ESG Controversies and Market-Based Firm Performance: The Moderating Roles of Board Independence and Board Gender Diversity in ASEAN-5 Countries
DOI:
https://doi.org/10.61194/ijtc.v7i4.2633Keywords:
ESG controversies, market-based firm performance, board independence, board gender diversity, ASEAN-5Abstract
ESG controversies expose firms to reputational, financial, and operational risks, yet research on emerging markets has concentrated on aggregate ESG performance rather than on controversy events, leaving their valuation consequences in Southeast Asia untested. The ASEAN-5 combines high ESG risk exposure with largely voluntary reporting and uneven enforcement across jurisdictions, conditions under which internal board oversight carries more of the monitoring burden. This study examines whether ESG controversies reduce market-based firm performance and whether board independence and board gender diversity moderate that relationship. Refinitiv controversy scores are multiplied by -1 so that higher values denote greater controversy involvement. Using an unbalanced panel of 1,970 firm-year observations from 586 non-financial firms over the 2020-2024 period, the study applies Moderated Regression Analysis within a two-way fixed effects model carrying firm and year effects, estimated with panel-corrected standard errors. Tobin's Q serves as the main dependent variable and market-to-book equity is used for robustness. ESG controversies reduce Tobin's Q by 0.0221 per point (p < 0.01), while the interaction terms for board independence (0.00120) and board gender diversity (0.00190) are positive and significant, indicating that both attenuate the loss. The findings hold under the alternative proxy and a one-year lagged specification addressing reverse causality. Because board composition is not randomly assigned, the evidence is associational rather than causal. The study extends agency theory by treating board attributes as boundary conditions on an externally triggered shock, and it shows that board structure conditions how far sustainability incidents depress valuation in the ASEAN-5.
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