Impact of ESG Performance on Profitability and Firm Value: Experience of Companies Listed on the Stock Exchange of Thailand

This study examines the impact of Environmental, Social, and Governance Performance (ESGP) on profitability and firm value, focusing on 75 listed companies on the Stock Exchange of Thailand (SET) over the period 2014 to 2023. ESGP has emerged as a critical measure of corporate sustainability, yet its financial implications in emerging markets like Thailand remain underexplored. Employing the Generalized Method of Moments (GMM) approach the findings reveal that ESGP positively impacts ROA, ROE, and TBQ, emphasizing its role in enhancing operational efficiency, stakeholder trust, and market confidence. However, short- and long-term debt and cash ratio exhibit a negative impact on all financial metrics, highlighting inefficiencies linked to excessive leverage and liquidity. Firm size positively influences ROA and ROE but negatively affects TBQ, indicating challenges in market perception of growth potential for larger firms. Conversely, firm age positively impacts ROA, reflecting stability and operational experience, but presents mixed effects on ROE and TBQ due to innovation inertia and equity inefficiencies. Robustness checks using Difference GMM validate these findings, confirming the relationships between ESGP, financial metrics, and control variables. This study offers insights for corporate managers and policymakers, advocating for sustainable financial practices, optimal capital structures, and innovation-driven strategies to maximize profitability and market valuation. It contributes to the literature on sustainable finance by providing empirical evidence from an emerging market perspective and aligns with Thailand’s national sustainability agenda. JEL Classification: G32, G34, Q56, M14, C33