The Analysis Of ESG Score On Corporate Financial Distress Risk In Emerging And Developed Countries In Asia
Abstract
This study aims to examine how Environmental, Social, and Governance (ESG) performance affects the risk of non-financial public corporations in emerging and developed Asian nations over eight years from 2016 to 2023. Refinitiv Eikon data was used to collect data for this study, yielding a result of 208 companies across emerging Asian countries and 143 companies in developed Asian countries. The data were then processed through a regression model, where the dependent variable was the ESG scores and the independent variable was the firm financial distress risk, which was measured by the Altman Z-Score model. The findings of the study prove that improving ESG performance can help reduce firm financial distress risk for emerging Asian countries in the non-manufacturing sector and developed countries in Asia. The better ESG performance can reduce the company's firm financial distress risk from bankruptcy as indicated by the increasingly high Altman Z-Score. The conclusion of the study is that the ESG score is an important factor for companies in sustainable business development.
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EKOMBIS REVIEW: Jurnal Ilmiah Ekonomi dan Bisnis is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
