Does ESG Index Recognition Improve Firm Performance? Evidence from Thailand’s ESG100 Using Staggered Difference-in-Differences

In the context of rising investor interest in Environmental, Social, and Governance (ESG) benchmarks, this study examines whether first-time inclusion in Thailand’s ESG100 index improves firm performance. Performance is measured along three dimensions: accounting (return on assets, return on equity), market valuation (Tobin’s Q, market-to-book ratio), and payout policy (dividend ratio, dividend yield). Using a rigorous staggered Difference-in-Differences (DiD) framework—incorporating both traditional DiD and modern estimators by Callaway and Sant’Anna and Sun and Abraham—alongside propensity score matching to address treatment timing and selection bias, this methodology ensures robust identification. Results indicate that ESG100 inclusion does not improve short-term accounting or market performance, with robustness tests indicating slight declines. However, firms newly included in ESG100 significantly increase dividend payouts. We also find that firm size moderates these effects: large firms experience improvements in ROA and ROE, while smaller firms show limited or negative responses. In contrast, market valuation and payout responses do not vary by firm size. These findings refine stakeholder and agency theories in an emerging-market context by showing that ESG recognition influences cash distribution policies more than accounting metrics or market prices. By differentiating these effects, this paper contributes to theory and practice around ESG adoption in emerging economies and discusses implications for corporate ESG strategy and policy in the Asia-Pacific region.