The Value Relevance of ESG Practices in Japan and Malaysia: Moderating Roles of CSR Award, and Former CEO as a Board Chair

Sahar E-Vahdati, Wan Nordin Wan-Hussin, Mohd Shazwan Mohd Ariffin

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6 Citations (Scopus)
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This study examines the impact of ESG practices and its three pillars on the stock price, and the moderating role of CSR award, and having an ex-CEO as a chairman on the ESG-value nexus in Japan and Malaysia. Based on a large sample of 538 observations from 2015–2019, we find a positive valuation effect of ESG practices in both countries, which are in line with stakeholder theory. We observe that the value relevance of ESG practice is significantly higher in Malaysia than in Japan. However, the market does not significantly value all three ESG pillars equally in Japan and Malaysia. Our study reveals that the social pillar is more dominant in Japan; whereas, in Malaysia, it is the environmental pillar that strongly influences market value. According to signaling theory, we find CSR award only moderates the market valuation of ESG in Malaysia. Based on positive synergy theory, we further suggest that when an ex-CEO sits as a chairman, it moderates the value relevance of ESG in Japan. Our study has practical implications for stakeholders including investors, policymakers, and managers. Our results suggest investors and regulators in the Indo-Pacific region need to distinguish between the three pillars of ESG practices and their consequences on the market price, before making an investment decision.
Original languageEnglish
Article number2728
Number of pages17
JournalSustainability (Switzerland)
Issue number3
Publication statusPublished - 2 Feb 2023
Externally publishedYes

Bibliographical note

This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (


This work was supported and funded by the Sumitomo Foundation (application grant number: 198935, FY2019) with Project ID 14685.


  • ESG
  • value relevance
  • CSR award
  • ex-CEO
  • Indo-Pacific


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