THE CAUSAL RELATIONSHIP MODEL OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) DISCLOSURE AND FIRM VALUE OF COMPANIES LISTED ON THE STOCK EXCHANGE OF THAILAND
Keywords:
ESG Information, disclosure scores, firm valueAbstract
The recent trend focus on sustainable investment has emphasized the growing significance of ESG (Environment, Social, and Governance) disclosure. This has led to examining its impact on a firm’s value. This research aims to: 1) Empirically assess the harmoniousness of the structural relation model of the causal relationship model between ESG disclosure scores and firm value. 2) Analyze the direct, indirect, and total effects of factors within the model. Data from the financial statements of 29 publicly listed companies, as evaluated in The Sustainability Yearbook from 2017 to 2023, were used (total samples = 203). Descriptive and inferential statistical analyzes were conducted. The findings reveal that the causal relationship model between ESG disclosure scores and firm value exhibits a good empirical fit. Firm value and cost of capital demonstrate a statistically significant (p < 0.01) positive direct influence from ESG disclosure scores. Furthermore, ESG disclosure scores negatively indirectly affect firm value through the cost of capital, acting as a partial mediator. These findings imply a potential conflict between sustainable policies and wealth creation. The high cost of capital related to ESG disclosure may be due to a lack of a clear approach to engaging investors or limited transparency in information, which can lead to suboptimal profitability.
References
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