ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) DISCLOSURE AND FIRM PERFORMANCE DURING COVID-19: MALAYSIAN EVIDENCE

Abstract

The relationship between ESG disclosure and firm performance has been extensively studied, but conflicting results persist. This paper highlights the importance of ESG disclosure and how it improves market and firm performance in Malaysian companies during COVID-19. The empirical analysis was performed in two stages: content analysis to obtain the extent of ESG disclosure and firm performance from the top 110 listed companies based on market capitalization in Malaysia; and regression modelling to assess the relationship between ESG disclosure and firm performance. The results suggest that business with higher level of ESG disclosure is linked to superior firm performance during COVID-19. This paper considers an aspect that has yet to be explored in the Malaysian context, which is to be relevant and concerned to businesses during COVID-19. Those who adopt sustainability management may expect a higher rate of return, as it may be used as a strategy for societal acceptance. This paper contributes to the understanding of ESG reporting among businesses in Malaysia, alongside evidenced its significance that is likely to pay off via firm performance.