This study examines whether and how global reporting initiative (GRI) compliance moderates the relationship between environmental, social and governance (ESG) performance and firm value in ASEAN emerging markets.
The study employs a comprehensive research design using panel data from 2,268 listed companies across five major ASEAN economies (Indonesia, Malaysia, Philippines, Singapore, and Thailand) spanning 2018–2023, yielding 13,608 firm-year observations. Multiple econometric approaches including pooled OLS, fixed effects, system GMM estimation, instrumental variables and Heckman selection models are employed to address potential endogeneity concerns.
Results demonstrate that ESG performance significantly and positively influences firm value, measured by Tobin's Q and market value of equity (MVE). GRI compliance serves as a significant positive moderator, amplifying the ESG-firm value relationship by approximately 52%, a finding robust. The moderating effect varies substantially across institutional contexts, proving strongest in common law jurisdictions (Singapore and Malaysia), economically developed ASEAN countries and cultures with high long-term orientation, while civil law and lower-income contexts exhibit substantially weaker amplification. Among ESG components, governance demonstrates the strongest value relevance and GRI moderation effect, followed by social and environmental dimensions. Practically, the 52% amplification implies that a GRI-compliant firm with a one-standard-deviation ESG improvement achieves a firm valuation gain of 0.185 Tobin's Q units, compared to 0.121 units for a non-compliant peer.
Findings suggest that ASEAN firms can enhance shareholder value through ESG investments, but must couple substantive performance improvements with standardized GRI-based disclosure to achieve maximum value recognition. Managers should prioritize governance and social initiatives while tailoring ESG strategies to country-specific institutional contexts. Investors should weight GRI compliance as a credibility signal when evaluating sustainability information.
The research provides evidence supporting harmonized sustainability reporting standards in ASEAN, though differentiated implementation timelines may be appropriate given institutional heterogeneity. Policymakers should strengthen institutional foundations including rule of law and regulatory quality to amplify the value-creating potential of ESG initiatives.
This study is the first to examine GRI compliance as a moderating variable in the ESG-firm value relationship within ASEAN emerging markets, providing novel evidence on how standardized reporting frameworks convert sustainability performance into recognized firm value. The research advances understanding of institutional contingencies that shape sustainability-finance relationships in diverse emerging market contexts.
