Environmental, Social, and Governance (ESG) disclosure has not yet had a significant impact on the value of companies listed on the Indonesia Stock Exchange (IDX) during the 2020–2024 period. Research conducted by Yulius Paul Pian, Sari Rusmita, and Umiaty Hamzani from Universitas Tanjungpura suggests that investors in the Indonesian capital market tend to prioritize short-term financial stability over sustainability information.
Background and Market Challenges
In the midst of the post-COVID-19 economic recovery, the ESG framework has gained popularity as a tool for assessing non-financial risks. Theoretically, companies that are transparent about their environmental impact, social practices, and governance should earn higher investor trust, reflected in an increase in firm value, or Tobin’s Q. However, reality in the field often differs due to information asymmetry or the market's inability to interpret sustainability signals as long-term economic value.
Research Methodology
The researchers analyzed 117 companies from various sectors listed on the IDX between 2020 and 2024. Using a quantitative approach and the Fixed Effect Model (FEM) on 574 observations, the study tested two main hypotheses: the direct impact of ESG disclosure on firm value and the role of profitability (Return on Assets) in strengthening that relationship.
Key Findings
The analysis revealed interesting insights into the behavior of the Indonesian capital market:
- No Significant Effect: ESG disclosure has not significantly driven an increase in firm value (Tobin’s Q).
- Profitability Does Not Moderate: Profitability did not prove to strengthen the relationship between ESG and firm value.
- Model Feasibility: While the main hypotheses were not supported, the research model remains valid and explains 59.9% of the variations in firm value related to the factors studied.
Implications for Stakeholders
These findings serve as an important signal for various parties. For companies, ESG disclosure must not be merely an administrative obligation or regulatory compliance; it must reflect substantive implementation to be recognized by the market. For regulators such as the Financial Services Authority (OJK) and the IDX, these results highlight the need for stricter standardization of ESG reporting to ensure the information received by investors is of higher quality and comparable across firms. Furthermore, investors are advised not to rely solely on ESG scores but to continue performing comprehensive fundamental analysis, especially amid post-pandemic economic uncertainty.
Author Profiles: This research was conducted by a team from Universitas Tanjungpura: Yulius Paul Pian, Sari Rusmita, and Umiaty Hamzani, who specialize in accounting, financial management, and capital market analysis.
Research Source:
Pian, Y. P., Rusmita, S., & Hamzani, U. (2026). The Effect of ESG Disclosure on Company Value with Profitability as a Moderation Variable. Indonesian Journal of Business Analytics (IJBA), 6(3), 777-792. DOI:
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