The impact of environmental, social, and governance information on individual stock investment decisions

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Abstract

The global business landscape has seen a growing necessity for companies to implement and disclose environmental, social, and governance (ESG) information (AlHares et al., 2023). Driven by the expectations of investors and society, companies find themselves obligated to publish ESG reports. Therefore, this study focuses on exploring the impact of ESG information on the investment decisions made by individual investors in Vietnamese stock markets. By employing the theory of planned behavior (TPB) and conducting a comprehensive survey, coupled with logistic regression analysis on a sample of 232 individual investors, our research uncovers a significant influence of ESG information on the stock decision-making process of these investors. Notably, our findings reveal that investors place greater emphasis on governance (G) information compared to social (S) and environmental (E) information when making investment decisions. This trend aligns with the conclusions drawn by Sultana et al. (2018) and Mehwish et al. (2022) but diverges from the findings of Rounok et al. (2023). These findings are poised to catalyze the disclosure of ESG reports among listed companies. They also impel policymakers to craft and implement policies actively promoting ESG reporting. Such initiatives will likely foster increased interest and bolster investments in companies adhering to ESG criteria, particularly among individual investors in emerging stock markets.

Keywords: Environmental, Social, and Governance, ESG, Information, Investment Decision, Individual Investor, Vietnam

Authors’ individual contribution: Conceptualization — N.T.P.D. and N.T.M.A.; Methodology — N.T.P.D. and N.T.M.A.; Resources — N.T.P.D., H.T.H., and P.H.T.; Writing — Review & Editing — N.T.P.D., N.T.M.A., P.H.T., and L.T.H.; Visualization — N.T.P.D. and N.T.L.; Funding Acquisition — N.T.P.D.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G30, G31, M14, M40, M41, M48

Received: 10.01.2024
Accepted: 03.05.2024
Published online: 07.05.2024

How to cite this paper: Dung, N. T. P., Anh, N. T. M., Toan, P. H., Hieu, L. T., Linh, N. T., & Hang, H. T. (2024). The impact of environmental, social, and governance information on individual stock investment decisions. Risk Governance and Control: Financial Markets & Institutions, 14(2), 32–43. https://doi.org/10.22495/rgcv14i2p4