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Title:	ESG disclosure and firm value : the role of investors uncertainty in investment decision
Authors:	Noraini Moktar (ZP02176)
Supervisor:	Rasidah Mohamad Said, Assoc. Prof. Dr.
Keywords:	Environmental Social and Governance (ESG) Sustainability development Universiti Kebangsaan Malaysia -- Dissertations Dissertations, Academic -- Malaysia
Issue Date:	9-Dec-2021
Description:	Sustainability development based on Environmental, Social and Governance (ESG) disclosure might provide relevant information to signal firm value. In this context, sustainability development information is expected to attract investors to access and evaluate firms performance in the stock market. Even though there is an increasing number of Public Listed Firms (PLFs) in Malaysian stock market that disclosed their ESG metrics since 2007, study on the accuracy of ESG disclosure to signal firm value has received limited attention. Furthermore, in the process of evaluating the firms ability to maximize shareholders wealth, investors confidence to evaluate firms based on ESG disclosure remains questionable. This study provides an argument on the strengthening of regulation on sustainability development in the Malaysian stock market in December 2014, which has witnessed an increasing number of ESG disclosure among the PLFs. On the other hand, ESG disclosure attenuates investors confidence in the firms motive to disclose the information. High-quality firms which have favorable inside information on their future and the current prospect will use the ESG disclosure signal to differentiate them from the less attractive firms. The purpose of this study is to investigate the effect of ESG disclosure on a firms value in the Malaysian stock market. This study includes the role of investors uncertainty in explaining the relationship between ESG disclosure and firm value. Investors uncertainty is determined by using event study methodology. This is to gauge the significant impact of the method of evaluating a firms ability by investors through information from the annual report (such as abnormal return, abnormal volume, and bid/ask as proxies). This study used 78 samples of firms from 2012 to 2018. Panel data regression is used to develop a model of the relationship between ESG disclosure and firm value. The analysis provides evidence that ESG disclosure increases investorsconfidence to access and evaluate firm prior investment decision is taken. Moreover, the role of investorsuncertainty is significant in explaining the relationship between ESG disclosure and firm value. A strong negative signal to firm value from ESG disclosure has also been found. The signalling theory application in the relationship between ESG disclosure and firm value does not explain that more information related to ESG disclosure signals higher firm value. In contrast, investors do not receive confidence to invest in firms presenting higher ESG disclosure. Therefore, this implies that there is weak evidence the role of investors uncertainty in the relationship between ESG disclosure and firm value. In conclusion, ESG disclosure allows stock market participants to access and evaluate firm value from the sustainability development perspective. The results also shed light on the awareness from market participants to the importance of sustainability development practices among PLFs in the Malaysian stock market. Unclear information on the enforcement of ESG disclosure among PLFs consequently reflects less attractive information for market participants to evaluate ESG disclosure compared to other information provided in the annual report as such firm size, leverage, and institutional ownership concentration.,Ph.D
Pages:	245
Publisher:	UKM, Bangi
Appears in Collections:	Faculty of Economy and Management / Fakulti Ekonomi dan Pengurusan

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