Esg Performance and Governance in Asean: Do Board Quality and Audit Committee Effectiveness Make a Difference?

Stakeholders are increasingly demanding stronger corporate sustainability practices. However, many companies continue to demonstrate suboptimal esg performance, indicating that corporate sustainability practices have not met stakeholder expectations. While effective corporate governance is expected to improve esg performance, empirical evidence on the role of board quality and audit committee effectiveness remains inconclusive, particularly in the asean context. Furthermore, variations in the timing of the adoption of sustainability-related regulations across countries provide a relevant institutional context for assessing the consistency of the influence of internal governance mechanisms. Countries that adopted such regulations earlier (“early adopters”) possess a relatively longer regulatory experience compared to those that adopted them later. Consequently, this study examines the impact of board quality and audit committee effectiveness on esg performance, as well as the moderating role of audit committee effectiveness in the relationship between board quality and esg performance. The study also explores the consistency of the influence of board quality across two groups: countries that adopted sustainability-related regulations earlier (singapore and malaysia) and those that adopted them later (indonesia and thailand). Drawing on agency theory and stakeholder theory, this study investigates the relationship between board quality, audit committee effectiveness, and esg performance among listed companies in indonesia, malaysia, singapore and thailand during 2020-2023. Using purposive sampling, 89 companies (356 firm-year observations) were selected for analysis.  Board quality and audit committee effectiveness were measured using composite indices constructed through principal component analysis (pca), and panel data regression was employed to test the hypotheses. The findings reveal that board quality and audit committee effectiveness significantly improve esg performance, whereas audit committee effectiveness does not significantly moderate the relationship between board quality and esg. Additional analysis reveals that the positive influence of board quality on esg performance is present both in countries that adopted sustainability-related regulations earlier and in those that adopted them later. These findings reinforce the evidence regarding the importance of internal governance mechanisms in supporting corporate esg performance within the asean region. Overall, this study highlights the importance of strengthening internal governance mechanism to improve esg performance. Specifically, this study findings suggest the importance of strengthening the internal governance mechanisms and governance policies to improve esg performance and promote sustainable practices in the asean region.