Determinants Influencing ESG Disclosure in Thailand: A Detailed Analysis

1. Overview of ESG Disclosure in Thailand

1.1. Current State of ESG Reporting

ESG reporting in Thailand is increasingly vital as businesses recognize the importance of long-term sustainability and building trust with their stakeholders [1]. This acknowledgment marks a shift towards integrating environmental, social, and governance factors into core business strategies, driven by both internal motivations and external pressures from investors, regulators, and the public. However, despite this growing recognition, the actual implementation and extent of ESG disclosure in Thailand still face significant hurdles. While there is a general understanding of the benefits of ESG, the specifics of how to effectively measure, report, and improve ESG performance remain challenging for many companies.

The level of ESG disclosure in Thailand remains relatively low when compared to more developed markets [2]. This disparity can be attributed to several factors, including a lack of standardized reporting frameworks, limited expertise in ESG-related areas, and varying degrees of regulatory enforcement. Many Thai companies are still in the early stages of understanding and implementing comprehensive ESG practices, which results in inconsistencies and gaps in their reporting. Additionally, the absence of mandatory ESG reporting requirements in many sectors means that disclosure is often voluntary and may not be consistent or comparable across different organizations.

There is increasing pressure on Thai companies to enhance their ESG reporting to remain competitive in the global market [3]. As international investors and multinational corporations increasingly prioritize ESG factors in their decision-making processes, Thai companies must demonstrate a commitment to sustainability and responsible business practices to attract investment and partnerships. This pressure is further amplified by global trends towards greater transparency and accountability, as well as the growing awareness among consumers and other stakeholders regarding the social and environmental impact of business operations. Consequently, Thai companies are compelled to adopt more robust ESG reporting practices to meet these rising expectations and maintain their competitive edge.

1.2. Importance of ESG for Stakeholders

Transparent ESG disclosure enhances corporate sustainability and engagement with stakeholders [1]. By openly communicating their ESG performance, companies can demonstrate their commitment to responsible business practices, which in turn builds trust and strengthens relationships with investors, customers, employees, and the broader community. This transparency allows stakeholders to make informed decisions about their interactions with the company, fostering a sense of shared responsibility and mutual benefit. Moreover, transparent ESG disclosure enables companies to identify areas for improvement and track progress towards their sustainability goals, driving continuous enhancement of their ESG performance.

ESG practices can mitigate risks and identify new business opportunities for Thai companies [1]. By proactively addressing environmental and social issues, companies can reduce their exposure to regulatory penalties, reputational damage, and operational disruptions. For example, investing in energy-efficient technologies can lower energy costs and reduce carbon emissions, while implementing fair labor practices can improve employee morale and productivity. Furthermore, ESG practices can unlock new market opportunities by catering to the growing demand for sustainable products and services, as well as by attracting investors who prioritize ESG factors in their investment strategies.

Investors and policymakers are increasingly focusing on the impact of ESG reporting on financial markets [4]. This focus reflects a growing recognition that ESG factors can have a material impact on a company's long-term financial performance and stability. Investors are using ESG data to assess risks and opportunities, make informed investment decisions, and engage with companies to improve their ESG performance. Policymakers are also paying close attention to ESG reporting as a means of promoting sustainable economic development, protecting the environment, and ensuring social equity. As a result, there is a growing demand for standardized and reliable ESG data to facilitate effective decision-making by both investors and policymakers.

1.3. Challenges in ESG Implementation

Inconsistencies in disclosure practices and information asymmetry pose significant challenges to effective ESG implementation [4]. The lack of standardized reporting frameworks and the varying levels of expertise among companies result in a wide range of disclosure practices, making it difficult for stakeholders to compare ESG performance across different organizations. This inconsistency is exacerbated by information asymmetry, where companies may selectively disclose positive ESG information while withholding negative or less favorable data, creating a distorted picture of their overall performance. Overcoming these challenges requires the development of clear and consistent reporting standards, as well as greater transparency and accountability in ESG disclosure.

Thai companies face difficulties in integrating ESG metrics into their business strategies [1]. Many companies lack the necessary expertise, resources, and internal systems to effectively measure, manage, and report on their ESG performance. Integrating ESG metrics into core business processes requires a fundamental shift in mindset and a commitment to embedding sustainability into all aspects of the organization, from strategic planning to operational execution. This integration also requires the development of robust data collection and analysis capabilities, as well as the establishment of clear targets and performance indicators to track progress and drive continuous improvement.

A need exists for a well-structured policy framework to ensure effective ESG initiatives [5]. Such a framework would provide clear guidelines and incentives for companies to adopt sustainable business practices, as well as establish mechanisms for monitoring and enforcing compliance. This framework should also address the specific challenges and opportunities facing Thai companies, taking into account the unique economic, social, and environmental context of the country. Furthermore, the policy framework should promote collaboration and knowledge-sharing among companies, government agencies, and other stakeholders to foster a collective effort towards achieving sustainable development goals.

2. Financial Performance and ESG Disclosure

2.1. Impact of Financial Metrics on ESG

Financial metrics like Return on Assets (ROA), Return on Capital Employed (ROCE), and Effective Tax Rate (ETR) can influence ESG disclosure in ASEAN countries [6]. These metrics provide insights into a company's financial health and performance, which can in turn affect its willingness and ability to invest in ESG initiatives and disclose related information. For example, companies with strong financial performance may have more resources to allocate to sustainability programs and may be more motivated to showcase their ESG achievements to attract investors and enhance their reputation. Conversely, companies facing financial challenges may prioritize short-term profitability over ESG considerations, leading to less comprehensive disclosure.

Singaporean companies with higher ROA may report less ESG information [6]. This counterintuitive finding suggests that companies with strong financial performance may perceive less pressure to disclose ESG information, as they are already viewed favorably by investors and other stakeholders. Additionally, these companies may believe that their financial success speaks for itself and that detailed ESG disclosure is unnecessary. However, this approach may be short-sighted, as ESG factors are increasingly recognized as important drivers of long-term value creation and risk management, and companies that neglect ESG disclosure may face reputational risks and lose out on investment opportunities in the future.

Thai companies' aggressive tax strategies might hinder positive ESG perceptions [6]. Aggressive tax strategies, while potentially boosting short-term profitability, can raise concerns among stakeholders regarding a company's ethical standards and commitment to social responsibility. Such strategies may be viewed as inconsistent with the principles of ESG, particularly the governance pillar, which emphasizes transparency, accountability, and ethical behavior. As a result, companies that engage in aggressive tax practices may face increased scrutiny from investors, regulators, and the public, potentially undermining their efforts to promote a positive ESG image.

2.2. ESG Disclosure and Firm Profitability

ESG disclosure has a positive relationship with Tobin's Q but not necessarily with ROA for Thai firms [7]. Tobin's Q, a market-based measure of firm value, reflects investors' expectations of future profitability and growth, while ROA is an accounting-based measure of current profitability. This finding suggests that investors perceive ESG disclosure as a positive signal of future value creation, even if it does not immediately translate into higher current profits. This may be because ESG practices are seen as improving a company's long-term competitiveness, reducing risks, and enhancing its reputation, all of which can contribute to higher market valuation.

High and medium ESGD levels can negatively impact Tobin's Q when Earnings Per Share (EPS) increases [7]. This surprising result suggests that investors may view high levels of ESG disclosure with skepticism when a company's earnings are growing rapidly. This may be because investors perceive that the company is overemphasizing ESG to distract from potential issues with its core business operations or that the company is spending too much on ESG initiatives at the expense of profitability. Alternatively, it could indicate that investors believe the company is engaging in "greenwashing," where it exaggerates its ESG achievements to improve its image without making meaningful changes to its practices.

Low ESGD levels correlate with an increase in Tobin's Q with rising EPS [7]. This finding suggests that investors may view low levels of ESG disclosure as acceptable or even desirable when a company is demonstrating strong earnings growth. This may be because investors prioritize short-term profitability over ESG considerations or because they believe that the company is efficiently allocating its resources to maximize shareholder value. However, this approach may be risky in the long run, as companies that neglect ESG disclosure may be more vulnerable to risks and may miss out on opportunities to enhance their long-term competitiveness and sustainability.

2.3. Financial Constraints and ESG

Financial constraints can act as obstacles to firm performance in ASEAN countries [8]. Companies facing financial constraints may have limited access to capital, which can restrict their ability to invest in growth opportunities, innovate, and improve their operational efficiency. These constraints can also make it difficult for companies to attract and retain talent, maintain their competitive position, and withstand economic downturns. As a result, financial constraints can have a significant negative impact on a company's overall performance and long-term sustainability.

High ESG scores can alleviate the adverse impact of financial constraints [8]. Companies with high ESG scores may be better positioned to attract investors, access financing, and build strong relationships with stakeholders, even when facing financial challenges. This is because ESG performance is increasingly recognized as a signal of good management practices, responsible corporate behavior, and long-term value creation. Investors may be more willing to provide capital to companies with high ESG scores, as they perceive them as being less risky and more likely to generate sustainable returns over time.

The Social (S) pillar of ESG has the greatest magnitude in moderating financial constraints [8]. This finding suggests that companies that prioritize social responsibility, such as employee welfare, community engagement, and ethical sourcing, may be better able to mitigate the negative effects of financial constraints. This may be because strong social performance enhances a company's reputation, builds trust with stakeholders, and improves employee morale and productivity, all of which can contribute to greater resilience and long-term success.

3. Corporate Governance and ESG

3.1. Board Characteristics

Board activity and independence significantly influence materiality disclosure in sustainability reporting [2]. An active and independent board is more likely to ensure that the company identifies and discloses the most relevant and significant sustainability issues to its stakeholders. Board activity, measured by the frequency of board meetings and the level of engagement in strategic decision-making, indicates a board's commitment to overseeing the company's sustainability performance. Board independence, characterized by the presence of non-executive directors who are free from conflicts of interest, ensures objective oversight and accountability in sustainability reporting.

Independent commissionaires and board size positively affect ESG disclosure in Indonesia [9]. Independent commissioners bring objectivity and diverse perspectives to the board, enhancing its ability to oversee and promote ESG practices. A larger board size can also contribute to better ESG disclosure, as it allows for a wider range of expertise and experience to be represented, increasing the board's capacity to address complex sustainability issues. These factors collectively strengthen the board's role in driving ESG integration and transparency.

Audit committee independence negatively affects ESG disclosure [9]. This counterintuitive finding suggests that a highly independent audit committee may focus primarily on financial reporting and compliance, potentially overlooking the importance of ESG disclosure. Alternatively, it could indicate that a strong audit committee may be more critical and rigorous in its review of ESG data, leading to more conservative or limited disclosure. Further research is needed to fully understand this relationship and its implications for ESG reporting practices.

3.2. Influence of Governance Disclosure on Firm Value

Governance disclosure can have a negative influence on firm value in Thailand [10]. This finding suggests that while transparent governance practices are generally considered positive, excessive or poorly managed governance disclosure may create confusion or raise concerns among investors. For example, overly complex or technical disclosures may be difficult for investors to understand, leading to uncertainty and potentially lowering their valuation of the firm. Additionally, if governance disclosures reveal significant weaknesses or risks, this could negatively impact investor confidence and firm value.

Effective corporate governance strengthens performance within the ESG disclosure framework [11]. A well-structured and functioning corporate governance system ensures that ESG considerations are integrated into strategic decision-making, risk management, and performance evaluation. Effective governance promotes transparency, accountability, and ethical behavior, all of which are essential for building trust with stakeholders and achieving long-term sustainability. By strengthening the overall ESG disclosure framework, effective corporate governance can enhance a company's reputation, attract investors, and improve its financial performance.

A sustainability committee on the board of directors can improve ESG transparency [12]. Such a committee provides dedicated oversight and expertise on ESG issues, ensuring that they receive adequate attention and resources within the organization. The sustainability committee can also play a key role in developing and implementing ESG strategies, monitoring performance, and communicating progress to stakeholders. By establishing a clear focal point for ESG, a sustainability committee can significantly enhance a company's ESG transparency and accountability.

3.3. Managerial Factors

Managerial ability is positively related to voluntary ESG disclosure and assurance [13]. Managers with strong skills in strategic planning, resource allocation, and stakeholder engagement are more likely to recognize the value of ESG disclosure and to invest in the necessary systems and processes to ensure its quality and credibility. These managers also tend to be more proactive in seeking third-party assurance of their ESG reports, demonstrating their commitment to transparency and accountability. By prioritizing ESG disclosure and assurance, capable managers can enhance their company's reputation, attract investors, and improve its long-term financial performance.

Managers with better abilities tend to use voluntary disclosure as part of a sustainable policy [13]. These managers understand that voluntary disclosure can be a powerful tool for communicating their company's commitment to sustainability and for building trust with stakeholders. They are also more likely to view ESG as an integral part of their business strategy, rather than simply a compliance exercise. By integrating ESG into their core operations and voluntarily disclosing their performance, capable managers can demonstrate their leadership and create long-term value for their organizations.

CEO overconfidence can negatively affect firm risk, with ESG disclosure playing a mediating role [14]. Overconfident CEOs may underestimate risks and overestimate their ability to manage them, leading to poor decision-making and increased firm risk. However, ESG disclosure can mitigate this effect by providing stakeholders with more information about the company's risk profile and its efforts to manage environmental, social, and governance issues. By increasing transparency and accountability, ESG disclosure can help to curb CEO overconfidence and promote more prudent risk management practices.

4. Environmental Factors and ESG

4.1. Environmental Disclosure and Performance

Environmental disclosure scores can negatively affect accounting-based performance measures like ROA and ROE in Thailand [5]. This seemingly counterintuitive finding might suggest that companies investing heavily in environmental initiatives may experience short-term reductions in profitability as they incur costs associated with these efforts. However, it is important to note that these accounting-based measures may not fully capture the long-term benefits of environmental sustainability, such as reduced risks, improved efficiency, and enhanced reputation.

Environmental initiatives are a key theme in ESG communication and disclosure among Thai companies [1]. These initiatives often include efforts to reduce carbon emissions, conserve energy and water, manage waste responsibly, and protect biodiversity. Companies are increasingly recognizing the importance of communicating these efforts to stakeholders, as they demonstrate a commitment to environmental stewardship and can enhance their reputation. However, the quality and completeness of environmental disclosure vary significantly across companies, highlighting the need for standardized reporting frameworks and greater transparency.

Companies managing environmental and social risks experience enhancements in firm value [15]. By proactively identifying and addressing environmental and social risks, companies can reduce their exposure to regulatory penalties, reputational damage, and operational disruptions. Effective risk management also demonstrates a commitment to responsible business practices, which can attract investors, enhance stakeholder relationships, and improve long-term financial performance. These factors collectively contribute to an increase in firm value.

4.2. Carbon Emissions and ESG

Carbon emission (CAE) plays a moderating role in the relationship between Corporate Social Responsibility (CSR) strategy and ESG disclosure quality [16]. This suggests that the effectiveness of CSR strategies in improving ESG disclosure quality depends on the level of carbon emissions associated with a company's operations. Companies with high carbon emissions may need to implement more comprehensive and transparent CSR strategies to demonstrate their commitment to environmental sustainability and to mitigate the negative impact of their emissions on ESG disclosure quality.

Governments in ASEAN should pay attention to developing areas with low CAE [16]. These areas may represent opportunities for sustainable development and investment, as they are less likely to be associated with environmental degradation and social problems. By promoting economic activities that are compatible with low carbon emissions, governments can foster sustainable growth and improve the overall ESG performance of their countries. This includes supporting renewable energy projects, promoting energy efficiency, and encouraging sustainable land use practices.

Social factors and the book market are more influential in CO2 disclosure than direct environmental factors [17]. This surprising finding suggests that companies may be more motivated to disclose information about their carbon emissions due to social pressures and market considerations than due to direct environmental concerns. For example, companies may disclose CO2 emissions to enhance their reputation, attract investors, or comply with industry standards. The influence of the book market may reflect the growing demand for sustainable products and services, as well as the increasing scrutiny of corporate environmental performance by consumers and other stakeholders.

4.3. Environmental Sustainability

Environmental sustainability is linked to ESG performance, especially with gender diversity on the board [18]. Companies with greater gender diversity on their boards are more likely to prioritize environmental sustainability and to integrate it into their overall ESG performance. This may be because women directors bring different perspectives and priorities to the board, including a greater emphasis on social and environmental issues. By promoting gender diversity, companies can enhance their commitment to environmental sustainability and improve their overall ESG performance.

Encouraging firms to disclose their energy use and minimize pollution can improve environmental sustainability [18]. Transparency about energy consumption and pollution levels allows stakeholders to assess a company's environmental impact and to hold it accountable for its performance. By setting targets for reducing energy use and pollution, and by publicly reporting on their progress, companies can demonstrate their commitment to environmental sustainability and can drive continuous improvement in their environmental performance. This includes adopting cleaner technologies, implementing energy-efficient practices, and investing in pollution control measures.

Biodiversity-related disclosure is crucial but faces challenges in recognition and understanding of risks [19]. Protecting biodiversity is essential for maintaining healthy ecosystems, supporting human well-being, and mitigating climate change. However, many companies fail to adequately disclose their impacts on biodiversity, and investors often do not fully understand the risks associated with biodiversity loss. This may be because biodiversity is a complex and multifaceted issue, and its impacts are often indirect and difficult to quantify. To address this challenge, there is a need for standardized reporting frameworks and greater awareness among investors and companies about the importance of biodiversity and the risks associated with its loss.

5. Social Factors and ESG

5.1. Social Disclosure and Firm Performance

Social disclosure scores consistently enhance ROA, ROE, and Tobin's Q in Thailand [5]. This indicates that a company's commitment to social responsibility not only aligns with ethical considerations but also translates into tangible financial benefits. Investors and stakeholders increasingly recognize the value of companies that prioritize employee well-being, community engagement, and ethical supply chains, leading to improved accounting-based performance measures and market valuation. This positive correlation underscores the importance of social factors in driving sustainable and profitable growth.

Employee welfare is a key theme in ESG communication and disclosure [1]. Companies are paying more attention to creating a positive and supportive work environment, offering competitive benefits, and promoting diversity and inclusion. Disclosing these initiatives demonstrates a commitment to valuing employees as key assets, which can enhance morale, productivity, and retention rates. Transparent communication about employee welfare programs also builds trust with stakeholders and strengthens the company's reputation as a socially responsible employer.

Community development initiatives are also vital for ESG [1]. Engaging in projects that benefit local communities, such as education programs, healthcare support, and infrastructure development, demonstrates a commitment to social responsibility beyond the company's immediate operations. These initiatives can enhance the company's social license to operate, build goodwill with stakeholders, and contribute to the overall well-being of the communities in which it operates. Disclosing these initiatives showcases the company's broader social impact and strengthens its ESG profile.

5.2. Stakeholder Engagement

Stakeholder theory emphasizes the importance of all stakeholders in enhancing a company's competitive advantage [11]. This theory posits that companies should consider the interests of all parties affected by their operations, including employees, customers, suppliers, communities, and investors. By engaging with stakeholders and addressing their concerns, companies can build trust, foster collaboration, and create shared value. This approach not only enhances the company's reputation but also contributes to its long-term sustainability and competitive advantage.

Sustainability reporting reduces information asymmetry to stakeholders [20]. Transparent and comprehensive sustainability reports provide stakeholders with valuable information about a company's environmental, social, and governance performance. This reduces the information gap between the company and its stakeholders, enabling them to make more informed decisions about their interactions with the organization. By providing clear and accessible information, sustainability reporting promotes accountability and fosters trust between companies and their stakeholders.

ESG reporting helps companies gain the trust of stakeholders through transparent and useful information [21]. By disclosing their ESG performance, companies demonstrate their commitment to responsible business practices and their willingness to be held accountable for their actions. Transparent and useful ESG information enables stakeholders to assess the company's impact on the environment and society, and to make informed decisions about their investments, purchases, and other interactions with the organization. This fosters trust and strengthens relationships between companies and their stakeholders.

5.3. Social Responsibility

Corporate Social Responsibility (CSR) is increasingly recognized as an aspect of sustainable business development [22]. CSR encompasses a wide range of activities and initiatives aimed at addressing social and environmental issues, such as reducing carbon emissions, promoting fair labor practices, and supporting community development. By integrating CSR into their business strategies, companies can contribute to sustainable development while also enhancing their reputation, attracting investors, and improving their long-term financial performance. This integration requires a shift in mindset and a commitment to embedding social and environmental considerations into all aspects of the organization.

CSR strategy has a favorable effect on ESG disclosure quality [16]. Companies with well-defined and effectively implemented CSR strategies are more likely to have higher quality ESG disclosures. This is because CSR strategies provide a framework for identifying, managing, and reporting on ESG issues, ensuring that disclosures are comprehensive, consistent, and reliable. By aligning their CSR strategies with their ESG reporting, companies can demonstrate their commitment to sustainability and build trust with stakeholders.

Companies aligning their strategies with societal needs enhance brand reputation and stakeholder engagement [23]. By addressing pressing social and environmental issues, companies can demonstrate their commitment to making a positive impact on society. This not only enhances their brand reputation but also strengthens their relationships with stakeholders, including customers, employees, investors, and communities. Consumers are increasingly likely to support companies that align with their values, and investors are increasingly prioritizing ESG factors in their investment decisions. By aligning their strategies with societal needs, companies can attract and retain both customers and investors, leading to long-term sustainable growth.

6. Regulatory and Institutional Influences

6.1. Government Policies and Guidelines

The need for a well-structured policy framework ensures that ESG initiatives lead to long-term financial stability [5]. A clear and comprehensive policy framework provides the necessary guidance and incentives for companies to adopt sustainable business practices, fostering a stable and predictable environment for investment and growth. This framework should include specific targets, reporting requirements, and enforcement mechanisms to ensure that ESG initiatives are effectively implemented and contribute to long-term financial stability. Without such a framework, ESG initiatives may be ad hoc, inconsistent, and ultimately ineffective.

Government support and funding are crucial to supporting firm performance [8]. Governments can play a key role in promoting ESG adoption by providing financial incentives, such as tax breaks and subsidies, to companies that invest in sustainable technologies and practices. They can also offer technical assistance and training programs to help companies develop the expertise and capabilities needed to implement effective ESG initiatives. By providing this support, governments can create a level playing field and encourage companies to prioritize ESG considerations in their business strategies.

Governments and firms need to deploy ESG guidelines to succeed in competitive firm performances [8]. Clear and consistent ESG guidelines provide companies with a roadmap for integrating sustainability into their operations and reporting on their progress. These guidelines should be aligned with international best practices and tailored to the specific context of the country or region. By adopting and implementing these guidelines, companies can demonstrate their commitment to ESG and enhance their competitiveness in the global market. Governments also need to play a role in enforcing these guidelines and ensuring that companies are held accountable for their ESG performance.

6.2. Stock Exchange Regulations

SET ESG ratings influence firm value through superior management of environmental and social risks [15]. The Stock Exchange of Thailand (SET) ESG ratings provide investors with a standardized assessment of a company's ESG performance, enabling them to make more informed investment decisions. Companies with higher SET ESG ratings are perceived as better managing their environmental and social risks, reducing their exposure to regulatory penalties, reputational damage, and operational disruptions. This leads to increased investor confidence and a higher valuation for the firm.

Announcements of SET ESG ratings result in immediate and sustained increases in firm value [15]. The release of SET ESG ratings provides a clear signal to the market about a company's ESG performance, triggering an immediate positive reaction from investors. This positive reaction is sustained over time as investors continue to recognize the long-term benefits of strong ESG performance, such as reduced risks, improved efficiency, and enhanced reputation. This underscores the importance of ESG as a key determinant of long-term viability in the eyes of investors.

Third-party ESG evaluations can amplify the positive effects of SET ESG ratings [15]. Independent evaluations from reputable ESG rating agencies can provide further validation of a company's ESG performance, enhancing investor confidence and increasing the positive impact on firm value. These evaluations provide an objective assessment of a company's ESG practices, helping investors to differentiate between companies that are genuinely committed to sustainability and those that are simply "greenwashing." However, conflicting assessments from multiple third parties can diminish firm value, highlighting the importance of strategically selecting evaluators to optimize market perceptions.

6.3. Accounting Standards

Fundamental accounting standards impact ESG disclosure quality [16]. The accounting standards used by a company can influence the scope, accuracy, and reliability of its ESG disclosures. For example, standards that require companies to recognize and measure environmental liabilities can lead to more comprehensive and transparent disclosure of environmental risks. Similarly, standards that promote transparency in corporate governance practices can enhance the quality of governance disclosures. By adopting and implementing robust accounting standards, companies can improve the credibility and usefulness of their ESG disclosures.

The adoption of International Financial Reporting Sustainability Standards (IFRS) S1 requires gap analysis in company annual reports [24]. The IFRS S1 standard provides a comprehensive framework for reporting on sustainability-related risks and opportunities. To comply with this standard, companies need to conduct a gap analysis to identify areas where their current reporting practices fall short of the requirements of IFRS S1. This gap analysis will help companies to prioritize their efforts and to develop a plan for improving their sustainability reporting.

The research highlights the dominant role of internal components and government factors for sustainable value [16]. Internal components, such as corporate governance practices and CSR strategies, play a crucial role in driving sustainable value creation. Government factors, such as regulations, incentives, and enforcement mechanisms, also play a key role in promoting sustainable business practices. By focusing on these internal components and government factors, companies can enhance their ESG performance and create long-term value for their stakeholders.

7. Firm-Specific Characteristics

7.1. Company Size and Leverage

Company size is often positively related to ESG disclosure [3]. Larger companies tend to have more resources and greater visibility, leading to increased pressure to disclose ESG information. They also have more sophisticated reporting systems and dedicated sustainability teams, enabling them to collect and analyze ESG data more effectively. As a result, larger companies are generally more likely to engage in comprehensive ESG disclosure than smaller companies.

Higher leverage weakens financial performance [5]. Companies with high levels of debt may face increased financial risk, as they have less flexibility to invest in growth opportunities or to respond to unexpected challenges. High leverage can also lead to higher interest expenses, reducing profitability and cash flow. As a result, companies with higher leverage may experience weaker financial performance than companies with lower debt levels.

Leverage has a significant positive effect on Corporate Social Responsibility Disclosure (CSRD) [22]. This suggests that companies with higher levels of debt may be more likely to engage in CSRD to signal their commitment to responsible business practices and to mitigate the potential negative impact of their debt on their reputation. CSRD can also help companies to attract investors and lenders who prioritize ESG factors, potentially improving their access to capital and reducing their borrowing costs.

7.2. Industry and Sector

The industry in which a company operates can influence ESG disclosure [3]. Companies in industries with high environmental or social impacts, such as energy, mining, and manufacturing, are more likely to face pressure to disclose ESG information. They also tend to have more developed ESG reporting practices and to be subject to greater scrutiny from regulators, investors, and the public. As a result, ESG disclosure practices can vary significantly across different industries.

Companies in critical sectors have a lower level of ESG disagreement [25]. Critical sectors, such as healthcare, utilities, and food production, are subject to greater regulatory oversight and public scrutiny, leading to more standardized ESG reporting practices. This reduces the potential for disagreement among ESG rating agencies, as they have access to more reliable and comparable data. As a result, companies in critical sectors tend to have a lower level of ESG disagreement than companies in other industries.

The tourism industry integrates social and environmental concerns in strategies and policies [22]. The tourism industry is particularly sensitive to environmental and social issues, as its success depends on the preservation of natural resources and the well-being of local communities. As a result, many tourism companies have adopted sustainable tourism practices, such as reducing their carbon footprint, conserving water and energy, and supporting local communities. These practices are often integrated into their business strategies and policies, and are disclosed in their sustainability reports.

7.3. Firm Age and Ownership

Firm age is a factor influencing sustainability reporting [26]. Older companies tend to have more established reporting systems and a longer track record of engaging with stakeholders, making them more likely to engage in sustainability reporting. They also have more experience in managing environmental and social risks and opportunities, and are better equipped to collect and analyze sustainability data. As a result, older companies are generally more likely to engage in sustainability reporting than younger companies.

Family ownership positively influences ESG disclosure [27]. Family-owned businesses often have a long-term perspective and a strong commitment to their local communities, leading them to prioritize ESG considerations in their business strategies. They also tend to have a more personal relationship with their stakeholders, making them more likely to engage in transparent ESG disclosure. As a result, family-owned businesses are often leaders in ESG disclosure.

Ownership structure has a negative impact on ESG reporting capability [28]. Complex ownership structures, such as those involving multiple subsidiaries or cross-ownership arrangements, can make it more difficult to collect and analyze ESG data. They can also create conflicts of interest and reduce transparency, hindering a company's ability to engage in effective ESG reporting. As a result, companies with complex ownership structures may face challenges in developing their ESG reporting capability.

8. Regional and Cultural Context

8.1. ASEAN Differences

Country-specific dynamics exist in the relationship between financial performance and ESG disclosure [6]. The economic, regulatory, and cultural contexts of different ASEAN countries can influence the way companies approach ESG disclosure and the impact it has on their financial performance. For example, countries with stronger environmental regulations may see a more positive relationship between environmental disclosure and financial performance, as companies are incentivized to invest in sustainable practices and to disclose their environmental performance transparently.

Malaysia, Singapore, and Thailand show different cyclic relationships between ESG disclosure and financial performance [20]. These differences reflect the unique characteristics of each country's economy, regulatory environment, and cultural values. For example, Malaysia has a strong emphasis on stakeholder engagement and corporate social responsibility, while Singapore is known for its strong regulatory framework and its focus on innovation and technology. Thailand has a more traditional business culture and is still in the early stages of developing its ESG reporting practices.

Significant positive cyclic relationship for Malaysian companies, negative for Singaporean, and no significant relationship for Thai companies [20]. This suggests that the impact of ESG disclosure on financial performance can vary significantly depending on the country in which a company operates. In Malaysia, companies that invest in ESG initiatives and disclose their performance transparently are likely to see a positive impact on their financial performance over time. In Singapore, however, there may be a negative relationship between ESG disclosure and financial performance, potentially due to the costs associated with implementing ESG initiatives and the lack of a clear regulatory framework for ESG reporting. In Thailand, there may be no significant relationship between ESG disclosure and financial performance, as ESG reporting practices are still in their early stages of development.

8.2. Cultural Values and Norms

Cultural values and norms can influence the adoption and implementation of ESG practices [29]. Cultural values, such as respect for the environment, social harmony, and ethical behavior, can promote the adoption of ESG practices and encourage companies to disclose their ESG performance transparently. Cultural norms, such as the expectation that companies should contribute to the well-being of their communities, can also influence the way companies approach ESG and the types of initiatives they prioritize. As a result, cultural values and norms play a significant role in shaping ESG practices and disclosure.

Societal norms are pivotal in shaping EVs purchase intentions [29]. Social norms, such as the perception that electric vehicles are environmentally friendly and socially responsible, can influence consumer attitudes and purchase intentions. Consumers are more likely to purchase electric vehicles if they believe that doing so will enhance their social image and demonstrate their commitment to sustainability. As a result, societal norms play a key role in driving the adoption of electric vehicles and promoting sustainable transportation.

Cultural context affects how companies communicate and disclose ESG information [1]. The way companies communicate and disclose ESG information can be influenced by cultural factors, such as language, communication styles, and attitudes towards transparency. For example, companies in cultures that value direct and open communication may be more likely to disclose negative ESG information transparently, while companies in cultures that emphasize harmony and consensus may be more likely to focus on positive ESG achievements. As a result, cultural context plays a significant role in shaping ESG communication and disclosure practices.

8.3. Emerging Market Considerations

Studies in developing countries are still rare and mixed regarding ESG and firm performance [30]. The relationship between ESG and firm performance can be complex and can vary depending on the specific context of the developing country. Factors such as the level of economic development, the strength of regulatory frameworks, and the prevalence of corruption can all influence the impact of ESG on firm performance. As a result, more research is needed to understand the specific dynamics of ESG and firm performance in developing countries.

ESG has a positive effect on firm performance in ASEAN developing countries [30]. Despite the challenges and complexities of implementing ESG practices in developing countries, there is evidence that ESG can have a positive impact on firm performance. This may be because ESG practices can help companies to reduce risks, improve efficiency, and enhance their reputation, leading to increased investor confidence and improved financial performance. However, the magnitude and nature of this effect can vary depending on the specific context of each country.

ESG, in the long term, builds effective governance and increases shareholder value in developing markets [30]. By adopting and implementing ESG practices, companies in developing markets can improve their corporate governance, enhance their transparency, and build trust with stakeholders. This can lead to increased investor confidence, improved access to capital, and higher shareholder value. As a result, ESG is increasingly recognized as a key driver of long-term sustainable growth in developing markets.

9. Impact on Investor Perceptions and Market Valuation

9.1. ESG and Firm Value

Firms with higher SET ESG ratings experience significant enhancements in firm value [15]. The Stock Exchange of Thailand (SET) ESG ratings serve as a credible signal of a company's commitment to sustainable practices, influencing investor perceptions and driving market valuation. These ratings reflect a company's performance across a range of environmental, social, and governance factors, providing investors with a standardized and comparable measure of ESG performance. Companies that achieve higher ratings are generally perceived as better managed, less risky, and more likely to generate long-term sustainable returns, leading to increased investor demand and higher firm value.

ESG disclosure positively affects firm value [31]. Transparent and comprehensive ESG disclosure provides investors with valuable information about a# Determinants Influencing ESG Disclosure in Thailand: A Detailed Analysis

1. Overview of ESG Disclosure in Thailand

1.1. Current State of ESG Reporting

ESG reporting in Thailand is increasingly crucial as businesses strive for long-term sustainability and enhanced stakeholder trust [1]. Effective ESG communication and disclosure practices are essential for demonstrating a company's commitment to sustainability. However, the level of ESG disclosure in Thailand remains relatively low compared to more developed markets [2]. Research indicates that many listed companies in Malaysia also disclose some amount of material sustainability information, but the level of disclosure remains relatively low, suggesting a broader trend in developing economies. There is a growing recognition of the need for Thai companies to improve their ESG reporting practices to effectively compete on the global stage [3]. This imperative aligns with the legitimacy theory, which posits that companies should disclose more ESG information to justify their continued existence and maintain stakeholder support.

The existing literature shows that the number of firms reporting ESG data has increased, along with the average ESG score, over the past decade [32]. Despite this progress, inconsistencies in reporting standards and varying regulatory environments pose significant challenges. Thai companies face specific difficulties in integrating ESG metrics effectively into their core business strategies [1]. The analysis of how the top 20 companies listed on the Thailand Stock Exchange communicate and disclose ESG-related information reveals diverse approaches in integrating ESG factors into their business models and public reporting. Furthermore, the limited number of enterprises in Vietnam that disclose ESG information highlights the broader challenges in emerging markets regarding ESG reporting.

1.2. Importance of ESG for Stakeholders

Transparent ESG disclosure is critical for enhancing corporate sustainability and fostering stronger stakeholder engagement [1]. Effective communication of ESG-related information demonstrates a company’s commitment to sustainable practices, which in turn builds trust and strengthens relationships with stakeholders. Companies that prioritize ESG practices can mitigate potential risks and identify new business opportunities, contributing to long-term financial benefits [1]. This proactive approach not only enhances a company's resilience but also positions it favorably in an evolving business landscape increasingly focused on sustainability.

Investors and policymakers are paying increasing attention to the impact of ESG reporting on financial markets [4]. The qualitative nature of ESG data, inconsistencies in reporting standards, and varying regulatory and cultural environments, contribute to the complexity of the relationship. The integration of robust ESG practices can enhance market confidence and drive long-term value creation, which provides actionable guidance for investors and policymakers [15]. Furthermore, understanding how managerial competence impacts voluntary ESG disclosure and assurance can equip stakeholders to hold companies responsible for their ESG disclosure practices and make informed investment decisions [13].

1.3. Challenges in ESG Implementation

Inconsistencies in disclosure practices and information asymmetry pose significant challenges to the effective implementation of ESG standards [4]. These inconsistencies can arise from the qualitative nature of ESG data, the absence of standardized reporting frameworks, and the varying levels of regulatory oversight across different markets. Thai companies often struggle to integrate ESG metrics seamlessly into their business strategies, leading to difficulties in demonstrating a cohesive and comprehensive approach to sustainability [1]. The thematic analysis of ESG communication and disclosure identifies key themes such as comprehensive ESG disclosure, environmental initiatives, employee welfare, governance and risk management, and community development, highlighting the diverse approaches taken by companies to integrate ESG factors.

There is a pressing need for a well-structured policy framework to ensure that ESG initiatives lead to long-term financial stability, increased investor confidence, and sustainable economic development [5]. Such a framework should address the existing gaps in ESG reporting standards, promote greater transparency and accountability, and provide clear guidelines for companies to follow. The study by Malik Abu Afifa et al. [16] emphasizes the dominant role of internal components (corporate governance, corporate social responsibility strategy, and carbon emissions) and government factors (fundamental accounting standards) for the sustainable value of firms in ASEAN-5, highlighting the need for governments to pay attention to developing areas that have low CAE and have a favorable influence on national sustainable development goals.

2. Financial Performance and ESG Disclosure

2.1. Impact of Financial Metrics on ESG

Financial metrics such as Return on Assets (ROA), Return on Capital Employed (ROCE), and Effective Tax Rate (ETR) can significantly influence ESG disclosure practices in ASEAN countries [6]. These metrics provide insights into a company's financial health and performance, which in turn can affect its approach to ESG reporting. For instance, companies with strong financial performance may be more inclined to invest in ESG initiatives and disclose related information, while those facing financial constraints may prioritize short-term profitability over sustainability efforts.

Interestingly, some studies suggest that Singaporean companies with higher ROA may report less ESG information [6]. This counterintuitive finding could be attributed to various factors, such as a perception that strong financial performance already signals overall corporate excellence, reducing the perceived need for extensive ESG disclosure. Thai companies' aggressive tax strategies might hinder positive ESG perceptions, as stakeholders may view such strategies as conflicting with broader sustainability goals [6]. The interplay between financial performance and ESG disclosure underscores the need for companies to carefully balance their financial objectives with their sustainability commitments.

2.2. ESG Disclosure and Firm Profitability

ESG disclosure has a positive relationship with Tobin's Q, which is a market-based measure of firm value, but not necessarily with Return on Assets (ROA), an accounting-based measure of profitability, for Thai firms [7]. This suggests that while ESG disclosure may enhance a company's market valuation, it does not always translate directly into improved accounting profits. The findings indicate discrepancies: high and medium ESGD levels are associated with a negative impact on TBQ when EPS increased, whereas low ESGD levels correlate with an increase in TBQ with rising EPS [7]. This nuanced relationship highlights the complexity of ESG's impact on financial performance, suggesting that the level of ESG commitment and its interaction with other financial variables can influence market value.

High and medium Environmental, Social, and Governance Disclosures (ESGD) levels can negatively impact Tobin's Q when Earnings Per Share (EPS) increases, indicating a potential disconnect between extensive ESG efforts and market perception of profitability [7]. Conversely, low ESGD levels correlate with an increase in Tobin's Q with rising EPS, suggesting that a more modest approach to ESG disclosure may be viewed favorably by investors when accompanied by strong earnings performance [7]. This suggests that investors may be skeptical of companies that heavily emphasize ESG without demonstrating corresponding financial results.

2.3. Financial Constraints and ESG

Financial constraints can act as obstacles to firm performance in ASEAN countries, limiting their ability to invest in ESG initiatives and disclose related information [8]. Companies facing financial difficulties may prioritize short-term survival over long-term sustainability goals, leading to reduced ESG efforts and disclosure. However, high ESG scores can alleviate the adverse impact of financial constraints, as companies with strong ESG profiles may be better positioned to attract investors and access capital [8]. This is because investors are increasingly considering ESG factors in their investment decisions, viewing companies with strong ESG performance as less risky and more sustainable in the long run.

The Social (S) pillar of ESG has the greatest magnitude in moderating financial constraints [8]. This suggests that social initiatives, such as employee welfare programs, community engagement, and ethical labor practices, can play a particularly important role in mitigating the negative effects of financial constraints on firm performance. Effective financial support and funding from the government are crucial to supporting firm performance [8]. ESG-compliant strategies should also be formulated to encourage ESG disclosure, which leads to increased capital allocation efficiency.

3. Corporate Governance and ESG

3.1. Board Characteristics

Board activity and independence significantly influence materiality disclosure in sustainability reporting [2]. More active and independent boards are more likely to ensure that companies disclose material sustainability information, as they are better positioned to oversee and guide the company's sustainability efforts. Independent commissionaires and board size positively affect ESG disclosure in Indonesia, indicating that a larger board with independent members enhances the oversight and prioritization of ESG issues [9]. The influence of board characteristics on ESG disclosure highlights the importance of effective corporate governance in promoting sustainability.

Audit committee independence negatively affects ESG disclosure [9]. This counterintuitive finding suggests that a highly independent audit committee may focus more on financial reporting and compliance, potentially overlooking or deprioritizing ESG-related disclosures. This underscores the need for audit committees to broaden their focus to include ESG considerations, ensuring a more comprehensive approach to corporate governance. Board members are urged to consider the importance of the reporting materiality determination process; otherwise, poor reporting may result in conflict with major stakeholder groups who do not see the material issues disclosed in the sustainability reports [2].

3.2. Influence of Governance Disclosure on Firm Value

Governance disclosure can have a negative influence on firm value in Thailand, which may seem counterintuitive [10]. This could be due to various factors, such as the perception that extensive governance disclosures signal potential weaknesses or a lack of trust within the organization. Effective corporate governance, however, strengthens performance within the ESG disclosure framework [11]. This suggests that while the mere disclosure of governance practices may not always translate into improved firm value, the actual implementation of effective governance structures and processes is crucial for enhancing overall corporate performance.

A sustainability committee on the board of directors can improve ESG transparency [12]. Such committees provide dedicated oversight and guidance on ESG issues, ensuring that they are properly addressed and disclosed. Furthermore, in companies with state participation, an important determinant of ESG transparency is the presence of a sustainability committee, while the quantitative composition, independence and diversity of the board of directors do not affect the degree of ESG transparency of such companies [12]. This highlights the need for companies to establish dedicated structures and processes for managing and disclosing ESG information.

3.3. Managerial Factors

Managerial ability is positively related to voluntary ESG disclosure and assurance [13]. Managers with strong abilities are more likely to recognize the importance of ESG issues and proactively disclose related information, as well as seek third-party assurance to enhance the credibility of their ESG reporting. Managers with better abilities tend to use voluntary disclosure as part of sustainable policy, demonstrating a commitment to transparency and accountability [13]. This suggests that the skills and competencies of managers play a critical role in shaping a company's approach to ESG.

CEO overconfidence can negatively affect firm risk, with ESG disclosure playing a mediating role [14]. Overconfident CEOs may underestimate potential risks and make suboptimal decisions, but transparent ESG disclosure can help to mitigate these negative effects by providing stakeholders with more comprehensive information about the company's operations and risk profile. By better comprehending how managerial competence impacts voluntary ESG disclosure and assurance, stakeholders may be better equipped to hold companies responsible for their ESG disclosure practices and make informed investment decisions [13].

4. Environmental Factors and ESG

4.1. Environmental Disclosure and Performance

Environmental disclosure scores can negatively affect accounting-based performance measures like ROA and ROE in Thailand [5]. This may seem counterintuitive, but it could be because companies that are heavily involved in industries with high environmental impact may face increased scrutiny and higher costs associated with environmental compliance, which negatively impacts their accounting performance. Environmental initiatives are a key theme in ESG communication and disclosure among Thai companies [1]. These initiatives often include efforts to reduce carbon emissions, conserve resources, and minimize pollution.

Companies managing environmental and social risks experience enhancements in firm value [15]. This suggests that investors recognize the importance of effective risk management and reward companies that proactively address environmental and social challenges. This underscores the importance of integrating environmental considerations into business strategies.

4.2. Carbon Emissions and ESG

Carbon emission (CAE) plays a moderating role in the relationship between Corporate Social Responsibility (CSR) strategy and ESG disclosure quality [16]. This means that the impact of CSR strategies on ESG disclosure quality can vary depending on the level of carbon emissions. Governments in ASEAN should pay attention to developing areas with low CAE, as these areas may offer opportunities for promoting sustainable development and attracting green investments [16]. This highlights the importance of considering carbon emissions in the context of ESG disclosure and sustainability efforts.

Social factors and the book market are more influential in CO2 disclosure than direct environmental factors [17]. This suggests that companies are more likely to disclose information about their carbon emissions if they are subject to social pressure or if they operate in industries with high public visibility. This also highlights the importance of stakeholder engagement and communication in promoting environmental transparency.

4.3. Environmental Sustainability

Environmental sustainability is linked to ESG performance, especially with gender diversity on the board [18]. Companies with greater gender diversity on their boards tend to have better ESG performance, particularly in the area of environmental sustainability. Encouraging firms to disclose their energy use and minimize pollution can improve environmental sustainability [18]. Transparent disclosure of environmental impacts enables stakeholders to assess a company's environmental performance and hold it accountable for its actions.

Biodiversity-related disclosure is crucial but faces challenges in recognition and understanding of risks [19]. Despite the increasing recognition of the importance of biodiversity, the quality of biodiversity-related disclosure has declined in recent years, suggesting a need for greater awareness and attention to this issue. These findings suggest the need for equal recognition of biodiversity alongside climate change in reporting standards and policies [19].

5. Social Factors and ESG

5.1. Social Disclosure and Firm Performance

Social disclosure scores consistently enhance ROA, ROE, and Tobin's Q in Thailand [5]. This indicates that companies that prioritize social responsibility and disclose related information tend to perform better financially. Employee welfare is a key theme in ESG communication and disclosure, as companies recognize the importance of attracting, retaining, and motivating their workforce [1]. This includes initiatives such as fair wages, safe working conditions, training and development opportunities, and work-life balance programs.

Community development initiatives are also vital for ESG, as companies seek to contribute to the well-being of the communities in which they operate [1]. This can include supporting local charities, investing in education and healthcare, and promoting economic development. The importance of transparent ESG disclosure in enhancing corporate sustainability and stakeholder engagement is underscored by the analysis [1].

5.2. Stakeholder Engagement

Stakeholder theory emphasizes the importance of all stakeholders in enhancing a company's competitive advantage [11]. This includes not only shareholders but also employees, customers, suppliers, communities, and the environment. Sustainability reporting reduces information asymmetry to stakeholders, enabling them to make more informed decisions about their interactions with the company [20]. This transparency builds trust and strengthens relationships with stakeholders, contributing to long-term value creation.

ESG reporting helps companies gain the trust of stakeholders through transparent and useful information [21]. By disclosing their ESG performance, companies demonstrate their commitment to responsible business practices and their willingness to be held accountable for their actions. Effective stakeholder engagement is crucial for building a strong reputation and fostering long-term relationships.

5.3. Social Responsibility

Corporate Social Responsibility (CSR) is increasingly recognized as an aspect of sustainable business development [22]. Companies are expected to integrate social and environmental concerns into their strategies, policies, and business operations. CSR strategy has a favorable effect on ESG disclosure quality, as companies with strong CSR commitments are more likely to prioritize ESG reporting [16]. This underscores the importance of aligning CSR and ESG efforts to achieve greater sustainability outcomes.

Companies aligning their strategies with societal needs enhance brand reputation and stakeholder engagement [23]. By addressing social and environmental challenges, companies can build trust with customers, employees, and communities, strengthening their brand and enhancing their long-term competitiveness. This alignment is particularly important in today's business environment, where consumers are increasingly demanding that companies demonstrate a commitment to social and environmental responsibility.

6. Regulatory and Institutional Influences

6.1. Government Policies and Guidelines

The need for a well-structured policy framework ensures that ESG initiatives lead to long-term financial stability [5]. Such a framework should provide clear guidelines for companies to follow, promote transparency and accountability, and incentivize sustainable business practices. Government support and funding are crucial to supporting firm performance, particularly for companies facing financial constraints [8]. This support can take the form of grants, tax incentives, and access to low-cost financing.

Governments and firms need to deploy ESG guidelines to succeed in competitive firm performances [8]. These guidelines should be tailored to the specific context of each country and industry, taking into account local challenges and opportunities. This also highlights the need for governments to pay attention to developing areas that have low CAE and have a favorable influence on national sustainable development goals [16].

6.2. Stock Exchange Regulations

SET ESG ratings influence firm value through superior management of environmental and social risks [15]. Companies with high SET ESG ratings are perceived as being better managed and less risky, which translates into higher firm value. Announcements of SET ESG ratings result in immediate and sustained increases in firm value, demonstrating the importance of ESG performance in the eyes of investors [15]. This suggests that investors are increasingly using ESG ratings as a signal of a company's long-term sustainability and financial prospects.

Third-party ESG evaluations can amplify the positive effects of SET ESG ratings [15]. Endorsements from reputable sources can further enhance a company's reputation and attract investors. However, conflicting assessments from multiple third parties can diminish firm value, creating confusion and uncertainty among investors [15].

6.3. Accounting Standards

Fundamental accounting standards impact ESG disclosure quality [16]. The adoption of International Financial Reporting Sustainability Standards (IFRS) S1 requires gap analysis in company annual reports [24]. This standard provides a framework for companies to disclose information about their sustainability-related risks and opportunities. The research highlights the dominant role of internal components and government factors for sustainable value, emphasizing the need for a holistic approach to ESG integration [16].

The research points up the dominant role of internal components (i.e. COG, CSRS and CAE) and government factor (i.e. fundamental accounting standards) for the sustainable value (i.e. ESGDQ) of firms in ASEAN-5, a developing market [16]. Thus, firm headers should inspect the performance of these internal components at a crucial interval to enhance their environmental, social and governance (ESG) behaviors and make them more sustainable.

7. Firm-Specific Characteristics

7.1. Company Size and Leverage

Company size is often positively related to ESG disclosure [3]. Larger companies tend to have more resources and greater visibility, which makes them more likely to invest in ESG initiatives and disclose related information. Larger firms also face greater scrutiny from stakeholders, which further incentivizes ESG reporting. Higher leverage weakens financial performance [5]. Companies with high levels of debt may face increased financial risk and have less flexibility to invest in ESG initiatives.

Leverage has a significant positive effect on Corporate Social Responsibility Disclosure (CSRD) [22]. This suggests that companies with higher levels of debt may use CSRD as a way to signal their commitment to responsible business practices and mitigate potential risks associated with their debt burden. This underscores the complex relationship between financial structure and ESG reporting.

7.2. Industry and Sector

The industry in which a company operates can influence ESG disclosure [3]. Companies in industries with high environmental or social impact, such as energy, mining, and manufacturing, are more likely to face pressure from stakeholders to disclose ESG information. Companies in critical sectors have a lower level of ESG disagreement [25]. This suggests that there is greater consensus among rating agencies about the ESG performance of companies in these sectors.

The tourism industry integrates social and environmental concerns in strategies and policies [22]. Companies in the tourism sector are increasingly recognizing the importance of sustainability and are incorporating ESG considerations into their business models. This is driven by growing consumer demand for sustainable tourism options and increasing awareness of the environmental and social impacts of tourism.

7.3. Firm Age and Ownership

Firm age is a factor influencing sustainability reporting [26]. Older companies may have more established reporting practices and a greater understanding of ESG issues. Family ownership positively influences ESG disclosure [27]. Family-owned businesses may have a stronger sense of social responsibility and a greater commitment to long-term sustainability.

Ownership structure has a negative impact on ESG reporting capability [28]. Companies with certain ownership structures may face greater challenges in implementing and disclosing ESG information. The results indicate that business size has a positive impact, while financial leverage, business sector, and ownership structure have a negative impact [28].

8. Regional and Cultural Context

8.1. ASEAN Differences

Country-specific dynamics exist in the relationship between financial performance and ESG disclosure [6]. The unique economic, social, and political contexts of each country in ASEAN can influence how companies approach ESG reporting. Malaysia, Singapore, and Thailand show different cyclic relationships between ESG disclosure and financial performance [20]. This suggests that the impact of ESG disclosure on financial performance can vary depending on the specific characteristics of each country.

Significant positive cyclic relationship for Malaysian companies, negative for Singaporean, and no significant relationship for Thai companies [20]. These differences highlight the importance of considering the regional and cultural context when analyzing ESG disclosure and its impact on financial performance. This underscores the importance of tailoring ESG disclosure strategies to each country's financial performance landscape [6].

8.2. Cultural Values and Norms

Cultural values and norms can influence the adoption and implementation of ESG practices [29]. Societal norms are pivotal in shaping EVs purchase intentions [29]. Cultural context affects how companies communicate and disclose ESG information [1]. Companies need to be sensitive to cultural values and norms when developing their ESG strategies and reporting practices.

Effective ESG communication and disclosure practices are critical in demonstrating corporate commitment to sustainability [1]. The analysis identifies five key themes in ESG communication and disclosure: (1) comprehensive ESG disclosure and reporting, (2) environmental initiatives, (3) employee welfare, (4) governance and risk management, and (5) community development [1].

8.3. Emerging Market Considerations

Studies in developing countries are still rare and mixed regarding ESG and firm performance [30]. This is due to factors such as limited data availability, varying regulatory environments, and different levels of stakeholder awareness. ESG has a positive effect on firm performance in ASEAN developing countries [30]. This suggests that companies in emerging markets can benefit from adopting ESG practices.

ESG, in the long term, builds effective governance and increases shareholder value in developing markets [30]. This underscores the importance of promoting ESG adoption in emerging markets to foster sustainable economic development. Research originality in this study proves that developing countries have a positive effect between ESG disclosure and company performance [30].

9. Impact on Investor Perceptions and Market Valuation

9.1. ESG and Firm Value

Firms with higher SET ESG ratings experience significant enhancements in firm value [15]. This demonstrates that investors recognize the importance of ESG performance and reward companies with strong ESG profiles. ESG disclosure positively affects firm value [31]. Transparent and comprehensive ESG reporting can enhance a company's reputation, attract investors, and improve its overall market valuation.

Environmental and social disclosures positively influence firm value [10]. This suggests that investors are particularly interested in companies that prioritize environmental and social responsibility. Moreover, the study found the positive influence of environmental and social disclosures on firm value, while there was a negative influence of governance disclosure on firm value [10].

9.2. Investor Confidence

Robust ESG practices enhance market confidence and drive long-term value creation [15]. Companies that demonstrate a commitment to ESG principles are more likely to attract investors and build trust with stakeholders. Investors seek ESG information to make informed investment decisions [13]. By better comprehending how managerial competence impacts voluntary ESG disclosure and assurance, stakeholders may be better equipped to hold companies responsible for their ESG disclosure practices and make informed investment decisions [13].

ESG transparency is needed for investors and policymakers [27]. These findings underscore the need for ESG transparency for investors and policymakers, and the role of governance in enabling sustainable financial performance [27]. These insights are crucial for firm management, highlighting the importance of ESGD in relation to other financial variables and their effects on market value [7].

9.3. Market Reactions

Announcements of SET ESG ratings result in immediate and sustained increases in firm value [15]. This demonstrates that the market reacts positively to companies that are recognized for their strong ESG performance. Third-party evaluations from reputable sources amplify the positive effects of SET ESG ratings [15]. Endorsements from credible organizations can further enhance a company's reputation and attract investors.

Conflicting assessments from multiple third parties can diminish firm value [15]. This highlights the importance of carefully selecting evaluators and ensuring that their assessments are consistent and reliable. Specifically, a single strong endorsement markedly enhances firm value, whereas evaluations from two to three third parties may introduce confusion, leading to increased information asymmetry [15].

10. Recommendations and Future Research Directions

10.1. Enhancing ESG Communication

Thai businesses need to enhance their ESG communication strategies and strengthen sustainability efforts [1]. This includes developing clear and comprehensive ESG reports, engaging with stakeholders, and promoting a culture of sustainability within the organization. Companies should strategically select their evaluators to optimize market perceptions [15]. Choosing reputable and credible evaluators can enhance the credibility of ESG ratings and attract investors.

Transparent ESG disclosure is crucial for corporate sustainability and stakeholder engagement [1]. By openly communicating their ESG performance, companies can build trust with stakeholders and enhance their long-term competitiveness. This suggests both country characteristics market [32].

10.2. Policy and Regulatory Improvements

A well-structured policy framework is needed to ensure that ESG initiatives lead to long-term financial stability [5]. This framework should provide clear guidelines for companies to follow, promote transparency and accountability, and incentivize sustainable business practices. Regulators should promote sustainable development practices and ensure adherence to established guidelines [33]. This includes monitoring ESG performance and enforcing compliance with relevant regulations.

Governments should pay attention to developing areas with low carbon emissions [16]. These areas may offer opportunities for promoting sustainable development and attracting green investments. Encouraging firms disclose their energy use minimize pollution can improve benefitting society [18].

10.3. Areas for Future Research

Future research can compare materiality disclosure with other countries like Singapore [2]. This would provide valuable insights into the factors that influence ESG reporting in different contexts. Further exploration is needed on how ESG factors influence financial analysis in different contexts [4]. This includes examining the impact of ESG disclosure on analyst forecast accuracy and investment decisions.

Studies should integrate quantitative analysis with qualitative research methods for a more comprehensive understanding of ESG disclosures [33]. This approach can provide valuable insights into the motivations, challenges, and best practices related to ESG reporting. Thus, investors who seek should give more attention these making their decision [32].