ESG, country governance indicators and company value: Evidence from Asia

Laura Valinka Devi ,Moch. Doddy Ariefianto ,Rita Juliana

doi:10.24294/jipd9195

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ESG, country governance indicators and company value: Evidence from Asia

Laura Valinka Devi

Moch. Doddy Ariefianto

Rita Juliana

Journal of Infrastructure Policy and Development 2024, 8(14), 9195; https://doi.org/10.24294/jipd9195

Submitted：18 Sept 2024

Accepted：21 Oct 2024

Published：04 Dec 2024

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Abstract

This study aimed to examine the impact of Environmental, Social, and Corporate Governance (ESG) scores and Country Governance Indicators (CGI) on companies’ value. The study procedures were carried out by creating a linear empirical model where the dependent variable was companies’ value. In addition, the variables of interest in the model were ESG scores and CGI. Analysis was carried out on annual data from 278 non-financial Asian companies spanning 11 years from 2011–2021. The feasible generalized least squares (FGLS) method was used for estimation due to the presence of serial correlation and heteroscedasticity in the data obtained. The results showed the presence of a positive relationship and correlation between ESG scores and companies’ value. Meanwhile, CGI had a negative impact, revealing the potential difficulties caused by country governance framework. This study also found a positive correlation between CGI and ESG on company value. These findings have important practical contributions emphasizing the significance of ESG factors in improving companies’ value and the complex relationship between country governance and corporate valuation.

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References

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