When Sustainability Meets Cost Adjustment: ESG Ratings, SG&A Cost Adjustment, Gross Margin, and Equity Market Value in Thailand

This study examines how ESG ratings and SG&A cost adjustment are associated with equity market value and whether gross margin provides an exploratory operating-performance pathway. Using a balanced panel of 1512 firm-year observations from 504 companies over 2023–2025, with 2022 financial information used only to construct lagged change measures, the study estimates two-way fixed-effects models with firm-clustered standard errors. Equity market value is measured as log market capitalization, while SG&A cost adjustment is defined as the negative change in the logarithm of the SG&A-to-sales ratio. Gross margin is examined as an exploratory intermediary rather than a predetermined causal mechanism. The results indicate a negative and statistically significant within-firm association between the ordinal ESG rating measure and equity market value (β = −0.211, p = 0.004). Alternative ESG codings show that this association is concentrated in entry into the rated universe: the rating-level coefficient is not statistically significant among rated firm-years or when a separate unrated indicator is included. SG&A cost adjustment is not statistically significant in the fully controlled specification that includes ROA, whereas the estimate becomes positive and statistically significant when ROA is excluded, highlighting specification sensitivity. The exploratory gross-margin pathway and the ESG–SCA interaction provide no statistically supported evidence of an additional pathway or conditional association. The findings indicate that the estimated valuation associations are sensitive to profitability conditioning and measurement choices and should not be interpreted as causal effects. The study contributes by distinguishing ESG positioning, observable operating-cost adjustment, gross-margin performance, and equity valuation within a firm-level panel framework. The results also show why the interpretation of sustainability-related valuation associations should account explicitly for profitability controls, rating participation, and within-firm identification.