ARE ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FACTORS IMPACTING MALAYSIAN INVESTORS’ DECISIONS? AN EMPIRICAL ANALYSIS

Abstract

Incorporating environmental, social, and governance (ESG) considerations into stock market investment decisions is crucial amidst the onset of the COVID-19 pandemic and world turmoil, as these are essential to sustainable development. The underpinning theory of the Theory of Planned Behaviour (TPB) is employed, and the ESG aspects are examined. A survey approach is adopted, and a total of 300 respondents are collected. Partial least squares (PLS) analysis is used to analyse the obtained data. The findings suggest that environmental, social, and governance factors have a significant impact on Malaysian investment decisions following geopolitical conflicts and the ongoing COVID-19 pandemic-related distortions. However, their investment horizon has no moderating effect on their investment decisions. This research has provided valuable insights for investors, institutions, communities, and regulators. Increased awareness of the impact of ESG on individual investment decisions in Malaysia could prompt private and public institutions to prioritise ESG practises for both long-term and short-term attributes as they strive to respond to the needs of individuals and society. Regulators should provide incentives to corporations that integrate EGS practises, which include providing subsidies and stimulating greater strategic flexibility through deregulation of establishments, thereby contributing to a more positive impact on the country's financial system.