September 10, 2025Finance Theory and PracticeOpen Access

Environmental, Social, and Governance (ESG) Practices and Their Financial Implications: A Study of Indonesia and Malaysia Capital Markets

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This study examines ESG scores' relationship with market value and profitability in Indonesia and Malaysia, suggesting mixed implications.

ESG scores are positively associated with market value, indicating that better ESG performance enhances firm valuation.
The analysis revealed a coefficient of 3.655 for the relation between ESG and market value, highlighting significant financial benefits.
Employing random-effects and fixed-effects panel regressions, the study examined corporate financial performance across 421 firm-year observations.
The findings imply that ESG integration may enhance shareholder returns while proving mixed in its impact on asset efficiency.

Azizah et al. (2025) studied this question.

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This study examines ESG scores' relationship with market value and profitability in Indonesia and Malaysia, suggesting mixed implications.