DOES ESG INCREASE FIRM PERFORMANCE? EVIDENCE FROM ASEAN-5 BASED ON THE DYNAMIC THRESHOLD REGRESSION METHOD
DOI:
https://doi.org/10.33736/ijbs.12823.2026Keywords:
ESG Score, ASEAN-5, Dynamic Threshold Regression Method, Threshold value, Low Regime and High RegimeAbstract
Guided by Shareholder Theory and Stakeholder Theory, this study examines the threshold influence of ESG on ASEAN-5 countries’ firm performance using the Dynamic Threshold Regression Method. DTRM is a powerful tool that addresses the dynamic nature of firm performance and resolves endogeneity problems in the variables used. Our analysis shows that ASEAN-5 firms must achieve an ESG score above the threshold to reap the benefits of ESG investment. At the low regime, we observed a negative relationship between ESG and firm performance, while at the high regime, the relationship was positive. These results remained robust across different estimation methods. The significance of the threshold value can serve as a reference for ASEAN-5 firms and relevant stakeholders in allocating funding for ESG activities to achieve long-term sustainable performance.
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