Before the next normal: How voluntary ESG reporting affects stock performance and trading among publicly-listed companies in the Philippines — An event study

• Main Authors: Alcaraz, Loren Andrea P., Calapatia, Michel Ann A., Joaquin, Alia Isabella M., Wu, Doris
• Format: text
• Language: English
• Published: Animo Repository 2022
• Subjects: Sustainable development reporting; Stock exchanges—Environmental aspects; Accounting; Behavioral Economics; Business and Corporate Communications; Business Law, Public Responsibility, and Ethics
• Online Access: https://animorepository.dlsu.edu.ph/etdb_acc/17; https://animorepository.dlsu.edu.ph/cgi/viewcontent.cgi?article=1050&context=etdb_acc
• Institution: De La Salle University

Sustainability is no longer a market niche — it is becoming the new normal. This has led to the rise of Environmental, Social, and Governance (ESG) reporting spurred by the demand for the transparency and standardization of sustainable business practices. Despite its increasing importance, there are limited studies on how investors react to companies publishing ESG reports as well as concerns on its integrity, specifically in emerging markets like the Philippines which have yet to mandate ESG reporting. As such, this study aims to analyze how the voluntary issuance of ESG reports affect stock performance and trading among publicly-listed companies (PLCs) in the Philippines. The population in this study included all PLCs in the Philippine Stock Exchange (PSE) that have issued standalone ESG reports from 2014 to 2019, identifying a total of 74 ESG issuances. An event study methodology was conducted to investigate the Cumulative Abnormal Returns (CAR) and Cumulative Abnormal Change in Trading Volume (CAV) around these ESG issuances. Hypotheses testing was conducted through the use of the Wilcoxon Signed Rank test. The individual and combined analysis of the variables revealed that PSE investors do not react to the issuance of ESG reports. The implications of such are significant to PSE investors, PLCs, regulatory bodies, Certified Public Accountants (CPAs), and the academe.