ESG Disclosure Research Articles

The Effect Of Environment, Social, Governance (ESG Disclosure) And Profitabiltiy On Firm Value With Audit Fee As Moderating Variable : Study Of Energy Sector Companies Listed On The Indonesian Stock Exchange Period 2019 - 2022

This research aims to analyze the influence of Environmental, Social, Governance Disclosure (ESG Disclosure) and Profitability on the Value of Energy Sector Companies Listed on the Indonesian Stock Exchange with Fee audit as a Moderating Variable. The population of this research is energy sector companies listed on the Indonesia Stock Exchange for the 2019-2022 period. The method used is quantitative, panel data regression model using the help of the eviews application, the number of samples obtained is 108 with a sampling technique using the purposive sampling method. The findings show that profitability has a positive effect on firm value. Environmental disclosure has a negative effect on firm value. Social and governance disclosures have no effect on firm value. Fee audit weakens the influence of profitability on firm value. Fee audit is unable to moderate the influence of the environment, social and governance on firm value

The Influence of Environmental, Social, and Governance Performance Disclosure on Stock Performance

This research aims to evaluate the effect of environmental, social, and governance (ESG) performance disclosure on the stock performance of companies listed on the Indonesia Stock Exchange (BEI) during the 2018-2022 period, using the price earning ratio (PER) as an indicator of stock performance. The research population includes companies listed on the IDX with ESG scores from the Thomson Reuters Eikon Database during the period studied. The research sample of 190 companies was selected using a purposive sampling technique. The data analysis method used is Panel Data Regression Analysis with the help of STATA 14 for Windows software. The research results show that environmental performance partially has a positive and significant influence on stock performance, while social and governance performance has no significant influence. Simultaneously, environmental, social, and governance performance variables influence the company's stock performance. This research implies that companies on the IDX can improve their stock performance by paying attention to environmental performance aspects. Even though social and governance performance does not partially show a significant influence, attention to these three aspects can improve overall stock performance. These findings provide insight to practitioners, regulators, and investors regarding the importance of ESG disclosure in the context of the Indonesian capital market.

The Integration of Sustainability and ESG Accounting into Corporate Reporting Practices

Purpose: The purpose of this study is to investigate the integration of sustainability and Environmental, Social, and Governance (ESG) accounting into corporate reporting practices. It explores the significance, challenges, and benefits associated with this integration, focusing on how it impacts transparency, accountability, and stakeholder engagement in corporate environments. Research Design and Methodology: The study employs a qualitative literature review methodology, involving comprehensive searches of academic databases, journals, and other relevant publications. The selection of literature is guided by predefined criteria, and data collection involves reading and critically analyzing scholarly articles, reports, and documents to extract pertinent themes and insights. Findings and Discussion: Key findings from the study highlight the growing recognition among companies of the importance of sustainability reporting. Despite the benefits, challenges such as issues with data accuracy, comparability, and integration into corporate decision-making processes persist, which can hinder the effectiveness of sustainability reports. Implications: The study suggests that to overcome these challenges, organizations need to adopt integrated reporting frameworks, comply with regulatory requirements, engage more effectively with stakeholders, and leverage technological innovations. These steps will help maximize the value derived from transparent and accountable ESG disclosures, ultimately enhancing company reputation, improving risk management, and boosting stakeholder engagement.

PENGARUH PENGUNGKAPAN ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) TERHADAP EFISIENSI INVESTASI

This research aims to test and analyze the influence of ESG disclosure both in aggregate and the influence of partial ESG components consisting of environmental, social and corporate governance disclosures on investment efficiency in companies listed on the IDX for the 2017-2021 period. Data collection in this research used the documentation method. This research uses purposive sampling as a sampling method with a total sample of 210 companies listed on the IDX. The results of this study show that aggregate ESG disclosure has a positive effect on investment efficiency. Meanwhile, partial ESG disclosure has no influence on investment efficiency. The findings of this research provide important awareness to companies regarding the benefits of carrying out comprehensive ESG disclosures.

The effect of Environmental, Social, and Governance disclosure on cost of debt: A life‐cycle perspective

AbstractDrawing on life cycle theory, this paper explores the relationship between Environmental, Social, and Governance (ESG) disclosure and the cost of debt using 556 Indian‐listed firms. The findings show that ESG disclosure is negatively related to the cost of debt; however, the impact of ESG disclosure is more pronounced in the growth and mature stages compared to the introduction, decline, and shakeout stages. The study deepens the analysis by investigating the effect of individual dimensions of ESG disclosure and the findings reveal that the environmental and social aspects have a more pronounced impact on the cost of debt compared to the governance component.

A literature review on the impact of ESG disclosure practices on investment decisions.

A literature review on the impact of ESG disclosure practices on investment decisions.

ESG regulation and financial reporting quality: Friends or foes?

The growing focus on ESG policies has sparked discussions about whether companies should be required to make ESG disclosures. A major concern is that companies use high ESG ratings to divert attention from poor performance, which is hidden by their low financial reporting quality (FRQ). Looking at U.S.-listed companies from 2012 to 2022, we find that high ESG ratings do not come at the expense of FRQ. Furthermore, the heightened focus on ESG performance following the 2019 Business Roundtable statement had a positive impact on FRQ. Our findings suggest that regulation mandating ESG disclosures is likely to improve FRQ.

The Effect of ESG Disclosure on Firm Value: An Empirical Evidence from Chinese Listed Companies

The Effect of ESG Disclosure on Firm Value: An Empirical Evidence from Chinese Listed Companies

Scoring Sustainability Reports for Assessing Environmental and Social Dimension of Leading Energy Sector Companies

The looming threat of climate change is increasingly placing the sustainability of businesses under scrutiny. The power sector in India offers a compelling context to explore the scope of ESG disclosures. The country heavily relies on coal, oil, and gas for extensive electrification, making it the world's fourth-largest emitter of pollution, releasing 2.65 billion metric tonnes of carbon into the atmosphere annually. In this paper an attempt has been made to review and analyse the Business Responsibility and Sustainability Reports of Energy sector companies in India. A distinction has also been made in public and private sector companies. Sustainability Reporting Maturity Model released by ICAI has been used to score the companies for the social and environmental indicators reported by them in the BRSR. It was found that although private sector companies are reporting the environmental indicators better, the public sector is leading in reporting social indicators. However, when it comes to overall performance, public sector companies outperform private sector companies.

The ESG Patterns of Emerging-Market Companies: Are There Differences in Their Sustainable Behavior after COVID-19?

We aim to map the ESG patterns of emerging-market companies from 2018 to 2021 in order to determine whether the COVID-19 pandemic exerted any influence on sustainable corporate behavior. Thus, the ESG performances were assessed by employing the Kohonen Self-Organizing Map (also known as the Kohonen neural network) for clustering purposes at three levels: (i) ESG overall, including country and sectoral perspectives; (ii) ESG thematic; and (iii) ESG four-folded (stakeholder, perspective, management, and focus strategic views). Our results show that emerging-market companies focus their ESG efforts on social and governance issues rather than on environmental. However, environmental and social behavior differ more acutely than governance behavior across clusters. The analyses of country-level ESG performance and that of eleven market-based economic sectors corroborate the geographic and sector dependence of ESG performance. The thematic-level analysis indicates that operational activities and community issues received more attention, which suggests that emerging-market companies address distinct ESG topics according to their particularities and competitiveness. Furthermore, our empirical findings provide evidence that the ESG behavior of companies has changed over the course of the COVID-19 pandemic. Thus, our findings are relevant to policy makers involved in regulating ESG disclosure practices, investors focused on enhancing their sustainable investment strategies, and firms engaged in improving their ESG involvement.

The Impact of ESG Disclosure on the Corporate Value of Automobile Industry: Evidence from China

From the ESG ratings information on A-share listed automotive businesses published from 2018 to 2022, regression analyses using the Ordinary Least Squares (OLS) method were carried out for this company. The study explores how ESG disclosure affects business value in the car sector and experimentally examines the regression model. The study's conclusions show a strong positive influence between ESG disclosure and the worth of enterprises in the automotive sector. Therefore, the financial investment market supports companies with more ESG disclosure more strongly than those with lesser transparency. Through the correlation analysis, it is found that financial leverage and ESG are in negative influence, companies with more financial leverage will use their debt capital more frequently, and they can use lower costs to obtain funds for financial investment and ESG activities, which will increase the return on investment. However, businesses in poor financial condition do not have extra funds to care about ESG related operations. The body of information on ESG in the automobile industry is enriched by this study. It also discusses the effect of business profitability on ESG activities.

The Impact of Environmental, Social, and Governance Factor on the Financial Performance of China's Companies

This study looks at how ESG concerns affect the bottom lines of Chinese businesses. China has become the latest country to impose mandatory ESG reporting requirements on publicly traded corporations. This study provides evidence that Chinese firms that put an emphasis on ESG aspects are more likely to have long-term success. Investors should take ESG performance into account due to the beneficial relationship between social and environmental performance and financial success. In addition, regulators might encourage openness and responsibility by making ESG disclosures subject to the comply or explain approach. The theoretical foundations of stakeholder and principal-agent theories are investigated alongside recent ESG developments in China and associated laws. The study looked at information from 101 Chinese public businesses Financial success was shown to be positively correlated with social and environmental performance, whereas governance performance had no discernible effect. The study has findings that have important implications for both investors and regulators. The findings show that investors may place greater focus on ESG performance when making investment decisions. The Chinese economy will expand more sustainably if the problems with ESG reporting are solved.

How does ESG disclosure promote technological innovation? Moderating effects based on product market competition

PurposeThe primary objective of this study is to unveil the relationships that interconnect ESG and three pillars disclosures with technological innovation while also investigating the moderating impact of product market competition. The paper seeks to identify the underlying mechanisms that facilitate technological innovation in sustainable management.Design/methodology/approachUsing data from 8,738 Chinese firms from 2011 to 2019, this study employs quantitative analysis to examine the relationship between ESG disclosure and technological innovation and the moderating effect. Moreover, this study explores the heterogeneous impacts while considering factors such as property rights and firm size.FindingsThe findings reveal a positive correlation between ESG disclosure and technological innovation. The study also investigates the moderating role of product market competition and finds that increasing competition mitigates the positive effects of ESG disclosure on technological innovation. Additionally, the conclusions reveal that the relationship between ESG and three pillars disclosures and technological innovation, as well as the moderating role of product market competition, exhibits inconsistency across firms with different property rights and sizes.Originality/valueThis study offers a clear understanding of the relationship between ESG disclosures and technological innovation, and how it varies across businesses of different sizes and ownership structures. It also provides fresh perspectives on the influence of product market competition on this relationship, with implications for strategy development in corporations.

Does Green Finance Policy Contribute to ESG Disclosure of Listed Companies? A Quasi-Natural Experiment from China

In 2016, the People’s Bank of China (PBC) together with multiple departments issued the Guidance on Building a Green Financial System (the Guidance), which marked a great breakthrough in China’s green finance policy. Aiming to clarify the actual impact and underlying mechanisms of green finance policy on Chinese listed companies’ ESG disclosure quality, this study employs the difference-in-differences (DID) model and examines the impact of the Guidance on ESG disclosure practices of A-share listed companies on the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) during the period 2006 to 2022. This study reveals a positive correlation between the Guidance and listed companies’ ESG disclosure. Upon further examination, it becomes evident that the Guidance has a more noticeable positive impact on the quality of ESG disclosure among listed companies that operate in industries with high levels of pollution, state-owned enterprises, and regions that exhibit greater levels of economic development. This paper provides essential insights to policymakers, facilitating a deeper understanding and more thorough assessment of the economic implications of green finance policies. Additionally, it acts as a strategic resource for listed companies, guiding the enhancement of corporate ESG disclosures and the implementation of ESG strategies influenced by green finance policies.

Is ESG disclosure creating value propositions for the firms? An SLR and meta-analysis of how ESG affects the financials of a firm

This systematic literature review (SLR) delves into the evolving landscape of environmental, social, and governance (ESG) disclosures and their consequential effects on the financial performance of firms. As sustainability considerations increasingly influence investment decisions, corporations are compelled to integrate ESG factors into their reporting practices. The primary objective of this research is to comprehensively analyze existing literature, elucidating the patterns, trends, and key insights surrounding ESG disclosures and their repercussions on financial outcomes. The study employs a systematic approach to identify, evaluate, and synthesize pertinent research articles, academic papers, and industry reports. It explores the multifaceted dimensions of ESG disclosures, encompassing environmental stewardship, social responsibility, and governance practices. The analysis spans diverse sectors, examining how ESG reporting has become a crucial component of corporate transparency and stakeholder engagement. The review aims to distill overarching themes from the literature, providing a nuanced understanding of the relationship between ESG disclosures and financials. Preliminary findings suggest that ESG disclosures are positively associated with enhanced financial performance, fostering long-term value creation for firms. However, variations exist in the significance of these relationships across industries and regions. Furthermore, the review highlights the emergence of standardized frameworks and reporting guidelines as essential catalysts for advancing ESG disclosure practices. This research contributes to the ongoing dialogue on sustainable finance by consolidating diverse perspectives and methodologies found in the literature. The synthesis of existing knowledge seeks to inform future research directions, guide corporate practices, and assist policymakers in shaping frameworks that promote responsible and transparent business conduct. In total, 650 articles were reviewed to explore the effect the ESG disclosure has on the financial performance of the firms.

The Moderating Effect of Board characteristics in the Relationship Between ESG Disclosure and Financial Performance: Evidence from KSA

With the increasing shift toward sustainable development and heightened societal scrutiny, companies are placing greater emphasis on environmental, social, and governance (ESG) disclosures. This study investigates the association between ESG disclosures and financial performance among companies listed on the Saudi Stock Exchange, focusing on how board characteristics influence this relationship. By analyzing a sample of Saudi-listed firms, the research assesses the impact of ESG disclosures, as well as their individual environmental, social, and governance components, on key financial performance indicators: Return on Assets (ROA), Return on Equity (ROE), and Earnings Per Share (EPS). The findings reveal a positive association between overall ESG disclosures and financial performance metrics. Environmental disclosures are particularly effective in enhancing ROA, social disclosures positively affect ROE, and governance disclosures significantly improve EPS. Additionally, the study highlights how board characteristics—such as ownership, size, and independence—moderate the relationship between ESG disclosures and financial performance. Specifically, board ownership has a positive moderating effect, while the impacts of board size and independence vary depending on the financial metric in question. These results emphasize the importance of ESG disclosures in influencing financial performance and underscore the significant role of board governance in strengthening this relationship. The study provides valuable insights from the Saudi context, offering both theoretical and practical implications for policymakers, investors, and corporate managers aiming to optimize ESG practices and enhance financial outcomes.

Unlocking Trade Credit Opportunities and Working Capital Efficiency through ESG Disclosure

This paper explores the impact of firms’ ESG performance on their trade credit financing and working capital efficiency, utilizing a sample of 586 Indian firms listed on the National Stock Exchange (NSE) from 2015 to 2022. The study offers robust evidence supporting the positive connection between superior ESG disclosure and trade credit, as well as the negative link between ESG disclosure and the cash conversion cycle. These findings underscore the role of ESG disclosure in increasing suppliers’ willingness to extend trade credit and facilitating efficient working capital management practices. The result shows that improved ESG disclosure practices increase payable turnover days and reduce both inventory turnover and receivable turnover days, reflecting the enhanced operational efficiency and market power of the firm.

Research on the relationship between ESG disclosure quality and stock liquidity of Chinese listed companies

<abstract> <p>In this article, we aim to verify the relationship between ESG disclosure quality and stock liquidity of listed companies and to provide a detailed analysis of its mechanisms. Based on the theories of information asymmetry, signal transmission, reputation, and stakeholder, we summarize and analyze the theoretical and logical framework of how ESG information disclosure can impact stock liquidity. Following the fixed effect (considering individual, year, and industry), panel model was applied to empirically test the relationship between ESG disclosure score and stock liquidity with data ranging from 2012 to 2021. The research findings indicate that improving the quality of ESG disclosure by companies can significantly enhance the level of stock liquidity. Furthermore, we analyze and verify through mechanism tests that ESG disclosure can influence stock liquidity by increasing analyst attention and media coverage (information effect) and enhancing reputation (reputation effect). From a theoretical perspective, the paper enriches the research related to the economic impact of ESG information disclosure and factors affecting stock liquidity. Also, we validate theories connected to information and reputation. From a practical perspective, the research has specific reference value for policymakers, enterprise managers, and investors.</p> </abstract>

Beyond boardroom diversity and environmental, social, and governance transparency: Evidence of the emerging market firms

Since its inception, the environmental, social, and governance (ESG) framework has increasingly captured the attention of stakeholders across the globe. The Malaysian government, recognizing the critical importance of ESG principles, has actively advocated for enhanced transparency within the private sector by mandating comprehensive ESG disclosure among public-listed companies (PLCs). Responding to Ismail and Latiff’s (2019) call, this study explored the complex interplay between boardroom dynamics and ESG disclosure, integrating stakeholder theory, agency theory, and resource dependency theory to illuminate the multifaceted relationships within this context. Utilizing the weighted least squares (WLS) regression method, this research meticulously analyzed 63 firms’ data from 2018 to 2022, examining how various board characteristics influence ESG disclosure practices. The findings revealed a significant positive correlation between board expertise, foreign board presence, and board interlocking with ESG disclosure, while larger board sizes were found to negatively impact ESG disclosure practices. These insights not only highlight how specific board attributes enhance or hinder effective governance and ESG practices but also pave the way for policymakers and practitioners to develop actionable strategies that further promote ESG principles. Moreover, this study opened new avenues for academic inquiry, providing a robust foundation for future research on corporate governance and ESG.

Exploring the need for environmental, social, and governance disclosure strategy from the shareholders’ perspective

Corporations are now integrating environmental, social, and governance (ESG) disclosure and sustainability into their business strategy to enhance their reputation, win the trust of stakeholders, and build a more resilient and sustainable future for both themselves and the world. The paper aims to measure ESG disclosure by Indian companies and the perspective of stakeholders. To meet the research objectives and understand the stakeholder perspective on the three ESG disclosure norms, and ESG reporting including environmental factors, social factors and governance factors on 10 aspects, the data from 569 individuals were collected from accountants, managers, employees, investors, and other beneficiaries in different parts of India. The data were analysed using multiple regression techniques to determine whether stakeholders’ perspectives were met and achieved widespread recognition of the inclusion of ESG disclosures and sustainability enhancements. As a result, it was discovered that the cost of disclosing information should be as low as possible to support businesses dedicated to ESG reporting and sustainability. However, the attraction of working for organizations that are good stewards of the environment and society serves to increase interest in ESG reporting among other stakeholders, such as employees. The relevance of the study is that it provides an outcome that the corporation should invest in new technology or platforms to provide more timely data and high-quality disclosure processes for ESG disclosure practices.