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The effect of ESG on stock liquidity in Malaysia

In the most recent years, a wider trend towards sustainable and ethical business behavior is influenced in the growing importance of Environmental, Social, and Governance (ESG) standard in the business and investment sectors. This had led to asset managers and institutional investors complying with...

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Main Author: Chek, En Ye
Format: Final Year Project / Dissertation / Thesis
Published: 2024
Subjects:
H Social Sciences (General)
HD Industries. Land use. Labor
Online Access:http://eprints.utar.edu.my/6386/1/Thesis_Full_Report_Chek_En_Ye_2003292.pdf
http://eprints.utar.edu.my/6386/
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spelling my-utar-eprints.63862024-06-16T02:17:56Z The effect of ESG on stock liquidity in Malaysia Chek, En Ye H Social Sciences (General) HD Industries. Land use. Labor In the most recent years, a wider trend towards sustainable and ethical business behavior is influenced in the growing importance of Environmental, Social, and Governance (ESG) standard in the business and investment sectors. This had led to asset managers and institutional investors complying with ESG factors as become a part of investment strategies. When companies increasingly embark on ESG compliance, the expectation is that these expenditures will result in better stock returns and enhance liquidity for the firms’ stocks. While this concerns have been only examined in those countries with more developed markets such as the China (Chen et al., 2022, Wang et al., 2023, Chen et al., 2023, Zhang et al., 2024), Brazil and Germany (Svanes & Øyaas, 1970), United State (Tazo & Grabovac, 1970), Indonesia (Primasari et al., 2022), or Globally (Krueger et al., 2021, Shakil, 2020), however, there is still unidentified actual result in the Malaysian stock market. Therefore, this study aims to close the gap in the literature by providing evidence and insights of the relationship between ESG score and stock liquidity in Malaysia. This study implied a total of 31 publicly listed companies in Malaysia, over a 13-year sample period from 2010 to 2022, in the form of panel series data. The main findings identify that ESG score and each ESG factors have a significant negative relationship to stock liquidity. Moreover, this study found that Malaysia’ ESG is still in an early stage as there is lack of ESG compliance companies in Malaysia market which cause constraint in the liquidity. Finally, this study points out that governance acts as an important role to this problem as government should encourage and enforce the adoption of ESG principles to extend the pool of ESG compliance companies, which then help to increase the liquidity in the market. Keywords: Environmental, Social, and Governance, ESG Score, Stock Liquidity, Panel Series Data, Malaysian Stock Market. 2024 Final Year Project / Dissertation / Thesis NonPeerReviewed application/pdf http://eprints.utar.edu.my/6386/1/Thesis_Full_Report_Chek_En_Ye_2003292.pdf Chek, En Ye (2024) The effect of ESG on stock liquidity in Malaysia. Final Year Project, UTAR. http://eprints.utar.edu.my/6386/
institution Universiti Tunku Abdul Rahman
building UTAR Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Tunku Abdul Rahman
content_source UTAR Institutional Repository
url_provider http://eprints.utar.edu.my
topic H Social Sciences (General)
HD Industries. Land use. Labor
spellingShingle H Social Sciences (General)
HD Industries. Land use. Labor
Chek, En Ye
The effect of ESG on stock liquidity in Malaysia
description In the most recent years, a wider trend towards sustainable and ethical business behavior is influenced in the growing importance of Environmental, Social, and Governance (ESG) standard in the business and investment sectors. This had led to asset managers and institutional investors complying with ESG factors as become a part of investment strategies. When companies increasingly embark on ESG compliance, the expectation is that these expenditures will result in better stock returns and enhance liquidity for the firms’ stocks. While this concerns have been only examined in those countries with more developed markets such as the China (Chen et al., 2022, Wang et al., 2023, Chen et al., 2023, Zhang et al., 2024), Brazil and Germany (Svanes & Øyaas, 1970), United State (Tazo & Grabovac, 1970), Indonesia (Primasari et al., 2022), or Globally (Krueger et al., 2021, Shakil, 2020), however, there is still unidentified actual result in the Malaysian stock market. Therefore, this study aims to close the gap in the literature by providing evidence and insights of the relationship between ESG score and stock liquidity in Malaysia. This study implied a total of 31 publicly listed companies in Malaysia, over a 13-year sample period from 2010 to 2022, in the form of panel series data. The main findings identify that ESG score and each ESG factors have a significant negative relationship to stock liquidity. Moreover, this study found that Malaysia’ ESG is still in an early stage as there is lack of ESG compliance companies in Malaysia market which cause constraint in the liquidity. Finally, this study points out that governance acts as an important role to this problem as government should encourage and enforce the adoption of ESG principles to extend the pool of ESG compliance companies, which then help to increase the liquidity in the market. Keywords: Environmental, Social, and Governance, ESG Score, Stock Liquidity, Panel Series Data, Malaysian Stock Market.
format Final Year Project / Dissertation / Thesis
author Chek, En Ye
author_facet Chek, En Ye
author_sort Chek, En Ye
title The effect of ESG on stock liquidity in Malaysia
title_short The effect of ESG on stock liquidity in Malaysia
title_full The effect of ESG on stock liquidity in Malaysia
title_fullStr The effect of ESG on stock liquidity in Malaysia
title_full_unstemmed The effect of ESG on stock liquidity in Malaysia
title_sort effect of esg on stock liquidity in malaysia
publishDate 2024
url http://eprints.utar.edu.my/6386/1/Thesis_Full_Report_Chek_En_Ye_2003292.pdf
http://eprints.utar.edu.my/6386/
_version_ 1802982270670209024
score 13.244367

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