Kritsada Leeliang¹, Kanitsorn Terdpaopong^2♣ , Lyhorng Leng³, Joshua Teck Khun Loo⁴, and Yunlin Yang⁵

¹Finance Department, Royal Thai Army, Bangkok, Thailand
²Faculty of Accountancy, Rangsit University, Pathumthani, Thailand
³Rangsit International College, Rangsit University, Pathumthani, Thailand
⁴School of Business Administration, UOW Malaysia KDU University College, Penang, Malaysia
⁵Stamford International University, Phetchaburi, Thailand

ABSTRACT

This research aims to establish the impact of Environmental, Social, and Governance Disclosure (ESGD) factors in European publicly listed firms. Using 600 companies from 2015-2023, total of 3,900 firm-year observations taken from Bloomberg database, the study employs key performance indicators such as Return of Assets (ROA), Return of Equity (ROE), and Tobin’s Q (TBQ). According to the results derived from regression analysis, results show a positive relationship between ESGD practices and Return on Assets (ROA), suggesting improved operational performance. Conversely, a negative association with ROE reflects the complex interplay between ESGD initiatives and shareholder returns. Tobin’s Q outcomes vary, demonstrating ESGD’s potential to elevate market valuation in specific contexts. These insights throw light and use ESGD as an important strategic means of enhancing transparency, and effectiveness in the financial results. It is observed that there are disparities in the adoption western Europe leads the pack as they have stronger regulation beginning with the EU taxonomy to the Sustainable Finance Disclosure Regulation (SFDR). Furthermore, the research establishes the importance of diversity and inclusion within ESGD frameworks and shows how these endeavors relate positively to innovation and staff encouragement.

Keywords: ESGD, Corporate Sustainability, Firm Value, Tobin’s Q, European Listed Companies