ESG media signals and earnings risk: evidence from Vietnamese listed firms

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Demonstrates that ESG dimensions have distinct effects on earnings stability, extending the soft budget constraint argument from profitability to risk management.

🏢実務担当者:ESG sub-component analysis is more informative than aggregate scores for assessing Vietnamese firms, especially for investors and trade partners.

🏛政策担当者:Market-based ESG accountability mechanisms are effective in the private sector; extending ESG discipline to state-owned enterprises requires direct regulatory mandates.

This paper examines whether ESG-related media signals affect the volatility of corporate earnings among Vietnamese listed firms. It focuses on the second moment of financial performance, earnings stability rather than profitability level and investigates how environmental, social and governance signals exert distinct, dimension-specific effects on earnings risk and whether state ownership moderates these dynamics. Using the Covalence EthicalQuote database, which aggregates global media, NGO publications and institutional communications into firm-level ESG reputation scores, the study constructs a panel of 62 Vietnamese listed firms over 2012–2023 (709 firm-year observations). Panel fixed-effects models are estimated across four earnings volatility specifications with ESG variables lagged one year. Robustness is assessed through winsorization, COVID exclusion, alternative lag structures, placebo tests and first-difference specifications. Social media signals are positively associated with short-term earnings volatility, consistent with the transitional costs of active stakeholder engagement and this effect attenuates within two years. Governance signals are negatively associated with earnings volatility, particularly downside risk, reflecting the contemporaneous earnings-stabilizing function of internal monitoring. Environmental signals predict higher future earnings volatility but are uncorrelated with current volatility, consistent with an investment channel in which upfront environmental expenditure precedes efficiency gains. All three effects are concentrated among non-state-owned enterprises; majority state-owned firms exhibit no significant ESG-risk relationship, consistent with the soft budget constraint hypothesis. A conditional profitability analysis confirms that the risk and profitability channels of ESG operate largely independently. The sample is restricted to the 62 Vietnamese firms covered by the Covalence database, an internationally visible subset that may not represent the broader listed population. Identification relies on lagged fixed-effects specifications rather than quasi-experimental variation, and residual endogeneity from unobserved time-varying characteristics cannot be fully excluded. Future research should employ natural experiments or regulatory shocks to strengthen causal identification, particularly for the social dimension. For investors and trade partners assessing Vietnamese firms, ESG sub-component analysis is more informative than composite scoring, as environmental and social signals carry distinct and partially opposing risk implications that aggregate indices obscure. For policymakers, the findings indicate that market-based ESG accountability mechanisms will have the greatest impact in the private corporate sector; extending ESG discipline to state-owned enterprises requires direct regulatory mandates and integration of ESG metrics into state shareholder performance frameworks. This study provides the first systematic evidence from a Southeast Asian emerging market that ESG dimensions have distinct and opposing effects on earnings stability. It extends the soft budget constraint argument from profitability to risk management, demonstrating that ESG-based discipline mechanisms are absent in state-owned segments. The use of a media-based, externally constructed ESG measure, rather than self-reported disclosure scores, is particularly suited to the Vietnamese context, where mandatory ESG reporting remains limited.

• semanticscholar https://doi.org/10.1108/jts-04-2026-0031first seen 2026-07-19 05:58:23