Exploring the relationship between ESG Practices and Financial Performance of Vietnamese Companies

Abstract

This study investigates the relationship between ESG practices and financial performance among the top 100 companies in Vietnam, as listed in the VN100 Index during 2017-2023. The authors use the Pooled OLS, Fixed Effects Model, and Random Effects Model approaches. The analysis reveals no statistically significant relationship between ESG and financial performance. The findings underscore the influence of traditional financial factors such as firm age, firm size, financial leverage, and economic growth rate, highlighting their importance in financial assessments. This paper adds to the increasing body of research on ESG performance in emerging markets by arguing that to promote deeper ESG integration, there is a need for increased regulatory support as well as investor education. The increasing influence of global sustainability norms necessitates an understanding of these dynamics within emerging markets such as Vietnam to align corporate strategies with investor expectations and international standards. Additional research is suggested to track how ESG factors affect financial performance as market conditions and investor perceptions shift.