The Impact of ESG on Stock Misvaluation and Capital Structure in Publicly Listed Companies Across Five ASEAN Countries (2019–2023): Evidence Suggesting ESG Enhances Market Efficiency

Ghina Farha Fasya Ataya () and Dewi Hanggraeini ()
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Ghina Farha Fasya Ataya: Faculty of Economics and Business, Universitas Indonesia
Dewi Hanggraeini: Faculty of Economics and Business, Universitas Indonesia

A chapter in Proceedings of the International Conference on Contemporary Risk Studies (ICONIC-RS 2025), 2026, pp 4-23 from Springer

Abstract: Abstract This study aims to analyze the effect of Environmental, Social, and Governance (ESG) scores on stock misvaluation and its impact on the capital structure of companies in five emerging ASEAN countries, namely Indonesia, Malaysia, Thailand, the Philippines, and Vietnam, during the period 2019–2023. The study adopts a quantitative method using an unbalanced panel dataset of 320 companies and applies Fixed Effect regression and Two-Stage Least Squares (2SLS) models to address endogeneity issues. The main variables tested include ESG scores and their three component pillars, stock misvaluation indicators (based on the residual income model and analyst target prices), capital structure (changes in debt and equity, as well as the Debt-to-Equity ratio), with information asymmetry and market sentiment as moderating variables. The research results show that ESG performance has a significantly negative impact on stock misvaluation, where an increase in ESG indicates a decrease in misvaluation, suggesting that stronger ESG performance enhances market pricing efficiency. Additionally, the Governance pillar significantly affects capital structure through the debt-to-equity ratio.

Keywords: ESG; Stock Misvaluation; Capital Structure; ASEAN Emerging Markets; Panel Data Analysis (search for similar items in EconPapers)
Date: 2026
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DOI: 10.2991/978-2-38476-595-9_2

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