Title : Corporate Sustainability and Firms' Financial Performance: Evidence from Malaysian and Indonesian Public Listed Companies

Authors :
1. Norashikin Ismail
2. Nadia Anridho
3. Mohamad Azwan MD Isa
4. Nor Hadaliza Abd Rahman
5. Noriah Ismail

Department : Accounting

Journal Name : International Journal of Economics and Management

Types of Journal : Q3

Keywords : Sustainability, ESG, Financial Performance, Malaysia, Indonesia

ABSTRACT

The aim of the study is to examine the impact of corporate sustainability (ESG) on the
financial performance for Malaysia and Indonesia. A sample was selected consisting of
36 companies listed in Bursa Malaysia and 24 companies listed in Indonesia Stock
Exchange over the ten-year period 2010-2019. Using fixed effects (FE) and pooled OLS
suggest that ESG practices are positively associated with financial performance. This
result implies that companies engaged in environmental, social and governance aspects
have a higher shareholder value. A good economic condition encouraged companies to
integrate ESG aspects and rewarded investors with good financial returns (ROE).
Companies with lesser governance practices would increase shareholder value (ROE).
Essentially, this empirical evidence confirms stakeholder's theory and agency theory. The
implication of this study is to strengthen the development of sustainability from ESG
practice and in line with the current agenda of sustainable finance for the policymakers.
Indeed, this study encourages more potential investors to invest in companies with ESG
practices.

For details : https://feb.unair.ac.id/wp-content/uploads/2023/07/5.-corporate-sustainability-7ff.pdf