The Impact of Environmental, Social, and Governance (ESG) performance on financial performance across different periods; evidence from firms listed on the Stock Exchange of Thailand
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Abstract
This study investigates the timing of ESG performance’s effects on firm financial performance across different time periods by analyzing its impact in the same year (t), the one-year forward (t+1), and two-year forward (t+2) in companies listed on the Stock Exchange of Thailand (SET) during 2020–2024, using 401-557 firm-year observations. The independent variable is ESG score, collected form Refinitiv database. The independent variables for financial performance consisted of return on assets (ROA), return on equity (ROE), and Tobin’s Q, all of which were collected from SETSMART database. Panel data regression, random and fixed-effects models were employed to test the hypotheses and were analyzed by STATA version 18. The result indicates that ESG performance has varying financial impacts depending on the timing. Especially, ESG performance has a positive effect on ROA in two-year forward (t+2), but has no significant relationship with ROA in the same year (t) and the one-year forward (t+1). For Tobin’s Q, ESG performance exhibits a significantly negative effect in the one-year forward (t+1) and two-year forward (t+2), but it shows no statistical relationship in the same year (t). Nevertheless, this study shows a statistically insignificant relationship between ESG performance and ROE measure in the same year (t), one-year forward (t+1), and two-year forward (t+2).
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