Norliza Che-Yahya

Companies’ decision to go public is risky because of the high uncertainty level from the companies’ unknown history prior to their listing. Recent studies in the Malaysian market reported the declining trend of companies’ initial performance, relating it to investors’ current demand for higher information transparency that can reflect companies’ sustainable evolution as a means to attract their demand in subscribing newly issued shares. Thus, this study aims to investigate the impact of disclosing ESG practices on companies’ initial performance. Using a linear regression with maximum likelihood (ML) estimation, this study examines 171 initial public offerings (IPOs) issued in the Malaysian market from 2015 to 2023. By using two ways of measuring companies’ initial performance (offer-to-open and offer-to-close), the findings show that higher information disclosure on ESG practices will only be reflective and positively affect companies’ performance by the end of the day. Further examination of individual ESG pillars indicates that environmental disclosures negatively influence companies’ initial performance, while social and governance disclosures positively influence companies’ initial performance. A large investment in maintaining a high level of environmental practice can be costly, negatively influencing companies’ performances. Higher social and governance disclosure attracts socially conscious investors and reflects good internal governance, increasing demand for the companies’ shares during the IPO and positively influencing companies’ performances. This study contributes to the growing literature concerning ESG and post-IPO performances specific to the Malaysian market and proposes recommendations on the importance of disclosing ESG practices prior to their IPO.

Acknowledgments
The authors would like to acknowledge that this article is part of a research project funded by Universiti Teknologi MARA (UiTM) for the MyRA Grant Scheme, file no: 600-RMC 5/3/GPM (118/2022).

The influence of Environmental, Social, and Governance (ESG) risks on bank stability has become a critical area of study in the banking sector. This study examines the influence of ESG risks on bank stability using unbalanced panel data from 134 commercial banks in Indonesia from 2003 to 2022. Employing a fixed effects model, the findings reveal a significant negative effect of ESG risks on bank stability, where higher ESG risks significantly reduce bank stability. Specifically, government-owned banks face a greater stability decline than private banks due to their often higher exposure to regulatory and reputational pressures. Smaller banks are more adversely affected than larger ones because they lack the resources and diversification to effectively mitigate ESG risks. Additionally, non-listed banks experience a larger decrease in stability than listed banks, as the latter tend to have stricter governance structures and more robust risk management practices. These findings underscore the need for tailored risk management strategies to address ESG risks, particularly for government-owned, smaller, and non-listed banks.