FINANCIAL MARKET VALUATION OF ESG FACTORS: THE MODERATING ROLE OF SHAREHOLDER PRESSURE AND THE IMPACT ON CORPORATE FINANCIAL PERFORMANCE

This study investigates the nexus between Environmental, Social, and Governance (ESG) activities and firm value within the specific context of Vietnam, an emerging market, moving beyond a simplistic direct linkage to ascertain when and how ESG creates value by systematically testing the moderating role of shareholder pressure. Utilizing a comprehensive panel dataset of 395 listed non-financial firms in Vietnam from 2015 to 2024 and a manually constructed ESG disclosure index based on international standards and domestic regulations, the study employs a fixed-effects regression model and the System GMM methodology to rigorously address potential endogeneity. The findings reveal a notable ESG paradox: in isolation, ESG efforts do not positively impact, and may even negatively correlate with, firm value. However, this relationship is significantly and positively transformed by shareholder pressure, with both institutional and, more powerfully, foreign ownership acting as crucial monitoring mechanisms that ensure ESG investments translate into tangible financial benefits. Further analysis indicates this moderating effect is most pronounced for the Governance (G) pillar and within capital-intensive industries with high environmental impact. The study concludes that in Vietnam's evolving institutional environment, shareholder oversight is not merely an enabler but a fundamental prerequisite for ESG to be value-accretive. These results yield significant practical implications, advising managers to prioritize a robust governance foundation, encouraging investors to adopt a granular, pillar-specific analytical approach, and urging policymakers to strengthen the governance framework and foster a transparent ESG ecosystem to combat greenwashing and promote substantive, sustainable development.