Characteristics of the Audit Committee and the Environmental, Social, Governance (ESG) Performance in Indonesian Companies

Abstract

This study intends to experimentally demonstrate the impact of audit committee features on Environmental, Social, and Governance (ESG) performance in companies listed on the Indonesia Stock Exchange. The study specifically looks at how the number, tenure, independence, expertise, and frequency of audit committee meetings can impact ESG performance. A sample of the companies comprised in the Bloomberg database was used to gather information on the audit committee’s composition and ESG performance. With a total of 288 observations covering the years 2018 to 2021, the sample consists of 72 firms. According to the study’s conclusions, the size of audit committees and their level expertise have a positive impact on ESG performance. However, the length of the audit committee’s term, independence, and the frequency of audit committee meetings do not significantly impact ESG performance. These findings highlight the critical oversight functions that audit committees perform in maintaining a company’s commitment to all stakeholders and show that businesses typically follow social norms and international standards. Keywords: audit committee characteristics, ESG performance, corporate governance