The Association between Environmental, Social, and Governance (ESG) and the Performance of Listed Companies in the Stock Exchange of Thailand: The Context of the COVID-19 Pandemic

Abstract

The objective of this study was to examine the association between the degree of environmental, social, and governance (ESG) responsibility and the performance of companies listed on the Stock Exchange of Thailand. The KLD indicator, derived from financial statements and annual reports from 2019 to 2022, was utilized as the primary source of information. A total of 936 samples were analyzed over a four-year period. Data analysis is based on descriptive statistic, multiple correlation, and multiple regression.  The findings revealed a positive association between the levels of community engagement, product and service responsibility, and firm value (measured by Tobin's Q). This positive association indicates that companies with higher levels of community engagement and product and service responsibility tend to have higher enterprise values. Conversely, a negative association was observed between the levels of community engagement, product and service responsibility, and common stock yields (measured by Return). One possible explanation is that companies with a strong focus on ESG responsibility tend to prioritize long-term sustainability and social impact over short-term financial gains. They may invest more resources in environmental conservation, social initiatives, and ethical governance practices, which could impact their short-term profitability and, consequently, the returns generated by their common stocks. However, there were no statistically significant associations found between the ESG factors and the return on total assets (ROA) and the return on equity (ROE).