Relationship between ESG Disclosure Scores and Firm Performance: Moderating Roles of CEO Power, Institutional Ownership and Board Characteristics

Abstract

The objectives of this research were to examine: 1) the relationship between the environmental, social and governance (ESG) disclosure scores and firm market-based performance and 2) the moderating roles of CEO power, institutional ownership, and board characteristics on the relationship between ESG disclosure scores and firm marketbased performance. The samples used in this study consisted of 165 companies listed on the Thailand Sustainability Investment (THSI) index in 2022, of which 85 companies were in the sensitive industry group and 80 companies were in the non-sensitive industry group. ESG disclosure scores were collected from the London Stock Exchange Group (LSEG, formerly Refinitiv), whereas other data were collected from the annual reports, financial reporting, and the SET Market Analysis and Reporting Tool (SETSMART) database. Statistical methods used to analyze the data included multiple linear regression and Hayes’s regression-based analysis. The research results revealed the following findings. First, environmental pillar score positively affected firm performance, while ESG combined, social pillar and governance pillar scores did not affect firm performance. Second, non-CEO duality positively moderated the effect of ESG combined, environmental pillar and social pillar scores on firm performance; institutional ownership moderated the effect of environmental pillar and social pillar scores on firm performance; and board size moderated the effect of ESG combined and governance pillar scores on firm performance.