Title: Does environmental, social and governance (ESG) performance increase earnings informativeness? Evidence from ASEAN countries

Authors: Khalid Ardhi Nurrahman; Aria Farah Mita

Addresses: Department of Accounting, Faculty of Economics and Business, Universitas Indonesia, Depok 16424, Indonesia ' Department of Accounting, Faculty of Economics and Business, Universitas Indonesia, Depok 16424, Indonesia

Abstract: This study aims to analyse the effect of corporate sustainability performance on earnings informativeness. The sustainability performance measured by the environmental, social and governance (ESG) disclosures is expected to improve the earnings informativeness. This study was conducted on 97 companies which have ESG score from Thomson Reuters for the period of 2012 to 2016 in ASEAN-5 countries: Indonesia, Malaysia, Philippines, Singapore, and Thailand. This study finds that ESG disclosures increase earnings informativeness. Company's with higher ESG score reflects higher earnings informativeness and the higher earnings informativeness reduces the information asymmetry. The ESG disclosures in ASEAN countries now are still voluntary. This study implies that the regulators in ASEAN shall consider the benefits of ESG disclosure for investors.

Keywords: ASEAN countries; disclosures; earnings informativeness; ESG; environment; social; governance; information asymmetry; sustainability performance.

DOI: 10.1504/IJTGM.2022.124080

International Journal of Trade and Global Markets, 2022 Vol.15 No.3, pp.363 - 376

Received: 08 Oct 2018
Accepted: 17 Feb 2020
Published online: 12 Jul 2022 *

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