Environmental, Social, and Governance (ESG) Performance on the Market Value of Banks in ASEAN
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Dec 13, 2023
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Abstract
Several studies have been conducted linking Environmental, Social, and Governance (ESG) to the financial performance of companies. However, there is still a limited amount of research investigating the influence of ESG on the market value of banks listed on the stock exchange in ASEAN countries. Panel regression is employed using historical ESG data and the market value of banks from various stock-exchange-listed banks in six ASEAN member countries (Indonesia, Malaysia, Singapore, Thailand, the Philippines, and Vietnam) during the period 2013-2022. The results of this study are expected to provide a better understanding of the influence of ESG factors, specifically on the market value of banks in the banking industry of the ASEAN region. Additionally, this research can also offer valuable information for stakeholders, regulators, and market participants regarding the importance of considering ESG factors in investment decision-making within the banking sector.
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How to Cite
Kurniawan, K., & Kim, S. S. (2023). Environmental, Social, and Governance (ESG) Performance on the Market Value of Banks in ASEAN. Enrichment : Journal of Management, 13(5), 2960-2969. https://doi.org/10.35335/enrichment.v13i5.1711
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Di Tommaso, C., & Thornton, J. (2020). Do ESG scores effect bank risk taking and value? Evidence from European banks. Corporate Social Responsibility and Environmental Management, 27(5), 2286–2298. https://doi.org/10.1002/csr.1964
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Environmental, Social and Governance (ESG) Scores from Refinitiv - May 2022. (2022).
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Supriyadi, T. (2021). Effect of Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM) on the Company’s Value in Manufacturing Companies Listed on the Exchange Indonesia Securities Year 2016-2019. International Journal of Economics, Business and Management Research, 5(04), 2021. www.ijebmr.com
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Yuen, M. K., Ngo, T., Le, T. D. Q., & Ho, T. H. (2022). The environment, social and governance (ESG) activities and profitability under COVID-19: evidence from the global banking sector. Journal of Economics and Development, 24(4), 345–364. https://doi.org/10.1108/jed-08-2022-0136
Zhou, G., Liu, L., & Luo, S. (2022). Sustainable development, ESG performance and company market value: Mediating effect of financial performance. Business Strategy and the Environment, 31(7), 3371–3387. https://doi.org/10.1002/bse.3089
Azmi, W., Hassan, M. K., Houston, R., & Karim, M. S. (2021). ESG activities and banking performance: International evidence from emerging economies. Journal of International Financial Markets, Institutions and Money, 70. https://doi.org/10.1016/j.intfin.2020.101277
Banerjee, A., Gokarn, S., Pattanayak, M., & Sinha, S. (2023). Corporate Governance and Market Value: Preliminary Evidence from Indian Companies.
Beck, T., Demirgüç-Kunt, A., The, R. L., & Bank, W. (2009). Financial Institutions and Markets across Countries and over Time Data and Analysis. http://econ.worldbank.org.
Buallay, A. (2019). Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector. Management of Environmental Quality: An International Journal, 30(1), 98–115. https://doi.org/10.1108/MEQ-12-2017-0149
Di Tommaso, C., & Thornton, J. (2020). Do ESG scores effect bank risk taking and value? Evidence from European banks. Corporate Social Responsibility and Environmental Management, 27(5), 2286–2298. https://doi.org/10.1002/csr.1964
Eccles, R. G., Ioannou, I., Serafeim, G., & Hall, M. (2012). The Impact of Corporate Sustainability on Organizational Processes and Performance. http://www.nber.org/papers/w17950
El Khoury, R., Nasrallah, N., & Alareeni, B. (2023). ESG and financial performance of banks in the MENAT region: concavity–convexity patterns. Journal of Sustainable Finance and Investment, 13(1), 406–430. https://doi.org/10.1080/20430795.2021.1929807
Environmental, Social and Governance (ESG) Scores from Refinitiv - May 2022. (2022).
Ersoy, E., Swiecka, B., Grima, S., Özen, E., & Romanova, I. (2022). The Impact of ESG Scores on Bank Market Value? Evidence from the U.S. Banking Industry. Sustainability (Switzerland), 14(15). https://doi.org/10.3390/su14159527
Farisa Caesaria, A., & Basuki, B. (2017). The study of sustainability report disclosure aspects and their impact on the companies’ performance. www.idx.co.id,
Garcia-Herrero, A., Gavilá, S., & Santabárbara, D. (2007). What Explains the Low Profitability of Chinese Banks?
Junius, D., Mulya, U. P., Rijanto, Y. A., & Adelina, Y. E. (2020). The Impact of ESG Performance to Firm Performance and Market Value. Adriel Adisurjo 2) (Vol. 5, Issue 1).
Li, T. T., Wang, K., Sueyoshi, T., & Wang, D. D. (2021). Esg: Research progress and future prospects. In Sustainability (Switzerland) (Vol. 13, Issue 21). MDPI. https://doi.org/10.3390/su132111663
Miralles-Quirós, M. M., Miralles-Quirós, J. L., & Hernández, J. R. (2019). ESG performance and shareholder value creation in the banking industry: International differences. Sustainability (Switzerland), 11(5). https://doi.org/10.3390/su11051404
Nizam, E., Ng, A., Dewandaru, G., Nagayev, R., & Nkoba, M. A. (2019). The impact of social and environmental sustainability on financial performance: A global analysis of the banking sector. Journal of Multinational Financial Management, 49, 35–53. https://doi.org/10.1016/j.mulfin.2019.01.002
Shakil, M. H., Mahmood, N., Tasnia, M., & Munim, Z. H. (2019). Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks. Management of Environmental Quality: An International Journal, 30(6), 1331–1344. https://doi.org/10.1108/MEQ-08-2018-0155
Supriyadi, T. (2021). Effect of Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM) on the Company’s Value in Manufacturing Companies Listed on the Exchange Indonesia Securities Year 2016-2019. International Journal of Economics, Business and Management Research, 5(04), 2021. www.ijebmr.com
Velte, P. (2017). Does ESG performance have an impact on financial performance? Evidence from Germany. Journal of Global Responsibility, 8(2), 169–178. https://doi.org/10.1108/JGR-11-2016-0029
Yuen, M. K., Ngo, T., Le, T. D. Q., & Ho, T. H. (2022). The environment, social and governance (ESG) activities and profitability under COVID-19: evidence from the global banking sector. Journal of Economics and Development, 24(4), 345–364. https://doi.org/10.1108/jed-08-2022-0136
Zhou, G., Liu, L., & Luo, S. (2022). Sustainable development, ESG performance and company market value: Mediating effect of financial performance. Business Strategy and the Environment, 31(7), 3371–3387. https://doi.org/10.1002/bse.3089