• Login
• Admin

Chew, Li Eng (2025) The impact of environmental, social, and governance (ESG) factors on firm financial performance and stock prices: evidence from the FTSE Bursa Malaysia Emas index (FBMEMAS). [Dissertation (University of Nottingham only)]

PDF - Registered users only - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader Download (943kB)

Abstract

This dissertation examines the impact of ESG ratings on firm financial performance and stock prices among companies listed on the FBMEMAS Index from 2021 to 2023. ESG ratings are sourced from FTSE Russell, while financial performance is measured using ROA and ROE. Stock price performance is assessed based on the closing stock price at the end of each financial year.

The findings indicate that ESG ratings have no statistically significant relationship with financial performance, aligning with Atan (2018). However, ESG ratings show a negative relationship with stock prices, suggesting that investors may perceive ESG adoption as an additional cost burden, leading to lower stock price. This supports existing literature suggesting that while ESG investments may not yield immediate financial benefits, they can shape investor sentiment and contribute to long-term value creation (Gibson et al., 2020; Nirino et al., 2021).

A quantitative research approach is employed, using panel data regression models to address econometric concerns. The study applies Pooled Ordinary Least Squares (POLS), Fixed Effects (FE), and Random Effects (RE) models. Diagnostic tests, including the Breusch-Pagan heteroskedasticity test and the Hausman test, confirm the FE model as the most appropriate, effectively controlling for firm-specific heterogeneity and mitigating biases. The results validate that ESG ratings negatively impact stock prices but have no significant effect on ROA and ROE. These findings align with prior research suggesting that ESG adoption in emerging markets does not deliver immediate financial returns due to regulatory and structural challenges (Buallay, 2019; Lee et al., 2023).

This study contributes to the ESG-financial performance debate in emerging markets by providing empirical evidence from Malaysia. The findings highlight the need for firms to balance ESG commitments with financial objectives to align with investor expectations and regulatory requirements. Policymakers should enhance ESG disclosure standards to improve transparency and build investor confidence. Future research could explore long-term financial implications to provide a more comprehensive understanding of ESG adoption in Malaysia.

Item Type:	Dissertation (University of Nottingham only)
Depositing User:	Chew, Li
Date Deposited:	28 Jul 2025 11:46
Last Modified:	28 Jul 2025 11:46
URI:	https://eprints.nottingham.ac.uk/id/eprint/80796

Actions (Archive Staff Only)

Edit View