ESG Controversies and Firm Performance in ASEAN: Do Board Gender Diversity and Sustainability Committee Matter?

Abstract

This study investigates the impact of ESG controversies on the performance of publicly listed firms in the ASEAN-5 countries with the moderating effect of board gender diversity and sustainability committees. By employing random-effects regression, this study examines 1414 observations covering 2017 to 2023. Besides, a two-step GMM and 2SLS regression were used to address the endogeneity problem. The results found a significant negative relationship between ESG controversies and firm performance, implying that firms with fewer ESG controversies have higher performance. Besides, board gender and sustainable committees contribute to reducing the intensity of ESG controversies, which subsequently improves corporate reputation and hence their performances. This outcome presents policymakers with recommendations on how to develop regulations concerning ESG controversies, board gender diversity, and sustainability committees. This study is among the first that highlights the role of board gender diversity and sustainability committees in the context of ESG controversies and firm performance in the region of ASEAN.