Beyond profit: How ESG performance influences company value across industries?
DOI:
https://doi.org/10.31106/jema.v20i1.20574Keywords:
ESG, Company Value, Corporate Sustainability, Environmental Sustainability, Indonesian Stock ExchangeAbstract
Evaluating Environmental, Social, and Governance (ESG) scores is essential for understanding a company's long-term sustainability and value. These scores serve as a barometer of a firm's commitment to ethical, environmental, and social practices—attributes that are increasingly valued by both investors and consumers. However, despite their importance, previous studies have been constrained by their focus on smaller sample sizes and exclusive attention to the financial sector. Our study addresses this gap by delivering a comprehensive analysis of the impact of ESG scores on the valuation of companies across diverse industries, while purposefully excluding the financial sector, listed on the Indonesian Stock Exchange from 2019 to 2021. We analyzed 2,169 company-year observations, collected through non-probability purposive sampling, using multiple linear regression in STATA. Our findings reveal a robust correlation between ESG scores and company value, with firms boasting superior ESG scores consistently demonstrating enhanced size and profitability. These results emphasize that a genuine commitment to ESG principles not only elevates performance but also boosts attractiveness to investors, going beyond mere statutory compliance or superficial adoption.
References
Abdi, Y., Li, X., & Càmara-Turull, X. (2022). Exploring the impact of sustainability (esg) disclosure on firm value and financial performance (fp) in airline industry: The moderating role of size and age. Environment, Development and Sustainability, 24(4), 5052-5079. https://doi.org/10.1007/s10668-021-01649-w
Aboud, A., & Diab, A. (2018). The impact of social, environmental and corporate governance disclosures on firm value: Evidence from egypt. Journal of Accounting in Emerging Economies, 8(4), 442-458. https://doi.org/10.1108/JAEE-08-2017-0079
Alfayerds, W. D., & Setiawan, M. A. (2021). Pengaruh pengungkapan emisi karbon dan annual report readability terhadap nilai perusahaan. Jurnal Eksplorasi Akuntansi, 3(2), 349-363. https://doi.org/10.24036/jea.v3i2.363
Aydoğmuş, M., Gülay, G., & Ergun, K. (2022). Impact of ESG performance on firm value and profitability. Borsa Istanbul Review. https://doi.org/10.1016/j.bir.2022.11.0
Banerjee, S., Chang, X., Fu, K., Li, T., & Wong, G. (2014). Corporate environmental risk and the customer-supplier relationship. Available at SSRN 2533471.
Borralho, J. M., Hernandez-Linares, R., Gallardo-Vazquez, D., & de Sousa Paiva, I. C. (2022). Environmental, social and governance disclosure’s impacts on earnings management: Family versus non-family firms. Journal of Cleaner Production, 379, 134603. https://doi.org/10.1016/j.jclepro.2022.134603
Chen, Q., Goldstein, I., & Jiang, W. (2007). Price informativeness and investment sensitivity to stock price. The Review of Financial Studies, 20(3), 619-650. https://doi.org/10.1093/rfs/hhl024
Cheng, B., Ioannou, I., & Serafeim, G. (2014). Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), 1-23. https://doi.org/10.1002/smj.2131
Cho, C. H., Patten, D. M., & Roberts, R. W. (2006). Corporate political strategy: An examination of the relation between political expenditures, environmental performance, and environmental disclosure. Journal of Business Ethics, 67, 139-154. https://doi.org/10.1007/s10551-006-9019-3
Dai, L., Song, C., You, Y., & Zhang, W. (2022). Do sovereign wealth funds value esg engagement? Evidence from target firm's csr performance. Finance Research Letters, 50, 103226. https://doi.org/10.1016/j.frl.2022.103226
Dhaliwal, D. S., Li, O. Z., Tsang, A., & Yang, Y. G. (2011). Voluntary nonfinancial disclosure and the cost of equity capital: The initiation of corporate social responsibility reporting. The accounting review, 86(1), 59-100. https://doi.org/10.2308/accr.00000005
Dubbink, W., Graafland, J., & Van Liedekerke, L. (2008). CSR, transparency and the role of intermediate organisations. Journal of Business Ethics, 82, 391-406. https://doi.org/10.1007/s10551-008-9893-y
Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management science, 60(11), 2835-2857. https://doi.org/10.1287/mnsc.2014.1984
Eccles, R. G., Serafeim, G., & Krzus, M. P. (2011). Market interest in nonfinancial information. Journal of Applied Corporate Finance, 23(4), 113-127. https://doi.org/10.1111/j.1745-6622.2011.00357.x
Fatemi, A., Glaum, M., & Kaiser, S. (2018). Esg performance and firm value: The moderating role of disclosure. Global finance journal, 38, 45-64. https://doi.org/10.1016/j.gfj.2017.03.001
Firmansyah, A., Jadi, P. H., Febrian, W., & Fasita, E. (2021). Respon pasar atas pengungkapan emisi karbon di indonesia: Bagaimana peran tata kelola perusahaan. Jurnal Magister Akuntansi Trisakti Vol, 8(2). http://dx.doi.org/10.25105/jmat.v8i2.9789
Garay, L., & Font, X. (2012). Doing good to do well? Corporate social responsibility reasons, practices and impacts in small and medium accommodation enterprises. International Journal of Hospitality Management, 31(2), 329-337. https://doi.org/10.1016/j.ijhm.2011.04.013
Ghazali, A., & Zulmaita, Z. (2022). Pengaruh pengungkapan environmental, social, and governance (esg) terhadap tingkat profitabilitas perusahaan (studi pada perusahaan sektor infrastruktur yang terdaftar di bursa efek indonesia). Paper presented at the Seminar Nasional Akuntansi dan Manajemen PNJ.
Gillan, S. L., Koch, A., & Starks, L. T. (2021). Firms and social responsibility: A review of ESG and CSR research in corporate finance. Journal of Corporate Finance, 66, 101889. https://doi.org/10.1016/j.jcorpfin.2021.101889
Goldstein, I., & Yang, L. (2015). Information diversity and complementarities in trading and information acquisition. The Journal of Finance, 70(4), 1723-1765. https://doi.org/10.1111/jofi.12226
Gregory, A., Tharyan, R., & Whittaker, J. (2014). Corporate social responsibility and firm value: Disaggregating the effects on cash flow, risk and growth. Journal of Business Ethics, 124, 633-657. https://doi.org/10.1007/s10551-013-1898-5
Hapsoro, D., & Falih, Z. N. (2020). The effect of firm size, profitability, and liquidity on the firm value moderated by carbon emission disclosure. Journal of Accounting and Investment, 21(2), 240-257. https://doi.org/10.18196/jai.2102147
Hermawan, A., Aisyah, I. S., Gunardi, A., & Putri, W. Y. (2018). Going green: Determinants of carbon emission disclosure in manufacturing companies in indonesia. International Journal of Energy Economics and Policy, 8(1), 55.
Iman, C., Sari, F. N., & Pujiati, N. (2021). Pengaruh likuiditas dan profitabilitas terhadap nilai perusahaan. Perspektif: Jurnal Ekonomi dan Manajemen Akademi Bina Sarana Informatika, 19(2), 191-198. https://doi.org/10.31294/jp.v19i2.11393
Irwhantoko, I., & Basuki, B. (2016). Carbon emission disclosure: Studi pada perusahaan manufaktur indonesia. Jurnal akuntansi dan Keuangan, 18(2), 92-104. https://doi.org/10.9744/jak.18.2.92-104
Iskandar, D., & Fran, E. (2016). The effect of carbon emissions disclosure and corporate social responsibility on the firm value with environmental performance as variable control. Research Journal of Finance and Accounting, 7(9), 122-130.
Madsen, P. M., & Rodgers, Z. J. (2015). Looking good by doing good: The antecedents and consequences of stakeholder attention to corporate disaster relief. Strategic Management Journal, 36(5), 776-794. https://doi.org/10.1002/smj.2246
Mardani, R. M. (2022). Dividend policy, ownership structure and corporate governance: An empirical analysis of Indonesian firms. JEMA: Jurnal Ilmiah Bidang Akuntansi dan Manajemen, 19(1), 60-76. doi:https://doi.org/10.31106/jema.v19i1.11116
Matitaputty, J. S., & Davianti, A. (2020). Does broad gender diversity affect corporate social responsibility disclosures?. JEMA: Jurnal Ilmiah Bidang Akuntansi dan Manajemen, 17(1), 35-50. https://doi.org/10.31106/jema.v17i1.3612
Melinda, A., & Wardhani, R. (2020). The effect of environmental, social, governance, and controversies on firms’ value: Evidence from asia Advanced issues in the economics of emerging markets (Vol. 27, pp. 147-173): Emerald Publishing Limited. https://doi.org/10.1108/S1571-038620200000027011
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, 100015. https://doi.org/10.1016/j.cesys.2021.100015
Mujiani, S., Juardi, J., & Fauziah, F. (2019). Determinan carbon emission disclosure pada perusahaan bumn yang terdaftar di bursa efek indonesia periode 2013-2017. JIAFE (Jurnal Ilmiah Akuntansi Fakultas Ekonomi), 5(1), 53-64.
Muzayin, M. H. T., & Trisnawati, R. (2022). Pengaruh struktur modal, ukuran perusahaan, umur perusahaan dan profitabilitas terhadap nilai perusahaan (studi empiris pada perusahaan sub sektor makanan dan minuman yang terdaftar di bursa efek indonesia (bei) tahun 2017-2019). E-Prosiding Akuntansi, 3(1).
Noviarianti, K. (2020). Esg: Definisi, contoh, dan hubungannya dengan perusahaan. Retrieved April, 22, 2021.
Nugroho, N. A., & Hersugondo, H. (2022). Analisis pengaruh environment, social, governance (esg) disclosure terhadap kinerja keuangan perusahaan. E-Bisnis: Jurnal Ilmiah Ekonomi dan Bisnis, 15(2), 233-243. https://doi.org/10.51903/e-bisnis.v15i2.810
Nursetya, R. P., & Hidayati, L. N. (2020). How does firm size and capital structure affect firm value? Journal of Management and Entrepreneurship Research, 1(2), 67-76. https://doi.org/10.34001/jmer.2020.12.01.2-7
Pratiwi, N. P. Y., Yudiaatmaja, F., & Suwendra, I. W. (2016). Pengaruh struktur modal dan ukuran perusahaan terhadap nilai perusahaan. Jurnal Manajemen Indonesia, 4(1).
Qodary, H. F., & Tambun, S. (2021). Pengaruh environmental, social, governance (esg) dan retention ratio terhadap return saham dengan nilai perusahaan sebagai variabel moderating. Juremi: Jurnal Riset Ekonomi, 1(2), 159-172. https://doi.org/10.53625/juremi.v1i2.266
Serafeim, G. (2014). The consequences of mandatory corporate sustainability reporting, evidence from four countries: Retrieved from https,//accountancy. smu. edu. sg/sites/default/files ….
Setiadharma, S., & Machali, M. (2017). The effect of asset structure and firm size on firm value with capital structure as intervening variable. Journal of Business & Financial Affairs, 6(4), 1-5.
Soetjanto, J. R., & Thamrin, H. (2020). Analysis of factors that effect firm value of consumer goods industry listed on indonesia stock exchange. International Journal of Scientific and Research Publications (IJSRP), 10(05), 1-8.
Sugiyono, D. (2013). Metode penelitian pendidikan pendekatan kuantitatif, kualitatif dan r&d.
Sukarya, I. P., & Baskara, I. G. K. (2018). Pengaruh profitabilitas, leverage, dan likuiditas terhadap nilai perusahaan sub sektor food and beverages. Udayana University.
Sulbahri, R. A. (2021). Pengaruh corporate social responsibility terhadap nilai perusahaan. Akuntansi dan Manajemen, 16(2), 215-226. https://doi.org/10.30630/jam.v16i2.140
Toti, G. K., & Johan, S. (2022). The effect of enviromental, social, governance (esg) disclosure on company’s profitability & value in the sri-kehati index 2015-2020. Journal of Entrepreneurship, Management and Industry (JEMI), 5(2), 81-92. http://dx.doi.org/10.25105/mrbm.v21i1.12949
Triyani, A., Setyahuni, S. W., & Kiryanto, K. (2020). The effect of environmental, social and governance (esg) disclosure on firm performance: The role of ceo tenure. Jurnal Reviu Akuntansi dan Keuangan, 10(2), 261-270. https://doi.org/10.22219/jrak.v10i2.11820
Van Duuren, E., Plantinga, A., & Scholtens, B. (2016). Esg integration and the investment management process: Fundamental investing reinvented. Journal of Business Ethics, 138, 525-533. https://doi.org/10.1007/s10551-015-2610-8
Vernando, J., & Erawati, T. (2020). Pengaruh ukuran perusahaan terhadap nilai perusahaan dengan struktur modal sebagai variabel intervening: Studi empiris di bei. Jurnal Riset Manajemen Dan Bisnis, 15(1), 13-25. http://dx.doi.org/10.21460/jrmb.2020.151.344
Vilanova, M., Lozano, J. M., & Arenas, D. (2009). Exploring the nature of the relationship between csr and competitiveness. Journal of Business Ethics, 87, 57-69. https://doi.org/10.1007/s10551-008-9812-2
Vitari, C., & Raguseo, E. (2020). Big data analytics business value and firm performance: Linking with environmental context. International Journal of Production Research, 58(18), 5456-5476. https://doi.org/10.1080/00207543.2019.1660822
Wahyuningsih, R., Novianingsih, R., Sari, R. I., Putri, R. K., & Hanifah, U. (2022). Stigma carbon emission disclosure terhadap nilai perusahaan pada perusahaan yang terdaftar di BEI. Paper presented at the Prosiding Seminar Nasional Hukum, Bisnis, Sains dan Teknologi.
Wirawati, N. G. P., Dwija Putri, I., & Badera, I. D. N. (2020). Pengaruh ukuran perusahaan, leverage, pengungkapan lingkungan, dan kinerja lingkungan pada nilai perusahaan. E-Jurnal Akuntansi, 30(9), 2417. https://doi.org/10.24843/EJA.2020.v30.i09.p19
Zaitul, S. A., & Hamdi, M. (2020). ESG disclosure dan nilai perusahaan. Tata Kelola dan Akuntabilitas, 167-169.
Zuhrufiyah, D., & Anggraeni, D. Y. (2019). Pengungkapan emisi karbon dan nilai perusahaan (studi kasus pada perusahaan di kawasan asia tenggara). Jurnal Manajemen Teknologi, 18(2), 80-106. https://doi.org/10.12695/jmt.2019.18.2.1
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 JEMA: Jurnal Ilmiah Bidang Akuntansi dan Manajemen
This work is licensed under a Creative Commons Attribution 4.0 International License.
