Bandung, West Java – The Effect of ESG
Disclosure, Capital Structure, and Company Size on Company Value with Company
Age as a Moderation Variable (Study on IDX ESG Leaders in 2020–2024). This
research was conducted by Ridha Annas Fat-h Sabila and Desmiza from Jenderal
Achmad Yani University in a scientific article published in the East Asian
Journal of Multidisciplinary Research (EAJMR) in 2026.
Research conducted by Ridha Annas
Fat-h Sabila and Desmiza revealed that the disclosure of Environmental, Social,
and Governance (ESG) and the high use of debt do not necessarily increase the
company's value in the eyes of investors. In fact, in a number of cases, the
two are negatively correlated with the company's value as measured using
Tobin's Q ratio.
ESG Is Popular,
But Markets Haven't Fully Appreciated
In recent
years, ESG-based investments have grown rapidly as the number of investors in
the Indonesian capital market has increased. IDX ESG Leaders even recorded a
relatively superior performance of the index compared to other ESG indices.
However,
research data shows that there is a mismatch between ESG performance and market
valuation. Although ESG disclosure is increasing, company value does not
automatically increase.
This study
analyzed 12 companies that were consistently listed in the IDX ESG Leaders
during 2020–2024. Data was obtained from the company's financial statements and
sustainability reports, then analyzed using panel data regression and Moderated
Regression Analysis (MRA).
Three Key
Research Findings
Based on the
results of the analysis, there are several important findings:
- ESG disclosure has a negative effect on company
value (Tobin's Q).
Investors are considered not to fully see ESG as a factor that directly increases market valuation. - The debt-to-equity ratio (DER) capital structure
also has a negative impact.
The average DER of companies in the sample reached 260.1 percent, indicating a high dependence on debt and increasing the perception of financial risk. - The size of the company has a positive effect on
the value of the company.
Companies with total large assets—an average of IDR 506.64 trillion—are seen as more stable and trusted by investors.
The age of
the company is not decisive
The study also
examined whether the age of a company strengthens the relationship between ESG,
capital structure, and company size to company value. The results show that the
age of the company actually weakens the influence of these three variables.
This means that
investors in the Indonesian capital market are more focused on actual
performance and long-term prospects than the length of time the company has
been established. Companies that are decades old do not automatically get a
higher rating if their financial performance and risk management are not optimal.
Why is ESG
Rated Negatively?
According to
researchers, this condition can occur because ESG disclosure has not been
carried out comprehensively and has not been able to clearly show long-term
economic benefits to investors.
The cost of ESG
implementation is considered a burden if it is not offset by improved
performance or effective communication to the market. Investors are still
prioritizing financial stability, operational efficiency, and risk management.
In other words, ESG has not yet fully become the main factor in the formation
of corporate value in Indonesia, especially in the 2020–2024 research period.
Implications
for the Business World and Investors
The results of
this study provide several strategic messages:
- Companies need to improve the quality and transparency of ESG disclosures so that their long-term benefits can be understood by investors.
- The management of the capital structure must be maintained so that it is not too aggressive in the use of debt.
- Asset size and operational stability remain key factors in building market confidence.
- Investors should not only look at ESG labels, but also evaluate debt risk and asset management efficiency.
This research
reinforces the view that the value of companies in the Indonesian capital
market is still heavily influenced by traditional fundamental factors rather
than formal sustainability indicators.
Author
Profile
•
Ridha Annas Fat-h Sabila – Jenderal
Achmad Yani University.
•
Desmiza – Jenderal Achmad Yani
University.
Research
Source
Sabila, R. A. F., &
Desmiza. (2026). The Influence of ESG Disclosure, Capital Structure, and
Firm Size on Firm Value with Firm Age as a Moderating Variable (Study on IDX
ESG Leaders in 2020–2024).
East Asian Journal of
Multidisciplinary Research (EAJMR), Vol. 5 No. 2, pp. 351–370.
DOI: https://doi.org/10.55927/eajmr.v5i2.3
Official URL: https://journaleajmr.my.id/index.php/eajmr
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