a
significant positive effect on ROA with a significant level of 0.029. It means governance
information could improve firm performance.
These results found that ESG and its three-pillar components, namely, environmental,
social, and corporate governance information, positively affect firm performance. These
results are consistent with Velte (2019) research that the three pillars of ESG, namely
environmental, social, and governance, positively affect firm performance (ROA). Alareeni
& Hamdan (2020) mentioned that firms with high ESG, EVN, and CSR disclosure
levels have higher operational and financial performance (ROA). This evidence showed
that ESG and its three pillars have a significant and valuable factor for firm performance
in ASEAN companies.
Firm disclosure of sustainability efforts can help efficiently manage its resources and
increase its value (Mohammad & Wasiuzzaman, 2021). ESG factors tend to treat them either
as a way to attract socially responsible asset owners or as a tool to reduce their portfolio
companies' regulatory or reputational risks. Companies that adopt governance mechanisms
will provide more helpful information to investors and other users of financial statements
to reduce asymmetry information (Alareeni & Hamdan, 2020). ESG performance could
mitigate financial risk during a financial crisis (Broadstock et al., 2020). Buallay (2018)
also found that disclosing more information about ESG could enhance firm performance.
ESG factors and their components, environmental, social, and governance factors,
represent a company's non-financial performance. This information invites investors to
consider ESG issues when evaluating firm performance (Atan et al., 2018). Better ESG
disclosure helps companies increase their corporate performance, create a good image
and credibility and promote corporate ethical practices (Kumar & Firoz, 2022). Fischer
& Sawczyn (2013) found a positive relationship between corporate social performance
and financial performance (ROA) and concluded is affected by the degree of innovation.
The better ESG-performing firms have good firm performance (Chelawat et al., 2016)
and ESG effects on firm valuation (Fatemi et al., 2017). ESG helps investors assess a
company's behavior and determine the company's future financial performance (Ting
et al., 2019).
ESG disclosure is a crucial way to report non-financial information, providing
stakeholders with a stable flow of valuable data and information and reducing information
asymmetry (Ellili, 2022). This condition reduces transaction costs and distribution
competition between key stakeholders, provides a competitive advantage in procuring
and using environmental resources, and ultimately positively impacts corporate value
(Ruan & Liu, 2021). Moreover, from a resource-based theory and strategic management
perspective, ESG activities can create a unique competitive advantage for a company (Ruan

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Makhdalena. Environmental, Social, Governance and Firm Performance

& Liu, 2021). The reputation of a sustainability report is considered a valuable tangible
resource that can provide long-term benefits for the company (Lourenço et al., 2014).
We found that social information has a positive effect on firm performance.
This result is consistent with Yoo & Managi (2021) found that corporate social scores
positively affect company performance. Companies are starting to realize and consider
corporate social responsibility practices as a driver of company market performance
(Alareeni & Hamdan, 2020). Social responsibility is fundamental and relevant in science
and business management (Ting et al., 2019). The Principles control approximately
50% of the world's institutional asset base for Responsible Investment signatories,
demonstrating the financial market's commitment to adopting ESG standards for
investment decisions (Ting et al., 2019). 
The result also showed that better governance information could increase firm
performance. This result supported the literature by Alareni & Hamdan (2020) that higher
governance practices improve and positively affect operational and market performance.
Companies that adopt governance mechanisms will provide more helpful information
to investors and other users of financial statements to reduce asymmetry information
(Alareeni & Hamdan, 2020). The results also showed that the control variables of research,
which are leverage and firm size, hurt firm performance, but firm age and GDP positively
affect firm performance. This finding indicates that smaller companies and leverage have
greater performance rather than larger companies. It also indicates that the older company
does more to improve the firm performance

Robustness Test
Table 5 shows the result of the robustness test. Using Tobin'sTobin's Q, we measured
firm performance with market value (Buallay, 2018; Alareeni & Hamdan, 2020; Ting
et al., 2019). Robustness test results showed that ESG positively impacts market firm
performance. Environmental and social pillars have a positive effect on market firm
performance. Meanwhile, governance does not affect market firm performance. This
finding consists of our regression result that ESG positively impacts firm performance
measured by ROA. The result found that governance information does not impact a
on firm's market performance, indicating that there is no significant effect on firm
value creation if the company discloses the information on firm governance (such as
management, shareholders, and CSR strategy).
The robustness test result also showed that environmental and social information
could enhance firm market performance. It indicates that the higher disclosure of overall
ESG, environmental, and social information enhances a firm’s market performance.
This condition may be because the yearly variation of the ESG disclosure enhances the
positive image of firms and then their performance (Alareeni & Hamdan, 2020). ESG
initiatives may significantly improve valuation effects (Ting et al., 2019). Firms with
higher environmental initiatives can improve shareholders’ wealth, and social initiatives
lead to value creation (Ting et al., 2019).

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Table 5. Robustness Test Result

Tobin’s Q
(1) (2) (3) (4)
ESG 0.005205* (0.076)
ENV 0.0070849*** (0.003)
SOC 0.007144***
(0.005)
GOV 0.000 (0.895)
LEV 0.002 0.006 0.007 0.001
(0.969)
SIZE -0.52076*** -0.786046*** (0.000) -0.762757*** -0.48500*** (0.000)
(0.000)
AGE -0.096 0.017193*** (0.000) 0.017361*** 0.100
(0.000) (0.601)
GDP 1.96799*** 0.654648*** 0. 637300*** 1.8958433*** (0.010)
(0.011) (0.014)
YEAR yes yes yes yes
*** p<.01, ** p<.05, * p<.1

This result contradicts the finding by Ruan and Liu (2021), who assumed that
in emerging market countries where ESG activities are not active, the ESG information
disclosure requirements for listed companies might evolve into a severe cost burden
for these companies, thereby leading to a significant negative correlation between ESG
ratings and firm performance.

CONCLUSION
Increasingly visible environmental and risk issues have made more regulatory
agencies and enterprises aware of the importance of environmental, social, and governance
(ESG) activities. This study examines the effect of company environmental, social, and
governance (ESG) information on firm performance. The study's results found that
overall ESG information can improve company performance. The three ESG pillars of
environment, social, and governance show similar results, positively impacting corporate
performance. These results indicate that carrying out environmental, social, and corporate
governance-related activities and disclosing them is proven to improve firm performance
in developing countries' companies in ASEAN. This positive relationship may be due to
the year-to-year fluctuations in ESG disclosure, improving the company's positive image
and, thus, its performance. The improvement in ESG is attractive to stakeholders because
disclosure allows the company to minimize the information asymmetry between the
company and its stakeholders and improve its performance. Companies with good ESG
exposure gain more stability and resilience regarding operational and financial performance.
This research can be used as academic literature to see the effect of environmental,
social, and corporate governance information on company performance. Research findings
can also be considered for companies to carry out activities related to environmental, social,

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Makhdalena. Environmental, Social, Governance and Firm Performance

and better corporate governance and disclose them to reduce information asymmetry
and improve company performance. We also found that ESG information has positive
effects on firm market performance. Rather than an expense, managers could consider
ESG as an investment. They are addressing the environmental, social, and institutional
requirements, and the different stakeholder requirements result in value creation for firms.
This research can also be a consideration for regulators to mandate companies to practice
environmental, social, and good corporate governance as a form of corporate awareness
to be environmentally and socially responsible both inside the company and outside the
company, which this activity is empirically proven to improve company performance.
This research has its limitations. This study uses listed companies presented in the
Thomson Reuters database in developing Southeast Asian countries, so several developing
countries in Southeast Asia are not included in the research observations.

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