Bridging ESG Disclosures and Corporate Financial Performance

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Abstract

The objective of this study is to analyze the influence of Environmental, Social, and Governance disclosures on the corporate financial performance of companies in the ASEAN-5 countries. This study uses a quantitative approach with secondary data of non-financial companies indexed in the top companies list of each respective country, acquired from Bloomberg and annual reports with a period ranging from 2015 to 2022. This research also tests two models differentiated by corporate financial performance as the dependent variables used, proxied by Return on Asset and Return on Equity, with each model consisting of 423 and 546 observables processed using SPSS 29 as the statistical software. Results show that Social Disclosure Score has a significantly positive influence on the corporate financial performance used in both models. Meanwhile, Environmental Disclosure Score and Governance Disclosure Score do not show significant influences on corporate financial performance in both models. Companies could prioritize their social disclosures by increasing transparency about corporate social responsibility activities, such as employee welfare programs and community development projects, that can build their reputation and potentially improve financial performance through a commitment to social impact.