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September 10, 2025Finance Theory and PracticeOpen Access

Environmental, Social, and Governance (ESG) Practices and Their Financial Implications: A Study of Indonesia and Malaysia Capital Markets

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ESG scores are positively associated with market value, indicating that better ESG performance enhances firm valuation.
The analysis revealed a coefficient of 3.655 for the relation between ESG and market value, highlighting significant financial benefits.
Employing random-effects and fixed-effects panel regressions, the study examined corporate financial performance across 421 firm-year observations.
The findings imply that ESG integration may enhance shareholder returns while proving mixed in its impact on asset efficiency.

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This study examines ESG scores' relationship with market value and profitability in Indonesia and Malaysia, suggesting mixed implications.

Azizah et al. (2025) studied this question.

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This study examines ESG scores' relationship with market value and profitability in Indonesia and Malaysia, suggesting mixed implications.