ESG and its Impact on Investment Efficiency

Abstract

Our research studies the impact of environment , social, and governance (ESG) practices in firms investment efficiency across 2 industries listed on China stock exchange (Shanghai Stock Exchange (SSE) & Shenzhen Stock Exchange (SZSE)), Japan stock exchange (Tokyo Stock Exchange (TSE)), India stock exchange (Bombay Stock Exchange (BSE) & National Stock Exchange (NSE)), Malaysia stock exchange (Bursa Malaysia (BM)), and Hong Kong stock exchange (HKEX) from a time period 2019 to 2023. Fixed effect regressions has been run to test the effect of ESG performance on the efficiency of investments. ESG performance is measured with the ESG combined score form Thomas Reuter’s database. This examination is based on micro-level data which has been annually gathered from the reports of the opted firms. This investigation utilizes a rigorous approach including descriptive statistics, pairwise correlation and panel regression approaches. The result shows how environment, social, and governance (ESG) got significant influence firm’s investment efficiency across industries. The study offers deep understanding for corporate executive and regulatory entity emphasizing significance of merging Environment, Social, and Governance (ESG) components into corporate planning. It highlights the regulatory investment framework that boost effectiveness during supporting sustainable corporate governance.