International Journal of Human Capital in Urban Management
Quarterly Publication

Corporate sustainability dimensions, external sustainability ratings, and institutional ownership: Evidence from Southeast Asian emerging markets


Articles in Press, Accepted Manuscript
Available Online from 19 July 2026
International Journal of Human Capital in Urban Management

Document Type : ORIGINAL RESEARCH ARTICLE

Authors

C. F. Zeinidda
L. Lindrianasari

Accounting Department, School of Accounting, Master of Accounting, Bina Nusantara University, Jakarta, Indonesia

Abstract
BACKGROUND AND OBJECTIVES: Emerging capital markets face challenges in allocating financial resources to firms pursuing sustainability objectives. While prior studies have documented positive associations between environmental, social, and governance performance and firm value in developed economies, evidence from emerging markets remains inconclusive. This study examines the effects of sustainability performance, sustainability ratings, and institutional investor ownership on firm valuation among publicly listed companies in Southeast Asia.
METHODS: A balanced panel of 201 firm-year observations from 67 publicly listed companies (2022–2024) was analyzed using panel-data regression. Pooled Ordinary Least Squares. Fixed Effects, and Random Effects models were estimated, with model selection based on the Breusch-Pagan Lagrange Multiplier and Hausman tests. Firm value was measured using Tobin's Q, while explanatory variables included Refinitiv Environmental, Social, and Governance performance scores, Morningstar Sustainalytics ESG risk ratings, and institutional ownership characteristics. Firm size and leverage were included as control variables, and cluster-robust standard errors were applied. Statistical analyses were conducted using Python.
FINDINGS: The Breusch-Pagan LM test rejected pooled OLS (p < 0.001), while the Hausman test supported the Random Effects model (χ² = 5.37, p = 0.372). Under the final specification, ESG performance (β = −0.005, p = 0.730) and sustainability ratings (β = 0.015, p = 0.304) were not significantly associated with firm value. In contrast, institutional ownership characteristics were positively associated with firm value (β = 0.443, p = 0.027), whereas firm size showed a significant negative association (β = −0.413, p = 0.001). A one-period-lagged robustness model found no significant delayed effects of the sustainability variables. The final model remained significant (F = 6.35, p < 0.001) and explained 14.8% of the variation in firm value.
CONCLUSION: After accounting for panel heterogeneity, firm-level controls, and robust inference, neither internally reported ESG performance nor externally validated sustainability ratings exhibited a robust independent association with firm value. Institutional ownership characteristics emerged as the most consistent correlate of firm valuation, while firm size was negatively associated with Tobin's Q. These findings underscore the importance of rigorous panel-data methodology and institutional governance in understanding corporate valuation in emerging capital markets.

Keywords

Corporate governance
Environmental, Social governance
Emerging markets
Firm valuation
Institutional investors.
Subjects

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  • Receive Date 17 June 2026
  • Revise Date 07 July 2026
  • Accept Date 17 July 2026

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