The impact of environmental uncertainty and industry competition on firm value: Examining the mediating role of ESG in six Asian countries

This study aims to investigate the relationships between economic development and environmental degradation regarding the emissions of CO₂ and SO₂ in Southeast Asia (SEA). The pooling data consist of 10 countries, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, the Philippines, Thailand, and Vietnam, in the period 2003-2012. Furthermore, income elasticity of CO₂ and SO₂ emissions is computed for each country to observe the sensitivity of environmental degradation through the emissions of CO₂ and SO₂ brought by economic development.
The results indicate that CO₂ displays an inverted U-shape pattern, whereas SO₂ has decreased at an increasing rate since 2003. It is expected that SO₂ will increase as the SEA economies further develop. The turning points for both CO₂ and SO₂, indicate that the current SEA income level has not reached the turning point. The income elasticities show that income elasticities for CO₂ are positive for all 10 countries. Both Singapore and Malaysia are classified as countries with high income. However, Singapore, with 0.64%, has the highest income elasticity, and Malaysia, with 0.15%, has the second lowest. There is no indication that wealthy countries have a significant impact on CO₂ through economic development. Income elasticities for SO₂ of each country are all negative. This suggests that SO₂ is an inferior good. Brunei, with 8.41%, has the most sensitivity toward change in SO₂ emissions, whereas Myanmar, with only 0.58%, is the least sensitive to SO₂ emissions.

Environmental, social, and governance (ESG) performance is critical in mitigating climate change. Energy companies must include ESG practices in their business plans because they can determine firm value. This study investigates the impact of ESG and firm size on firm value in Indonesian energy sector, which is moderated by profitability through return on assets. This study uses a sample of 19 energy companies listed on the Indonesia Stock Exchange from 2016 to 2022. A panel data regression model is applied to estimate the impact of ESG practices and firm size on firm value with the moderating role of return on assets. The study results found that ecological, social, and governance disclosure in the model with return on assets as a moderator independently positively impacts firm value but not vice versa. The interaction between return on assets and ESG practices has no impact on firm value, which means that the role of return on assets as a moderator cannot strengthen the influence of ESG and firm size on firm value. Return on assets positively impacts firm value if it acts as an independent variable without a moderator. Firm size independently has a negative impact on firm value but has no effect if it interacts with return on assets. The implications of the empirical findings provide recommendations for policymakers, corporate management, investors, and academics. Environmental, social, and governance disclosure practices are essential to pay attention to as they can improve sustainability performance and firm value in the energy sector of Indonesia.

Acknowledgment
Acknowledgments are expressed to the Directorate General of Higher Education, Research, and Technology, Ministry of Education, Culture, Research and Technology for the Funding Assistance for the Master’s Thesis Research Grant Scheme [Contract Number: 01-1-4/675/SPK/VII/2024].

Type of the article: Research Article

Abstract
This study investigates the impact of greenwashing in ESG disclosure on firms’ ability to create shared value (CSV) by focusing on the mediating roles of disclosure quality and information asymmetry across different institutional contexts. The analysis is based on 391 firm-year observations of non-financial companies listed in Indonesia (277) and Malaysia (114) from 2018 to 2023, based on annual reports, sustainability disclosures, and Refinitiv ESG data. Random-effects panel regressions and bootstrapped mediation tests were used to evaluate direct and indirect effects. The results showed that greenwashing does not exert a significant direct influence on CSV in either country. However, in Malaysia, greenwashing significantly reduces information quality, which, in turn, undermines shared-value creation (indirect effect is significant). In Indonesia, although greenwashing negatively affects information quality, the subsequent link between disclosure quality and CSV is insignificant, resulting in no mediation effect. ESG disclosure quality, as a proxy for information asymmetry, does not mediate the greenwashing–CSV relationship in either country. These findings highlight the cross-country differences shaped by institutional environments: stronger regulatory oversight and stakeholder scrutiny in Malaysia amplify the mediating role of disclosure credibility, whereas weaker governance in Indonesia attenuates its relevance. This study contributes to the sustainability accounting literature by integrating symbolic compliance theory with the CSV framework and provides evidence that the credibility of ESG information is a critical determinant of value creation in emerging economies.

Acknowledgment
We express our gratitude to the Faculty of Economics and Business, Universitas Brawijaya, Indonesia, and the Faculty of Business and Economics, Universiti Malaya, Malaysia, for supporting this research collaboration.