Does Sustainability Pay Off? Examining Governance, Performance, and Debt Costs in Southeast Asian Companies (A Survey of Public Companies in Indonesia, Malaysia, Singapore, and Thailand for the 2021–2023 Period)

Fransisca Fransisca, Arie Pratama () and Kamaruzzaman Muhammad
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Fransisca Fransisca: Department of Accounting, Faculty of Economics and Business, Universitas Padjadjaran, Bandung 40132, Indonesia
Arie Pratama: Department of Accounting, Faculty of Economics and Business, Universitas Padjadjaran, Bandung 40132, Indonesia
Kamaruzzaman Muhammad: Faculty of Accountancy, Universiti Teknologi MARA, Cawangan Selangor, Puncak Alam 42300, Malaysia

JRFM, 2025, vol. 18, issue 7, 1-25

Abstract: Sustainability performance is an important criterion for investors and lenders when making financing decisions. This study aims to analyze whether sustainability governance influences sustainability performance and the extent to which sustainability performance affects a company’s cost of debt. This study analyzed 209 publicly listed companies in Indonesia, Malaysia, Singapore, and Thailand. Sustainability governance was measured using two proxies from the Refinitiv Eikon database: (1) the existence of a sustainability committee and (2) the existence of sustainability assurance. Sustainability performance and the cost of debt were assessed using scores obtained from the same database. Quantitative analysis was performed using descriptive statistics, ANOVA, and structural equation modeling (SEM) with path analysis. The results showed that sustainability governance has a strong positive impact on sustainability performance. However, the results also show that higher sustainability performance leads to a higher cost of debt. This finding suggests that companies that integrate sustainability into their core business strategies face challenges in obtaining funding to support sustainability initiatives. This research implies that a well-developed sustainable ecosystem needs to be established before companies can realize a lower cost of debt.

Keywords: sustainability; cost of debt; governance; performance; Southeast Asia (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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