article · Business Strategy & Development
An examination of 1,414 observations of publicly listed firms across the ASEAN-5 economies between 2017 and 2023 reveals a significant negative relationship between environmental, social, and governance controversies and corporate performance. Companies experiencing fewer controversies consistently achieve stronger financial results. Furthermore, the presence of board gender diversity and dedicated sustainability committees weakens the negative impact of these controversies. By moderating the intensity of such disputes, diverse boards and sustainability oversight help protect and improve corporate reputation, which in turn bolsters overall firm performance. These findings offer practical guidance for corporate leaders seeking to safeguard reputation and provide a factual basis for policymakers designing governance frameworks around sustainability and board composition.
Corporate controversies involving environmental, social, or governance failures can rapidly destroy business value. This research demonstrates that ethical issues directly harm financial performance, but companies can cushion themselves against these risks. Establishing sustainability committees and increasing female representation on governing boards actively helps corporations avoid damaging disputes, preserving reputation and long-term commercial stability.
The abstract points to regulatory and policy applications rather than a direct commercial product, offering insights that corporate boards, investors, and policymakers can use to refine governance frameworks and risk management strategies. Because the research evaluates historical market data from 2017 to 2023, the findings are readily applicable to corporate policy design, though specific commercial tools or software applications are not indicated in the text.
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ABSTRACT This study investigates the impact of ESG controversies on the performance of publicly listed firms in the ASEAN‐5 countries with the moderating effect of board gender diversity and sustainability committees. By employing random‐effects regression, this study examines 1414 observations covering 2017 to 2023. Besides, a two‐step GMM and 2SLS regression were used to address the endogeneity problem. The results found a significant negative relationship between ESG controversies and firm performance, implying that firms with fewer ESG controversies have higher performance. Besides, board gender and sustainable committees contribute to reducing the intensity of ESG controversies, which subsequently improves corporate reputation and hence their performances. This outcome presents policymakers with recommendations on how to develop regulations concerning ESG controversies, board gender diversity, and sustainability committees. This study is among the first that highlights the role of board gender diversity and sustainability committees in the context of ESG controversies and firm performance in the region of ASEAN.
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DOI: 10.1002/bsd2.70094
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