Sustainable Development and Firm Performance: Evidence from Thailand
8 Pages Posted: 23 Jan 2017
Date Written: January 20, 2017
The sustainability framework shifts the firm’s management paradigm from simply maximising not only shareholders’ wealth, to also considering the wider interests of shareholders as well as environmental and social developments. This study aims to examine whether sustainable development has a significant link with firm performance. The investigation only covers the year 2015 since the Stock Exchange of Thailand had then just launched the list of firms that were announced as part of the “Thai Sustainability Investment (THSI)” scheme. We classify firms into two groups: the first group of firms has passed the sustainability criteria defined by the Stock Exchange of Thailand. The second group of size-matched firms has not passed these criteria. The matched pair design is employed to reduce the heteroscedasticity between the groups. The total sample was finalised as 96 firms: 50 from the Thai Sustainability Investment list, and 46 with a similar size, based on market capitalisation. To measure firm performance, we use return on asset (ROA) and return on equity (ROE). The results show no differences in performance between the Thai Sustainability Investment firms and the matched ones. Furthermore, our findings support the view that adopting sustainability practices would facilitate the development of firm value over the long-term rather than the short-term.
Keywords: Sustainable Development, Firm Performance, Stock Exchange of Thailand
JEL Classification: M14, M4
Suggested Citation: Suggested Citation