THE EFFECT OF ENVIRONMENTAL, SOCIAL, GOVERNANCE, AND CONTROVERSIES ON FIRMS’ VALUE: EVIDENCE FROM ASIA

Anna Melinda, Ratna Wardhani

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

7 Citations (Scopus)

Abstract

With the increasing understanding of stakeholders on sustainability aspects for the business, companies are nowadays paying more attention to environmental and social issues. This study aims to examine the relationship between Environmental, Social, Governance (ESG) Index and firms’ value. Moreover, this study also examines how the controversy score influences the company’s value. The authors employ a dataset of 1.356 companies from 22 countries in Asia which representing the Asian market from 2014 to 2018. This study shows that ESG index score and controversy score are statistically significant, affecting the firms’ value, measured by Tobin’s Q. From the individual tests, the findings of this study indicate that ESG-environmental, ESG-social, and ESG-governance, individually affect the firms’ value. This study suggests that providing disclosure on ESG aspects is essential, not only to increase company value but also to show the company resilience and sustainability. On the other hand, ESG controversy score surprisingly indicates a positive relationship with the company value. The result implies that controversies provide a positive signal to the investor because controversies could provide a signal to the public of companies’ willingness to have transparency and accountability.

Original languageEnglish
Title of host publicationInternational Symposia in Economic Theory and Econometrics
PublisherEmerald Publishing Limited
Pages147-173
Number of pages27
DOIs
Publication statusPublished - 2020

Publication series

NameInternational Symposia in Economic Theory and Econometrics
Volume27
ISSN (Print)1571-0386

Keywords

  • Environmental, Social, Governance
  • ESG controversies
  • firm value
  • sustainability

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