DOES ESG PERFORMANCE MATTER? CEO POWER AND FIRM VALUE IN ASEAN MARKET

-

DOI:

https://doi.org/10.29303/akurasi.v8i2.786

Authors

  • Noor Endah Cahyawati Universitas Islam Indonesia
  • Aditya Pandu Wicaksono Universitas Islam Indonesia

Keywords:

ESG Performance, Financial Performance, CEO Power, ASEAN, Tobin’s Q

Abstract

This study examines the effect of Environmental, Social, and Governance (ESG) performance on firm value and the moderating role of CEO power in ASEAN markets. Drawing on legitimacy theory and stakeholder theory, the research applies a quantitative approach using panel data from 133 public companies across Indonesia, Malaysia, Singapore, Thailand, and the Philippines during 2015-2019. ESG data were obtained from Refinitiv, while CEO power was proxied by tenure extracted from annual reports. The analysis utilizes multiple regression and Two-Stage Least Squares (2SLS) to address endogeneity. Results reveal that environmental and social performance have significant negative effects on firm value (Tobin's Q), while governance performance is not significant. CEO power negatively moderates the environmental performance-firm value relationship, indicating the strategic role of leadership in sustainability policy. Findings suggest that ESG initiatives have not yet been fully reflected in economic value within ASEAN markets. The study emphasizes the importance of top management support and more developed market responses to integrate ESG into sustainable business strategies.

Downloads

Download data is not yet available.

References

Ab Aziz, N.H., Alshdaifat, S.M., and Al Amosh, H. (2025), ESG controversies and firm performance in ASEAN: Do board gender diversity and sustainability committee matter? Business Strategy Development, 8: e70094. https://doi.org/10.1002/bsd2.70094

Alareeni, B. A., & Hamdan, A. (2020). ESG impact on performance of US S&P 500-listed firms. Corporate Governance: International Journal of Business in Society, 20(7), 1409–1428. https://doi.org/10.1108/CG-06-2020-0258

Aljabri Q. (2025). Corporate social responsibility and cost of debt: The moderating role of insider and institutional ownership. Journal of Global Responsibility, 16 (4), 625–648, doi: https://doi.org/10.1108/JGR-04-2024-0072

Al Azizah, U.S., Haron, R. (2025). The sustainability imperative: Evaluating the effect of ESG on corporate financial performance before and after the pandemic. Discover Sustainability 6, 529 https://doi.org/10.1007/s43621-025-01401-8

Aulia, A., Lastari, A. W., & Dillak, V. (2025). Enhancing ESG disclosure: The role of profitability, financial slack, and board gender diversity in Indonesian and Malaysian banks sector. GREENOMIKA, 7(1), 67–77. https://doi.org/10.55732/unu.gnk.2025.07.1.7

Behl, A., Ferreira, F. A. F., & Pereira, L. F. (2022). Assessing sustainable business practices in the ESG framework: A multi-criteria decision analysis. Journal of Cleaner Production, 341, 130833. https://doi.org/10.1016/j.jclepro.2022.130833

Budita, D. M., & Fidiana, F. (2023). ESG, CEO power, dan kinerja keuangan: Bukti dari perusahaan pertambangan di Indonesia. Jurnal Ilmu Akuntansi, 18(1), 101–120.

Buallay, A. (2019). Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector. Management of Environmental Quality: An International Journal, 30(1), 98–115. https://doi.org/10.1108/MEQ-12-2017-0149

Carnahan, S., Agarwal, R., & Campbell, B. A. (2010). The effect of firm compensation structures on the mobility and entrepreneurship of extreme performers. Strategic Management Journal, 33(3), 523–546.

Cespa, G. and Cestone, G. (2007), Corporate social responsibility and managerial entrenchment. Journal of Economics & Management Strategy, 16: 741-771. https://doi.org/10.1111/j.1530-9134.2007.00156.x

Deegan, C. (2002). Introduction: The legitimising effect of social and environmental disclosures – a theoretical foundation. Accounting, Auditing & Accountability Journal, 15(3), 282–311. https://doi.org/10.1108/09513570210435852

Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management Science, 60(11), 2835–2857. https://doi.org/10.1287/mnsc.2014.1984

El Ghoul, S., Guedhami, O., Kwok, C. C. Y., & Mishra, D. R. (2011). Does corporate social responsibility affect the cost of capital? Journal of Banking & Finance, 35(9), 2388–2406. https://doi.org/10.1016/j.jbankfin.2011.02.007

Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pitman.

Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: Aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210–233. https://doi.org/10.1080/20430795.2015.1118917

Gillan, S. L., Koch, A., & Starks, L. T. (2021). Firms and social responsibility: A review of ESG and CSR research in corporate finance. Journal of Corporate Finance, 66, 101889. https://doi.org/10.1016/j.jcorpfin.2020.101889

Hendrastuti, R., & Harahap, R. F. (2023). Agency theory: Review of the theory and current research. Jurnal Akuntansi Aktual, 10(1), 85–96. https://doi.org/10.17977/um004v10i12023p085

Hendro, J., & Bowo Pranogyo, A. (2023). Inovasi berkelanjutan: ESG initiatives untuk masa depan yang bertanggung jawab. Jurnal Ilmu Sosial, Manajemen, Akuntansi dan Bisnis, 4(4), 135–147. https://doi.org/10.47747/jismab.v4i4.1445

Henisz, W., Koller, T., & Nuttall, R. (2019, November). Five ways that ESG creates value. McKinsey Quarterly. https://www.mckinsey.com/

Jarboui A, Bouzouitina A. (2025). How do the CEO demographic characteristics affect CSR commitment in European firms?. Society and Business Review, 20 (2), 347–368, doi: https://doi.org/10.1108/SBR-02-2024-0050

Javeed, S. A., & Lefen, L. (2019). An analysis of corporate social responsibility and firm performance with moderating effects of CEO power and ownership structure: A case study of the manufacturing sector of Pakistan. Sustainability, 11(1), 248. https://doi.org/10.3390/su11010248

Kerber R., & Simon, E. (2021, December 23). How 2021 became the year of ESG investing. Reuters. https://www.reuters.com/markets/us/how-2021-became-year-esg-investing-2021-12-23/

Khairunnisa, A., & Widiastuty, H. (2023). ESG performance dan kinerja keuangan di Asia Tenggara. Jurnal Akuntansi Multiparadigma, 14(2), 210–225. https://doi.org/10.18202/jamp.v14i2.12456

Krishnamoorthy, R. (2021). Environmental, Social, and Governance (ESG) investing: Doing good to do well. Open Journal of Social Sciences, 9, 189–197. https://doi.org/10.4236/jss.2021.97013

Ladyve, G. M., Noor Shodiq Ask, & M. Cholid Mawardi. (2020). Pengaruh kinerja lingkungan, biaya lingkungan, dan ukuran perusahaan terhadap kinerja keuangan perusahaan yang terdaftar di Bursa Efek Indonesia tahun 2015-2018. E-JRA, 9(6), 1–12.

Li, Y., Gong, M., Zhang, X. Y., & Koh, L. (2018). The impact of environmental, social, and governance disclosure on firm value: The role of CEO power. The British Accounting Review, 50(1), 60–75. https://doi.org/10.1016/j.bar.2017.09.007

Maulana, A., Wibowo, L. A., & Rachman, M. A. (2023). ESG implementation and financial performance: Empirical evidence from ASEAN public companies. Jurnal Manajemen dan Kewirausahaan, 25(1), 34–46. https://doi.org/10.9744/jmk.25.1.34-46

Melinda, R. D., & Wardhani, R. (2020). The effect of ESG disclosure on financial performance with moderating role of board gender diversity. Asian Journal of Business and Accounting, 13(1), 1–28.

Nugroho, N. A., & Hersugondo, H. (2022). Kinerja ESG dan dampaknya terhadap nilai perusahaan. Jurnal Keuangan dan Perbankan, 26(3), 432–444. https://doi.org/10.26905/jkdp.v26i3.7535

Octavio, M.F.R., Setiawan, D., Aryani, Y.A., and Arifin, T. (2025). Corporate Governance as a Driver: Enhancing ESG Performance in ASEAN Companies. Business Strategy Development, 8: e70104. https://doi.org/10.1002/bsd2.70104

Octavio, M.F.R., Setiawan, D., Aryani, Y.A., and Arifin, T. (2025). The relationship between corporate governance and sustainability performance: The moderating role of public attention. Asian Review of Accounting 2025; https://doi.org/10.1108/ARA-01-2025-0009

Octavio, M. F. R., & Wicaksono, A. P. (2025). Climate change mitigation disclosure in ASEAN energy industry: Does ownership structure has an impact? Akurasi: Jurnal Studi Akuntansi dan Keuangan, 8(1), 63–92. https://doi.org/10.29303/akurasi.v8i1.668

Polwat, L., & Teerapan, U. (2024). ESG performance, ownership structure, and firm value: Evidence from ASEAN-5. ABAC Journal, 44(4), 517–534. https://doi.org/10.59865/abacj.2024.63

Qiu, Y., Shaukat, A., & Tharyan, R. (2016). Environmental and social disclosures: Link with corporate financial performance. The British Accounting Review, 48(1), 102–116. https://doi.org/10.1016/j.bar.2014.10.007

Refinitiv. (2022). ESG scoring methodology. https://www.refinitiv.com

Raneses, A. Beyond firms doing good: the impact of environmental, social, and governance factors (ESG) on the financial performance of Philippine companies. A Capstone Paper in the Field of Sustainability for the Graduate Liberal Arts Degree in Extension Studies. Harvard University, 2020 - scholar.harvard.edu

Rankin, M., Ferlauto, K., McGowan, S., & Stanton, P. (2018). Contemporary Issues in Accounting (2nd ed.). John Wiley & Sons Australia

Sandberg, H., Alnoor, A., & Tiberius, V. (2022). Environmental, social, and governance ratings and financial performance: Evidence from the European food industry. Business Strategy and The Environment, 32 (4), 1189-2539. https://doi.org/10.1002/bse.3259

Sari, W. R., & Matusin, A. R. (2019). Net income and CSR disclosure as predictors shares price and return per share. Jurnal Dinamika Manajemen, 10(1), 81-91.

Sila, I., & Cek, K. (2017). The impact of environmental, social, and governance dimensions of corporate social responsibility on economic performance: Australian evidence. Procedia Computer Science, 120, 797–804. https://doi.org/10.1016/j.procs.2017.11.310

Sitanggang, D. A., & Ratmono, D. (2019). Good corporate governance dan dampaknya terhadap kinerja keuangan: Studi empiris di Indonesia. Jurnal Akuntansi dan Keuangan Indonesia, 16(2), 123–136. https://doi.org/10.21002/jaki.v16i2.10521

Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20(3), 571–610. https://doi.org/10.5465/amr.1995.9508080331

Triyani, R. (2020). CEO power dan kualitas pengungkapan ESG: Analisis pada perusahaan publik di Asia Tenggara. Jurnal Akuntansi dan Auditing, 17(1), 79–93.

Truong, M. O., Le, N. D. K., & Huynh, T. N. T. (2024). Impacts of environmental, social, and governance (ESG) performance on firm value, profitability, and cash flows: Evidence in Southeast Asia. Journal of Finance & Accounting Research, 1(26), 1–20.

Ting, Ting, W. P. (2022, July 21). Only 16% of Asia-Pacific's top 50 listcos link ESG performance to pay of top executives: Study. The Business Times. https://www.businesstimes.com.sg/

Velte, P. (2019). ESG performance and analyst forecast accuracy: International evidence. Review of Managerial Science, 13, 1005–1040. https://doi.org/10.1007/s11846-018-0272-4

Yoo, S., & Managi, S. (2022). Relationship between ESG performance and financial performance of Japanese firms: A panel data analysis. Sustainable Production and Consumption, 30, 305–317. https://doi.org/10.1016/j.spc.2022.01.017

Zahroh, B. M., & Hersugondo, H. (2021). The effect of ESG performance on the financial performance of manufacturing companies listed in Indonesia. AFEBI Management & Business Review, 6(2), 129.

Zainab, A., & Burhany, D. (2020). Pengaruh environmental disclosure terhadap nilai perusahaan. Jurnal Riset Akuntansi dan Keuangan, 8(2), 156–166.

Zhu, Q., Liu, J., & Lai, K. (2022). Environmental performance and financial outcomes: Evidence from Asia-Pacific firms. Journal of Cleaner Production, 335, 130235. https://doi.org/10.1016/j.jclepro.2021.130235

Downloads

Published

2025-12-23

How to Cite

Cahyawati, N. E., & Pandu Wicaksono, A. (2025). DOES ESG PERFORMANCE MATTER? CEO POWER AND FIRM VALUE IN ASEAN MARKET: -. Akurasi : Jurnal Studi Akuntansi Dan Keuangan, 8(2), 501–524. https://doi.org/10.29303/akurasi.v8i2.786

Issue

Vol. 8 No. 2 (2025): Akurasi: Jurnal Studi Akuntansi dan Keuangan, December 2025

Section

Articles

License

Copyright (c) 2025 Noor Endah Cahyawati, Aditya Pandu Wicaksono

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish in Akurasi: Jurnal Studi Akuntansi dan Keuangan agree to the following terms:

  • Authors retain the copyright of their articles.
  • Authors grant Akurasi: Jurnal Studi Akuntansi dan Keuangan the right of first publication.
  • Articles are licensed under the Creative Commons Attribution-ShareAlike 4.0 International License (CC BY-SA 4.0).
  • This license allows anyone to copy, distribute, display, and adapt the articles for any purpose, including commercial use, as long as proper credit is given to the author(s) and the source, and derivative works are distributed under the same license.
  • All published articles are open access and may be used for educational, research, and scientific purposes.