Financial constraints of ASEAN firms: impact alleviation by ESG pillars
The purpose of this study is to examine whether ESG plays a positive moderating role in the negative relationship between financial constraint, the Kaplan-Zingales (KZ) and Whited and Wu (WW) indexes, and f irm performance: Return of Asset (ROA) and Return of Equity (ROE). This study uses informatio...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Conscientia Beam
2024
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| Online Access: | http://psasir.upm.edu.my/id/eprint/114681/ http://psasir.upm.edu.my/id/eprint/114681/1/114681.pdf |
| _version_ | 1848866564603904000 |
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| author | Ng, Yee Ling Lau, Wei Theng Soh, Wei Ni Ab Razak, Nazrul Hisyam |
| author_facet | Ng, Yee Ling Lau, Wei Theng Soh, Wei Ni Ab Razak, Nazrul Hisyam |
| author_sort | Ng, Yee Ling |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | The purpose of this study is to examine whether ESG plays a positive moderating role in the negative relationship between financial constraint, the Kaplan-Zingales (KZ) and Whited and Wu (WW) indexes, and f irm performance: Return of Asset (ROA) and Return of Equity (ROE). This study uses information from the Thomas Refinitiv database, which covers the Association of Southeast Asian Nations (ASEAN-5): Indonesia, Malaysia, Singapore, Tha iland, and the Philippines non-financial firms from 2011 to 2019. Fixed-effects (FE) are used as the baseline model, and random-effects (RE) act as the robustness of methods. The results show that the main effect of financial constra ints is to a ct as an obstacle to firm performance. However, the marginal effects of financial constra ints can be improved in the presence of ESG. Firms with a high ESG score are better at alleviating the adverse impact of f inancial constraints as compared to those with a low ESG score. When the ESG score is further broken down into three sub-pillar dimensions, the S-score is of the greatest magnitude in its moderating role in the ESG breakdown. The findings have important implications: effective financial support and the source of funding from the government are crucial to supporting firm performance. ESG-compliant strategies should also be formulated to encourage ESG disclosure, which leads to increased capital allocation efficiency. The firms should be stringent on S-score, which helps drive the company a s employees respond by giving their best. Governments and firms need to deploy ESG guidelines in order to succeed in thriving competitive firm performances. |
| first_indexed | 2025-11-15T14:22:37Z |
| format | Article |
| id | upm-114681 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T14:22:37Z |
| publishDate | 2024 |
| publisher | Conscientia Beam |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-1146812025-01-23T01:57:06Z http://psasir.upm.edu.my/id/eprint/114681/ Financial constraints of ASEAN firms: impact alleviation by ESG pillars Ng, Yee Ling Lau, Wei Theng Soh, Wei Ni Ab Razak, Nazrul Hisyam The purpose of this study is to examine whether ESG plays a positive moderating role in the negative relationship between financial constraint, the Kaplan-Zingales (KZ) and Whited and Wu (WW) indexes, and f irm performance: Return of Asset (ROA) and Return of Equity (ROE). This study uses information from the Thomas Refinitiv database, which covers the Association of Southeast Asian Nations (ASEAN-5): Indonesia, Malaysia, Singapore, Tha iland, and the Philippines non-financial firms from 2011 to 2019. Fixed-effects (FE) are used as the baseline model, and random-effects (RE) act as the robustness of methods. The results show that the main effect of financial constra ints is to a ct as an obstacle to firm performance. However, the marginal effects of financial constra ints can be improved in the presence of ESG. Firms with a high ESG score are better at alleviating the adverse impact of f inancial constraints as compared to those with a low ESG score. When the ESG score is further broken down into three sub-pillar dimensions, the S-score is of the greatest magnitude in its moderating role in the ESG breakdown. The findings have important implications: effective financial support and the source of funding from the government are crucial to supporting firm performance. ESG-compliant strategies should also be formulated to encourage ESG disclosure, which leads to increased capital allocation efficiency. The firms should be stringent on S-score, which helps drive the company a s employees respond by giving their best. Governments and firms need to deploy ESG guidelines in order to succeed in thriving competitive firm performances. Conscientia Beam 2024-04-26 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/114681/1/114681.pdf Ng, Yee Ling and Lau, Wei Theng and Soh, Wei Ni and Ab Razak, Nazrul Hisyam (2024) Financial constraints of ASEAN firms: impact alleviation by ESG pillars. Economics and Finance Letters, 11 (2). pp. 126-145. ISSN 2312-6310; eISSN: 2312-430X https://archive.conscientiabeam.com/index.php/29/article/view/3738 10.18488/29.v11i2.3738 |
| spellingShingle | Ng, Yee Ling Lau, Wei Theng Soh, Wei Ni Ab Razak, Nazrul Hisyam Financial constraints of ASEAN firms: impact alleviation by ESG pillars |
| title | Financial constraints of ASEAN firms: impact alleviation by ESG pillars |
| title_full | Financial constraints of ASEAN firms: impact alleviation by ESG pillars |
| title_fullStr | Financial constraints of ASEAN firms: impact alleviation by ESG pillars |
| title_full_unstemmed | Financial constraints of ASEAN firms: impact alleviation by ESG pillars |
| title_short | Financial constraints of ASEAN firms: impact alleviation by ESG pillars |
| title_sort | financial constraints of asean firms: impact alleviation by esg pillars |
| url | http://psasir.upm.edu.my/id/eprint/114681/ http://psasir.upm.edu.my/id/eprint/114681/ http://psasir.upm.edu.my/id/eprint/114681/ http://psasir.upm.edu.my/id/eprint/114681/1/114681.pdf |