Abstract
Besides financial disclosure, there is a rising surge of reporting environmental, social, and governance (ESG) information in
emerging countries. The ESG disclosure intended to fulfill the information needs of all the company’s stockholders, particularly
the investors. This study intends to determine how individual investors materialize ESG information into their investment
allocation decision. Moreover, to examine the information dimension having more prudent impact on their investment allocation
decision. The primary data was collected through a structured survey from 220 novices and experienced individual investor
actively involved in stock market trading Pakistan stock exchange (PSX). The predictive power of the deduced model is
determined through covariance-based structural equation modelling. Findings of the study suggest that, on average, the ESG
predicts the individual investor’s asset allocation decision in the context of the Pakistan stock exchange (PSX). Also, it ascertained
that the environment and governance had more magnitude than social information. Addationally, both novice and experienced
consider the decision usefulness of ESG disclosure while making investment allocation decision. The proposed model is novel and
offer insight for companies listed on Pakistan stock exchange to pay more attention to ESG disclosure practices. Moreover,
investor particularly individual investor by incorporating ESG information can make more informed and rational investment
allocation decision.
Muhammad Naveed, Muhammad Khalid Sohail, Syed Zain ul Abdin, Madiha Awais, Noshaba Batool. (2020) Role of ESG Disclosure in Determining Asset Allocation Decision: An Individual Investor Perspective, Paradigms , Vol 14, Issue 1.
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