PERCEPTION VS. REALITY THE ROLE OF LINGUISTIC FRAMING IN ESG REPORTING AND ITS BEHAVIORAL EFFECTS ON INVESTMENT DECISIONS

Abstract

This study investigates the impact of linguistic framing in ESG (Environmental, Social, and Governance) reporting on investor perception and decision-making behavior, with a comparative perspective between Indonesian and Thai participants. Using an experimental design, 120 respondents were exposed to either positively framed or neutrally framed ESG disclosures. Quantitative data were analyzed using PLS-SEM, and qualitative insights were derived from follow-up interviews to deepen the interpretation of investor responses. The findings reveal that linguistic framing significantly enhances investor perception, which in turn positively influences their investment intention. Moreover, cultural context plays a moderating role: Indonesian investors exhibited greater sensitivity to positive ESG narratives than Thai investors, who tended to prioritize factual clarity. These results demonstrate that ESG communication is not only about what is reported but also how it is linguistically framed. The study contributes to behavioral finance and accounting literature by integrating cognitive framing theory with cross-cultural insights, highlighting the role of language in shaping investor behavior. Practically, the research offers guidance for companies and regulators in designing ESG disclosures that are both ethically persuasive and culturally adaptive. The novelty lies in combining experimental, linguistic, and cultural lenses to examine ESG reporting behaviorally in a Southeast Asian context.