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

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 : Akuntansi

Journal Name : International Journal of Economics and Management

Kinds of Journal : Q3

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

ABSTRACT

The aim of study is to examine the impact of corporate sustainability (ESG) on the
financial performance for Malaysia and Indonesia. A sample was selected comprising of
36 companies listed in Bursa Malaysia and 24 companies listed in Indonesia Stock
Exchange over the ten-year period 2010-2019. Using fixed effect (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 economy condition encouraged companies to
integrate ESG aspects and rewarded investors with good financial return (ROE).
Companies with lesser governance practice would increase shareholders 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 current agenda of sustainable finance for the policymakers.
Indeed, this study encourages more potential investors to invest companies with ESG
practices.

For details : http://www.ijem.upm.edu.my/vol16no2/5.%20Corporate%20Sustainability.pdf