ENVIRONMENTAL AND SOCIAL COMMITMENTS: IS IT BENEFICIAL FOR FIRM VALUE?
DOI:
https://doi.org/10.25170/jak.v19i1.5999Keywords:
Board Size, Environmental Social and Governance Disclosure, Environmental Performance, Firm Value, Legitimacy Theory, Stakeholder TheoryAbstract
This study aims to analyze the effect of ESG (Environmental, Social, and Governance) disclosure and environmental performance on firm value with board size as a moderating variable. This study uses multiple regression analysis and moderation test on data from 30 industrial and energy sector companies listed on the Indonesia Stock Exchange (IDX). The results showed that ESG disclosure and environmental performance had no significant effect on firm value. In addition, board size does not moderate the relationship between ESG disclosure and environmental performance on firm value. This study expands the understanding of the dynamics of ESG disclosure and environmental performance in relation to firm value and explores the role of board size as a moderating factor. The findings provide practical insights for corporate management, investors and policy makers in an effort to encourage more sustainable business practices.
References
Abogun, S., Adigbole, E. A., & Olorede, T. E. (2021). Income smoothing and firm value in a regulated market: the moderating effect of market risk. Asian Journal of Accounting Research, 6(3), 296–308. https://doi.org/10.1108/AJAR-08-2020-0072
Al-Dhaimesh, O. H. (2020). Green accounting practices and economic value added: An applied study on companies listed on the Qatar stock exchange. International Journal of Energy Economics and Policy, 10(6), 164–168. https://doi.org/10.32479/ijeep.10199
Ali, M. (2018). Determinants and consequences of board size: Conditional indirect effects. Corporate Governance (Bingley), 18(1), 165–184. https://doi.org/10.1108/CG-01-2016-0011
Allman, E., Won, J., Dreyer, C., Kalmenovitz, J., Mehrotra, V., Pil-Seng, L., Rzeznik, A., Xu, K., Yildrim, A., Lock, B., Hazarika, S., Peng, L., & Wang, J. (2021). The Effect of ESG Disclosure on Corporate Investment Efficiency *. https://ssrn.com/abstract=3816592
Al-Najjar, B., & Al-Najjar, D. (2017). The impact of external financing on firm value and a corporate governance index: SME evidence. Journal of Small Business and Enterprise Development, 24(2), 411–423. https://doi.org/10.1108/JSBED-11-2016-0172
Asante-Darko, D., Adu Bonsu, B., Famiyeh, S., Kwarteng, A., & Goka, Y. (2018). Governance structures, cash holdings and firm value on the Ghana Stock Exchange. Corporate Governance (Bingley), 18(4), 671–685. https://doi.org/10.1108/CG-07-2017-0148
Bansal, P., & Clelland, I. (2004). Talking trash: Legitimacy, impression management, and unsystematic risk in the context of the natural environment. Academy of Management Journal, 47(1).
Buallay, A. (2019). Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector. Management of Environmental Quality: An International Journal, 30(1), 98–115. https://doi.org/10.1108/MEQ-12-2017-0149
Cahan, S. F., De Villiers, C., Jeter, D. C., Naiker, V., & Van Staden, C. J. (2016). Are CSR disclosures value relevant? Cross-country evidence. European Accounting Review, 25(3), 579–611. https://doi.org/10.1080/09638180.2015.1064009
Chen, B., Dai, J., & Sciubba, E. (2014). Ecological accounting for China based on extended exergy. In Renewable and Sustainable Energy Reviews, 37, 334–347). Elsevier Ltd. https://doi.org/10.1016/j.rser.2014.05.022
Chen, Z., & Xie, G. (2022). ESG disclosure and financial performance: Moderating role of ESG investors. International Review of Financial Analysis, 83, 102291. https://doi.org/https://doi.org/10.1016/j.irfa.2022.102291
Ching, H. Y., & Gerab, F. (2017). Sustainability reports in Brazil through the lens of signaling, legitimacy and stakeholder theories. Social Responsibility Journal, 13(1), 95–110. https://doi.org/10.1108/SRJ-10-2015-0147
Cho, C. H. (2009). Legitimation strategies used in response to environmental disaster: A french case study of total SA’s Erika and AZF incidents. European Accounting Review, 18(1), 33–62. https://doi.org/10.1080/09638180802579616
Chouaibi, S., Chouaibi, J., & Rossi, M. (2022). ESG and corporate financial performance: the mediating role of green innovation: UK common law versus Germany civil law. EuroMed Journal of Business, 17(1), 46–71. https://doi.org/10.1108/EMJB-09-2020-0101
Deb, B. C., Saha, S., & Rahman, Md. M. (2020). Does green accounting practice affect bank performance? A study on listed Banks of Dhaka Stock Exchange in Bangladesh. PalArch’s Journal of Archaeology of Egypt/Egyptology, 17(9), 7225–7247.
Deegan, C. M. (2019). Legitimacy theory: Despite its enduring popularity and contribution, time is right for a necessary makeover. Accounting, Auditing and Accountability Journal, 32(8), 2307–2329. https://doi.org/10.1108/AAAJ-08-2018-3638
Dini, F. I. J. (2024). Aspek manakah yang memberikan imun lebih baik bagi kinerja keuangan & penilaian pasar perusahaan? Jurnal Ekonomi, Koperasi & Kewirausahaan, 14(8), 1329–1257. https://journal.ikopin.ac.id
Earnhart, D. (2018). The effect of corporate environmental performance on corporate financial performance. https://doi.org/10.1146/annurev-resource
Farooq, O. (2015). Financial centers and the relationship between ESG disclosure and firm performance: Evidence from an emerging market. The Journal of Applied Business Research, 31(4), 1239–1244.
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
Fernández-Temprano, M. A., & Tejerina-Gaite, F. (2020). Types of director, board diversity and firm performance. Corporate Governance (Bingley), 20(2), 324–342. https://doi.org/10.1108/CG-03-2019-0096
Georg, S., & Justesen, L. (2017). Counting to zero: accounting for a green building. Accounting, Auditing and Accountability Journal, 30(5), 1065–1081. https://doi.org/10.1108/AAAJ-04-2013-1320
Gonzalez, C. C., & Mendoza, K. H. (2020). Green accounting in Colombia: a Case study of the mining sector. Environment, Development and Sustainability, 23(4), 6453–6465. https://doi.org/10.1007/s10668-020-00880-1
Gonzalez, C. C., & Peña-Vinces, J. (2023). A framework for a green accounting system-exploratory study in a developing country context, Colombia. Environment, Development and Sustainability, 25(9), 9517–9541. https://doi.org/10.1007/s10668-022-02445-w
Gray, R., Walters, D., Bebbington, J., & Thompson, I. (1995). The greening of enterprise: an Exploration of the (non) role of environmental accounting and environtmental accountans in organizational change. Critical Perspective on Accounting, 6, 211–239.
Hakimi, A., Rachdi, H., Ben Selma Mokni, R., & Hssini, H. (2018). Do board characteristics affect bank performance? Evidence from the Bahrain Islamic banks. Journal of Islamic Accounting and Business Research, 9(2), 251–272. https://doi.org/10.1108/JIABR-06-2015-0029
Halkos, G., & Nomikos, S. (2021). Corporate social responsibility: Trends in global reporting initiative standards. Economic Analysis and Policy, 69, 106–117. https://doi.org/10.1016/j.eap.2020.11.008
Haninun, Lindrianasari, & Denziana, A. (2018). The effect of environmental performance and disclosure on financial performance. Int. J. Trade and Global Markets, 11(2), 138–148.
Harford, J., Mansi, S. A., & Maxwell, W. F. (2008). Corporate governance and firm cash holdings in the US. Journal of Financial Economics, 87(3), 535–555. https://doi.org/10.1016/j.jfineco.2007.04.002
Ianniello, G., Mainardi, M., & Rossi, F. (2013). Corporate governance and auditor choice.
Indriastuti, M., & Mutamimah, M. (2023). Green accounting and sustainable performance of micro, small, and medium enterprises: The role of financial performance as mediation. The Indonesian Journal of Accounting Research, 26(02). https://doi.org/10.33312/ijar.691
Iswajuni, I., Manasikana, A., & Soetedjo, S. (2018). The effect of enterprise risk management (ERM) on firm value in manufacturing companies listed on Indonesian Stock Exchange year 2010-2013. Asian Journal of Accounting Research, 3(2), 224–235. https://doi.org/10.1108/AJAR-06-2018-0006
Jahamani, Y. F. (2003). Green accounting in developing countries: The Case of U.A.E. and Jordan.
Jouber, H. (2021). Is the effect of board diversity on CSR diverse? New insights from one-tier vs two-tier corporate board models. Corporate Governance (Bingley), 21(1), 23–61. https://doi.org/10.1108/CG-07-2020-0277
Jurnali, T., Haniyyah, N., & Tabrani, P. (2024). The Effect of Board Size and Gender Diversity on Company Performance Moderated by Political Connections and Family Ownership. 4(1).
Kamaliah. (2020). Disclosure of corporate social responsibility (CSR) and its implications on company value as a result of the impact of corporate governance and profitability. International Journal of Law and Management, 62(4), 339–354. https://doi.org/10.1108/IJLMA-08-2017-0197
Karim, S., & Ilyas, M. (2021). Foreign institutional investors and the contribution of cash and dividend to firm’s value. Managerial Finance, 47(3), 310–325. https://doi.org/10.1108/MF-11-2019-0568
Krueger, P., Sautner, Z., Yongjun Tang, D., & Zhong, R. (2024). The effects of mandatory ESG disclosure around the world. ECGI Working Paper Series in Finance. http://ssrn.com/abstract_id=3832745www.ecgi.global/content/working-papers
Liu, C., Su, K., & Zhang, M. (2023). Do boards practice what they preach on nonfinancial disclosure? Evidence from China on corporate water information disclosures. China Accounting and Finance Review, 25(2), 249–289. https://doi.org/10.1108/cafr-07-2022-0080
Li, Z., Wei, J., Marinova, D. V., & Tian, J. (2021). Benefits or costs? The effects of diversification with cross-industry knowledge on corporate value under crisis situation. Journal of Knowledge Management, 25(1), 175–226. https://doi.org/10.1108/JKM-11-2019-0659
Mishra, R. K., & Kapil, S. (2018). Effect of board characteristics on firm value: evidence from India. South Asian Journal of Business Studies, 7(1), 41–72. https://doi.org/10.1108/SAJBS-08-2016-0073
Nikolaeva, R., & Bicho, M. (2011). The role of institutional and reputational factors in the voluntary adoption of corporate social responsibility reporting standards. Journal of the Academy of Marketing Science, 39(1), 136–157. https://doi.org/10.1007/s11747-010-0214-5
O’Donovan, G. (2000). Legitimacy theory as an explanation for corporate environmental disclosures. Victoria University of Technology.
O’Donovan, G. (2002). Environmental disclosures in the annual report. Accounting, Auditing & Accountability Journal, 15(3), 344–371. https://doi.org/10.1108/09513570210435870
Paolone, F., Pozzoli, M., Chhabra, M., & Di Vaio, A. (2024). Cultural and gender diversity for ESG performance towards knowledge sharing: Empirical evidence from European banks. Journal of Knowledge Management, 28(11), 106–131. https://doi.org/10.1108/JKM-05-2023-0445
Paramita, R. W. D., Noviansyah, R., & Sulistyan, R. B. (2021). Metode penelitian kuantitatif : Buku ajar perkuliahan metodologi penelitian bagi mahasiswa akuntansi & manajemen (3rd ed.). Widya Gama Press.
Patten, D. M. (1992). Intra-industry environmental disclosures in response to The Alaskan Oil Spill: a Note on legitimacy theory. In Accounting OrgantzatlonsandSoctety (Vol. 17, Issue 5).
Pfeffer, J. (1972). Size and composition of corporate boards of directors: the organization and its environment. In Source: Administrative Science Quarterly, 17(2).
Prasetyorini, B. F. (2013). Pengaruh ukuran perusahaan, leverage price earning ratio dan profitabilitas terhadap nilai perusahaan. Jurnal Imu Manajemen |, 1(183).
Rahman, F., Purwoko, G. D., & Rachmi, T. N. (2022). Analisis rasio keuangan dalam mengukur nilai perusahaan berdasarkan rasio likuiditas, rasio solvabilitas dan rasio profitabilitas pada PT Elang Mahkota Teknologi Tbk Periode 2012-2021. In SCIENTIFIC JOURNAL OF REFLECTION: Economic, Accounting, Management and Business, 5(3).
Roberts, R. W. (1992). Determinants of corporate social responsibility disclosure: an application of stakeholder theory. In Accounting Organizations and Society,17(6).
Roestanto, A., Vivianita, A., & Nurkomalasari, N. (2022). Pengaruh ukuran perusahaan, umur perusahaan, jenis industri, dan struktur kepemilikan terhadap environmental, social, and governance (ESG) disclosure (Studi empiris perusahaan di Indonesia yang terdaftar di IDX 2017-2020). Jurnal Akuntansi Sekolah Tinggi Ilmu Ekonomi Muhammadiyah Palopo, 8(1), 1–18.
Sari, A. M. P., & Ardiana, P. A. (2014). Pengaruh board size terhadap nilai perusahaan. E-Jurnal Akuntansi Universitas Udayana, 7(1), 177–191.
Schaltegger, S., Hörisch, J., & Freeman, R. E. (2019). Business cases for sustainability: a Stakeholder theory perspective. Organization and Environment, 32(3), 191–212. https://doi.org/10.1177/1086026617722882
Setthasakko, W. (2010). Barriers to the development of environmental management accounting: An exploratory study of pulp and paper companies in Thailand. EuroMed Journal of Business, 5(3), 315–331. https://doi.org/10.1108/14502191011080836
Stanojević, M., Vranes, S., & Gökalp, I. (2010). Green accounting for greener energy. In Renewable and Sustainable Energy Reviews,14(9), 2473. Elsevier Ltd. https://doi.org/10.1016/j.rser.2010.06.020
Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. In Source: The Academy of Management Review,20(3).
Sugeng, B. (2020). Fundamental metodologi penelitian kuantitatif (eksplanatif) (1). Deepublish.
Sujoko, & Soebiantoro, U. (2007). Pengaruh struktur kepemilikan saham, leverage, faktor intern dan faktor ekstern terhadap nilai perusahaan (Studi empirik pada perusahaan manufaktur dan non manufaktur di Bursa Efek Jakarta). Jurnal Manajemen dan Kewirausahaan, 9(1), 41–48.
Sukandar, P. P., & Rahardja. (2014). Pengaruh ukuran dewan direksi dan dewan komisaris serta ukuran perusahaan terhadap kinerja keuangan perusahaan. Diponegoro Journal of Accounting, 3(3), 1–7.
Sukmadilaga, C., Winarningsih, S., Yudianto, I., Lestari, T. U., & Ghani, E. K. (2023). Does green accounting affect firm value? Evidence from ASEAN countries. International Journal of Energy Economics and Policy, 13(2), 509–515. https://doi.org/10.32479/ijeep.14071
Tregua, M., Russo Spena, T., & Casbarra, C. (2015). Being social for social: A co-creation perspective. Journal of Service Theory and Practice, 25, 198–219. https://doi.org/10.1108/JSTP-09-2013-0183
Ulupui, I. G. K. A., Murdayanti, Y., Marini, A. C., Purwohedi, U., Mardi, & Yanto, H. (2020). Green accounting, material flow cost accounting and environmental performance. Accounting, 6(5), 743–752. https://doi.org/10.5267/j.ac.2020.6.009
Wangi, G. T., & Aziz, A. (2024). Analisis pengaruh ESG disclosure, likuiditas, dan profitabilitas terhadap nilai perusahaan pada perusahaan yang terdaftar di indeks ESG Leaders. Jurnal IKRAITH-EKONOMIKA, 7(2), 221–230. https://doi.org/10.37817/ikraith-ekonomika.v7i2
Wayan Widnyana, I., Gusti Bagus Wiksuana, I., Artini, L. G. S., & Sedana, I. B. P. (2021). Influence of financial architecture, intangible assets on financial performance and corporate value in the Indonesian capital market. International Journal of Productivity and Performance Management, 70(7), 1837–1864. https://doi.org/10.1108/IJPPM-06-2019-0307
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Zakir Gunibala, Satia Nur Maharani, Sri Pujiningsih
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
