Comprehensive Environmental, Social, and Governance (ESG) disclosure is proven to significantly improve investment efficiency in Indonesian manufacturing companies. Research conducted by Talitha Rahmi Ardiyanti, Bambang Sugeng, and Nurika Restuningdiah from Universitas Negeri Malang highlights how the transparency of non-financial data plays a vital role in refining managerial decision-making.
The Importance of Transparency in the Manufacturing Sector
The manufacturing sector is a national economic pillar that often faces significant negative environmental externalities. Until now, there has been a considerable gap in the quality and coverage of ESG disclosure among companies. In modern capital markets, however, investors no longer look solely at financial performance, but also at how companies manage environmental, social, and governance responsibilities.
Research Methodology
Researchers conducted a quantitative analysis of annual reports and sustainability reports from manufacturing companies listed on the Indonesia Stock Exchange (IDX) between 2022 and 2024. Using purposive sampling, they selected companies that possessed complete data and compliant ESG disclosure platforms. Investment efficiency was measured by assessing a firm’s ability to simultaneously avoid overinvesting in low-value projects and underinvesting in profitable ones.
Key Research Findings
The data analysis revealed the following crucial findings:
ESG disclosure has a positive and significant impact on corporate investment efficiency.
Companies with higher information transparency are proven to exhibit superior investment efficiency.
ESG disclosure helps optimize resource allocation and reduces inefficient investment decisions.
The ESG disclosure coefficient was recorded at 0.041 with a very strong significance level (p-value of 0.000).
Implications and Benefits
This research provides empirical evidence that ESG transparency is not merely a formality, but a strategic tool to reduce information asymmetry between managers (agents) and shareholders (principals). With adequate disclosure, companies gain stricter oversight from various parties, which ultimately "forces" management teams to be more rational in allocating capital. The authors suggest that manufacturing companies should not just meet administrative obligations, but integrate sustainable practices into their core operations to enhance accountability and long-term investor trust.
Author Profiles:
- Talitha Rahmi Ardiyanti, student at Universitas Negeri Malang.
- Bambang Sugeng, academic at Universitas Negeri Malang.
- Nurika Restuningdiah, academic at Universitas Negeri Malang.
- The research team’s expertise covers accounting, corporate governance, and capital market analysis.
Research Source: Ardiyanti, T. R., Sugeng, B., & Restuningdiah, N. (2026). ESG Disclosure and Investment Efficiency: Evidence from Indonesian Manufacturing Companies. Indonesian Journal of Business Analytics (IJBA), 6(3), 808-825.
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