Environmental, social and governance (ESG) disclosure quality in developing countries: evidence from the ASEAN region

Abstract

Purpose: This study aims to investigate the nexus among environmental, social and governance disclosure quality (ESGDQ), corporate governance (COG) and corporate social responsibility strategy (CSRS) in the context of ASEAN, a developing market. Furthermore, carbon emission (CAE) has been considered as a moderation component for the CSRS–ESGDQ link. Design/methodology/approach: With strict selection criteria, five countries in the ASEAN region (ASEAN-5) were selected as the research sample frame, including Vietnam, Thailand, Malaysia, Indonesia and the Philippines. Using the Thomson Reuters Eikon database, the initial sample included 4,735 listed companies in ASEAN-5. After a rigorous screening process, there were a total of 683 companies in the final sample with the 2018–2022 intervals. Findings: By using maximum likelihood structural equation modeling, the finding indicates that COG and CSRS have a favorable effect on ESGDQ in the ASEAN-5 context. Furthermore, CAE plays an outstanding moderation role in the CSRS–ESGDQ link. The fundamental accounting standards are also identified as having an impact on ESGDQ. Practical implications: The research points up the dominant role of internal components (i.e. COG, CSRS and CAE) and government factor (i.e. fundamental accounting standards) for the sustainable value (i.e. ESGDQ) of firms in ASEAN-5, a developing market. Thus, firm headers should inspect the performance of these internal components at a crucial interval to enhance their environmental, social and governance (ESG) behaviors and make them more sustainable. Furthermore, governments in ASEAN-5 should pay attention to developing areas that have low CAE and have a favorable influence on national sustainable development goals. Social implications: The findings of the research provide some social implications by pointing up important factors influencing sustainability practices, and understanding how ESG practices can be improved in developing countries. Originality/value: The research enlarges ESG documentation by specifying the influences of internal components and government factor, as well as providing actual proof from developing regions. In addition, this study identifies the effectiveness of CAE as well as its moderating role in this context.