The Determinants of Retail Investors' Intention to Invest in Environmental Social Governance Stocks in Malaysia

Environmental, Social, and Governance (ESG) investing has become a global priority for sustainable finance, yet its determinants remain insufficiently examined in developing economies like Malaysia. While ESG disclosure is mandated by regulatory frameworks, investor participation remains low. This study addresses critical challenges such as the persistent “Disclosure Gap”, where companies fail to provide adequate data and the “Estimation Gap”, where investors rely on assumptions due to inconsistent reporting. These issues undermine investor confidence and contribute to slower growth in ESG stocks. The research objectives are threefold: examining the direct effects of individual and organisational factors on ESG investment intention, assessing the mediating effect of perceived corporate governance, and establishing a predictive behavioural framework. Guided by Self-Determination Theory (SDT), which emphasizes intrinsic motivation, autonomy, and perceived competence, this research investigates five key determinants: tacit knowledge, environmental concern, personal agency, opportunistic behaviour, and institutional trust. The study also explores how perceived corporate governance acts as a critical organisational-level mediator. Empirical findings reveal that tacit knowledge, environmental concern, personal agency, and institutional trust significantly enhance intentions to invest in ESG stocks, whereas opportunistic behaviour exerts a negative influence. Perceived corporate governance demonstrates a strong mediating effect, underscoring the importance of transparency, accountability, and ethical oversight. Theoretically, this study extends SDT into sustainable finance by integrating psychological, social, and governance dimensions. Practically, it provides evidence-based insights for policymakers and financial institutions to strengthen ESG adoption. By bridging gaps in Malaysia’s landscape, this research supports sustainable economic growth and enriches global discourse on developing global emerging markets.

Business Investment

1. Aida Maria Ismail, & Izrul Haida Mohd Latif. (2019). Board diversity and corporate sustainability practices: Evidence on environmental, social and governance (ESG) reporting. International Journal of Financial Research, 10(3), 31–50. https://doi.org/10.5430/ijfr.v10n3p31 [Google Scholar] [Crossref]

2. Buchetti, B., Arduino, F. R., & Perdichizzi, S. (2025). A literature review on corporate governance and ESG research: Emerging trends and future directions. International Review of Financial Analysis, 97. https://doi.org/10.1016/j.irfa.2024.103759 [Google Scholar] [Crossref]

3. Bursa Malaysia. (2023). Malaysian Retail Investor Insights Published by Bursa Malaysia. [Google Scholar] [Crossref]

4. Creswell, J. W. (2013). Qualitative inquiry & research design Choosing among five approaches. Sage Publications, (3). [Google Scholar] [Crossref]

5. Deci, E. L., & Ryan, R. M. (2012). Self-Determination Theory (20th ed., Vol. 1). https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q=This+intention+is+influenced+by+various+psychological+and+motivational+factors%2C+including+those+outlined+in+self-determination+theory&btnG= [Google Scholar] [Crossref]

6. Gneezy, A., Imas, A., & Jaroszewicz, A. (2020). The impact of agency on time and risk preferences. Nature Communications, 11(1). https://doi.org/10.1038/s41467-020-16440-0 [Google Scholar] [Crossref]

7. Government of Malaysia. (2021). 12th Malaysia Plan.Golzar, J., & Tajik, O. (2022). Convenience Sampling. In IJELS (Number 2). [Google Scholar] [Crossref]

8. Hair, J. F., Page, M., & Brunsveld, N. (2019). Essentials of Business Research Methods (4th ed.). Taylor & Francis. [Google Scholar] [Crossref]

9. Ho, W. K., Gultom, N. D., Susela, S. D., Singh, J., Kanagasabapathy, S., & Hashim, H. A. (2024). Do board characteristics influence sustainability-related disclosures? Evidence from an emerging market. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-07-2023-0419 [Google Scholar] [Crossref]

10. Kamaludin, K., Ibrahim, I., Sundarasen, S., & Faizal, O. (2022). ESG in the boardroom: evidence from the Malaysian market. International Journal of Corporate Social Responsibility, 7(1). https://doi.org/10.1186/s40991-022-00072-2 [Google Scholar] [Crossref]

11. Lucarelli, C., & Pasquino, M. (2025). Shaping Retail Investor Sustainable Choices: Exploration of the Influence of Financial Advisory Dynamics Through a Multi-Method Approach. [Google Scholar] [Crossref]

12. Mohammad, W. M. W., & Wasiuzzaman, S. (2021). Environmental, Social and Governance (ESG) disclosure, competitive advantage and performance of firms in Malaysia. Cleaner Environmental Systems, 2. https://doi.org/10.1016/j.cesys.2021.100015 [Google Scholar] [Crossref]

13. Nonaka, I., & Takeuchi, H. (1995). The Knowledge Creating Company (1st ed.). Oxford University Press. [Google Scholar] [Crossref]

14. Ryan, R. M., & Deci, E. L. (2000). Intrinsic and Extrinsic Motivations: Classic Definitions and New Directions. Contemporary Educational Psychology, 25(1), 54–67. https://doi.org/10.1006/ceps.1999.1020 [Google Scholar] [Crossref]

15. Ryan, R. M., & Deci, E. L. (2000). Self Determination Theory and the facilitation of Intrinsic motivation, social development and wellbeing. American Psychologist, 55(1). [Google Scholar] [Crossref]

16. Sekaran, U., & Bougie, R. (2016). Research Methods for Business. Wiley. https://books.google.com.my/ [Google Scholar] [Crossref]

17. Sultana, S., Zainal, D., & Zulkifli, N. (2017). The Influence of Environmental, Social and Governance (ESG) on Investment Decisions: The Bangladesh Perspective. Pertanika J. Soc. Sci. & Hum, 25, 155–174. [Google Scholar] [Crossref]

18. Sultana, S., Zulkifli, N., & Zainal, D. (2018). Environmental, social and governance (ESG) and investment decision in Bangladesh. Sustainability (Switzerland), 10(6). https://doi.org/10.3390/su10061831 [Google Scholar] [Crossref]

• Methane Emissions from Municipal Solid Waste - Case Study in Cai Rang District, Can Tho City, Vietnam
• Youth Activism, Intentional Integration of Policies to Raise Awareness on Climate Change Action among the Youth
• Breathing Spaces: Environmental & User Experience in Dhanmondi and Zigatola Multistoried Apartments, Dhaka, Bangladesh
• Effects of Solid Waste Disposal on Soil Quality in Makurdi Metropolis, Benue State, Nigeria
• Environmental Impact of Artisanal and Small-Scale Gold Mining in Borgu Local Government Area