Corporate social responsibility and financial distress

Abstract

This study investigates how social responsibility practices influence the financial distress of firms across the ASEAN-6 region. It examines the impact of environmental, social, and governance (ESG) initiatives on financial distress, proxied by Z-score. Data from Reinfinitiv Eikon's business reports, spanning 2016 to 2022, form the foundation of this analysis. Employing a panel data approach and the SGMM regression method, the research reveals a positive correlation between a company's ESG score, emissions score, and financial sustainability. Additionally, firms that produce Corporate Social Responsibility (CSR) reports demonstrate a stronger financial standing. Leveraging these insights, the study proposes practical policy recommendations to empower sustainable development for developing countries.