GREEN GAINS: HOW ENVIRONMENTAL ACCOUNTING DRIVES FIRM VALUE IN ASEAN

Abstract

Climate change poses significant threats to ASEAN economies, with the region ranking among the most vulnerable globally according to the Climate Economics Index. This study investigates how green accounting practices and environmental management systems influence firm value among publicly listed companies in ASEAN countries. Drawing on legitimacy theory and stakeholder theory, the research examines whether environmental transparency and management translate into financial benefits for companies operating in climate-vulnerable emerging markets. The study analyzes 23 sustainability-leading companies that were Asia Sustainability Reporting Awards finalists from 2021-2023, using panel data regression to examine relationships between specific environmental accounting dimensions and firm value measured by Tobin's Q. Green accounting is operationalized through three key dimensions aligned with Global Reporting Initiative standards: water usage efficiency, energy consumption management, and carbon emissions reduction. Results reveal important distinctions among environmental practices, with water management and carbon emissions reduction significantly enhancing firm value, while energy consumption and environmental management system implementation show no significant value effects. These findings suggest that investors in ASEAN markets reward concrete, measurable environmental actions over administrative compliance measures. The study demonstrates that not all environmental practices equally influence investor perceptions, challenging assumptions about uniform benefits of comprehensive environmental management. For corporate managers, the results emphasize prioritizing environmental initiatives with transparent outcomes and clear stakeholder benefits. This research provides the first empirical evidence on differential effects of green accounting dimensions in climate-vulnerable ASEAN markets, contributing valuable insights for sustainable business strategy in emerging economies facing environmental challenges.