ESG disclosure intensity and firm performance: Empirical evidence from ASEAN listed firms

This study examines the association between ESG disclosure scores and firm financial performance. Firms are categorized into low- and high-ESG disclosure groups, and the study also examines the association of these categories with financial performance. The study’s independent variables are the ESG disclosure score and level groups, while the dependent variable, financial performance, is measured using Return on Assets (ROA) and Tobin’s Q. This study analyses 4,220 firm-year observations from ASEAN-listed firms using a panel fixed-effect regression. The results show that the ESG disclosure score is negatively associated with both ROA and Tobin’s Q. High-disclosure firms exhibit lower financial performance, whereas low-disclosure firms exhibit higher ROA relative to the reference group. Robustness tests using an alternative performance measure, lagged disclosure, and dynamic-panel GMM are conducted. The dynamic-panel GMM supports the negative associations with Tobin’s Q. However, the associations are no longer statistically significant when year fixed effects are included, indicating that the findings are sensitive to this specification. The negative associations appear to operate through regional temporal patterns rather than firm-level differences in disclosure. Furthermore, the study does not establish causality, and further research could examine the causal relationship between ESG disclosure and financial performance.