ESG Performance, Ownership Structure and Firm Value: Evidence from ASEAN-5

This study first examines the relationship between Environment, Social and Governance (ESG) performance and firm value, and second, the effect of ownership structure on that relationship, employing a sample from five South-East Asian countries (ASEAN-5): Thailand, Indonesia, Malaysia, the Philippines, and Singapore. Based on data from the period of 2010 to 2020, the initial descriptive statistics report an increase in the average combined ESG scores of the ASEAN-5 countries and highlight that ESG has become more of a concern during the study period. Applying multiple regression with pooled panel data and controlling for year-, country- and industry-fixed effects, the results show that statistically ESG performance is positively related to firm value, particularly in Indonesia and Malaysia, when regressions are estimated at the country level individually. Concerning ownership structure, the study finds that this has a negative impact on the relationship between ESG performance and firm value, suggesting that a higher proportion of individual shareholders leads to lower ESG performance and a weaker firm value relationship, particularly in Indonesia. However, although different proxies of ownership structure could lead to different outcomes in the ASEAN-5 countries, the results confirm that the relationship between ESG and firm performance also applies to South-East Asian markets. Therefore, firms, as well as investors, should place more importance on ESG performance in order to achieve their goals. In addition, there is some evidence demonstrating that ownership structure effects the relationship between ESG performance and firm value.