Chulalongkorn University Theses and Dissertations (Chula ETD)

Other Title (Parallel Title in Other Language of ETD)

ประสิทธิภาพของปัจจัย สิ่งแวดล้อม สังคม และ ธรรมาภิบาล (ESG) ส่งผลกระทบต่อความเสี่ยงทางการเงินหรือไม่? หลักฐานจากตลาดเอเชียแปซิฟิก

Year (A.D.)

2023

Document Type

Independent Study

First Advisor

Boonlert Jitmaneeroj

Faculty/College

Faculty of Commerce and Accountancy (คณะพาณิชยศาสตร์และการบัญชี)

Department (if any)

Department of Banking and Finance (ภาควิชาการธนาคารและการเงิน)

Degree Name

Master of Science

Degree Level

Master's Degree

Degree Discipline

Finance

DOI

10.58837/CHULA.IS.2023.21

Abstract

This research investigates the relationship between Environmental, Social, and Governance (ESG) performance, represented by ESG scores, and Probability of Financial Distress Risk (FDR), as proxied by Ohlson O-Score, for firms operating in the Asia-Pacific region from 2010 to 2022. In addition, the aforementioned relationship during economic crisis and the level of market development is also investigated. The findings reveal a negative association between ESG performance and the probability of FDR in which the increase in ESG performance reduces the likelihood of FDR. Notably, the environmental and social pillars of ESG consistently exhibit negative relationship with FDR, with the social pillar having more pronounced effect. However, the governance pillar presents mixed results, underscoring the potential risks of excessive investment in governance-related activities. Moreover, this study underscores the impact of external factors, such as economic conditions and market development levels, on the ESG-FDR relationship. During economic crises, the Covid-19 pandemic, firms prioritizing ESG practices faced an elevated likelihood of financial distress. In terms of level of market development between developed and emerging markets, the research highlights that ESG practices exert a more significant influence in developed markets in the reduction in the probability of FDR, emphasizing the role of market maturity in shaping this connection.

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