Sustainable Development and Firm Performance: Evidence from Thailand
The sustainability framework shifts the firm’s management paradigm from simply maximising shareholders’
wealth, to also considering the wider interests of shareholders as well as environmental and social developments. This study
aims to examine whether sustainable development has a significant link with firm performance. The investigation only
covers two years - 2015 and 2016 - since the Stock Exchange of Thailand had then just launched the list of firms that were
announced as part of the “Thai Sustainability Investment (THSI)” scheme. We classify firms into two groups: the first group
of firms has passed the sustainability criteria defined by the Stock Exchange of Thailand. The second group of size-matched
firms has not passed these criteria. The matched pair design is employed to reduce the heteroscedasticity between the groups.
The total sample was finalised as 122 firms: 66 from the Thai Sustainability Investment list, and 56 with a similar size, based
on market capitalisation. To measure firm performance, we use both an accounting base (return on asset – ROA and return
on equity – ROE) and an economic base (the economic value added – EVA). The results show no differences in performance
between the Thai Sustainability Investment firms and the matched ones. Furthermore, our findings support the view that
adopting sustainability practices would facilitate the development of firm value over the long term rather than the short term.
Keywords - Sustainable Development; Firm Performance; Stock Exchange of Thailand.