Financial Performance as a Driver of ESG Disclosure: Evidence from Malaysia

Norhayati Sulaiman, Sunarti Halid, Noor Saatila Mohd Isa, Norliana Omar and Rahayu Abdul Rahman
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Norhayati Sulaiman: Faculty of Accountancy, Universiti Teknologi MARA, Perak Branch, Tapah Campus, 35400, Tapah Road, Perak, Malaysia
Sunarti Halid: Faculty of Accountancy, Universiti Teknologi MARA, Perak Branch, Tapah Campus, 35400, Tapah Road, Perak, Malaysia
Noor Saatila Mohd Isa: Faculty of Accountancy, Universiti Teknologi MARA, Perak Branch, Tapah Campus, 35400, Tapah Road, Perak, Malaysia
Norliana Omar: Faculty of Accountancy, Universiti Teknologi MARA, Perak Branch, Tapah Campus, 35400, Tapah Road, Perak, Malaysia
Rahayu Abdul Rahman: Faculty of Accountancy, Universiti Teknologi MARA, Perak Branch, Tapah Campus, 35400, Tapah Road, Perak, Malaysia

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 1, 3527-3534

Abstract: This study explores the relationship between firm financial performance and Environmental, Social, and Governance (ESG) disclosure. Specifically, it examines three financial performance indicators: return on assets (ROA), return on equity (ROE), and market valuation (MV) to ESG disclosure. Based on 370 firm-year observations spanning 2012 to 2021, the findings reveal a positive and significant relationship between ESG disclosure and two financial performance proxies – ROA and MV. These results hold valuable implications for investors, policymakers, and relevant agencies, marking one of the first empirical studies on the impact of financial performance on the ESG scores of Malaysian listed firms. The study highlights the critical role of integrating ESG considerations into business strategies to achieve sustainable growth and promote a more transparent and responsible corporate environment.

Date: 2025
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