ESG Disclosure and Firm Value Dynamics through Financial Performance

Rizky Amelia; Diana Puspitasari; Amalia Nur Chasanah; Dian Prawitasari

doi:10.69725/jebi.v3i1.343

Authors

Rizky Amelia Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia
Diana Puspitasari Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia
Amalia Nur Chasanah Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia
Dian Prawitasari Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia

DOI:

https://doi.org/10.69725/jebi.v3i1.343

Keywords:

ESG Disclosure, Firm value, Profitability, Leverage, Manufacturing Firms

Abstract

Purpose—This study examines how environmental, social, and governance (ESG) disclosure affects firm value. It also assesses the moderating roles of profitability and leverage in the relationship between ESG disclosure and firm value.

Design/methodology/approach—This study adopts a quantitative explanatory approach. The sample comprises 61 manufacturing firms listed on the Indonesia Stock Exchange from 2021 to 2023, yielding 183 firm-year observations selected through purposive sampling. ESG disclosure is measured using Bloomberg ESG scores. Firm value is proxied by price-to-book value, profitability by return on assets, and leverage by the debt-to-equity ratio. Data are analyzed using Partial Least Squares Structural Equation Modeling in SmartPLS.

Findings—ESG disclosure has a positive and significant effect on firm value. Profitability strengthens the relationship between ESG disclosure and firm value, suggesting that financially stronger firms provide more credible ESG signals to investors. Leverage also moderates the ESG disclosure–firm value relationship, though its effect is weaker than that of profitability.

Originality/value—This research contributes to ESG and corporate finance literature by examining how profitability and leverage serve as moderating factors in the relationship between ESG disclosure and firm value. It emphasizes that the significance of ESG disclosure for firm value is influenced by financial performance and capital structure.

Implications—The results indicate that companies should boost their ESG transparency, ensure robust profitability, and optimize leverage to increase market valuation.

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Author Biographies

Rizky Amelia, Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia

Rizky Amelia is a student in the Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Indonesia. Her academic interests focus on corporate finance, ESG disclosure, firm value, profitability, leverage, and sustainability reporting in Indonesian manufacturing firms. Her current research examines how environmental, social, and governance disclosure contributes to market valuation and how financial performance strengthens the relationship between sustainability transparency and firm value.
Diana Puspitasari, Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia

Diana Puspitasari is a lecturer in the Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Indonesia. Her research interests include corporate finance, financial performance, investment decisions, sustainability, ESG disclosure, and corporate governance. She actively supports research on firm value, financial strategy, and responsible business practices, particularly in the context of Indonesian listed companies and emerging market corporate finance.
Amalia Nur Chasanah, Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia

Amalia Nur Chasanah is a lecturer in the Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Indonesia. Her academic interests include financial management, corporate governance, sustainability disclosure, ESG performance, and empirical modeling in corporate finance. Her research focuses on how financial indicators, governance mechanisms, and sustainability practices influence firm performance and long-term value creation in Indonesian capital market settings.
Dian Prawitasari, Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia

Dian Prawitasari is a lecturer in the Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Indonesia. Her research interests include corporate finance, accounting, financial reporting, sustainability practices, and firm valuation. She is particularly interested in examining the role of financial performance, leverage, ESG disclosure, and governance mechanisms in enhancing firm value and strengthening investor confidence in emerging market firms.

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