Reassessing ESG and Firm Value: Moderating Evidence from Profitability and KBMI-Based Bank Size in Indonesia
DOI:
https://doi.org/10.31098/jgrcs.v6i2.4351Keywords:
Environmental Social and Governance, Return on Assets, Firm Value, Sustainability Accounting Standards Board, Tobin's QAbstract
Given the importance of environmental, social, and governance (ESG) issues in corporate sustainability and reputation, this study provides insights into how internal factors, such as profitability and bank size, strengthen the influence of ESG on firm value in the conventional banking sector listed on the Indonesian Stock Exchange (IDX) during 2020–2023. This study uses a quantitative approach with purposive sampling and panel data that meets the criteria of 72 conventional commercial banks. The moderated regression analysis of panel data uses a fixed-effects model based on the Chow and Hausman tests. The results show that ESG disclosure does not significantly influence firm value in Indonesian conventional commercial banks. However, profitability, as measured by return on assets (ROA), positively and significantly moderates the effect of ESG on firm value, indicating that more profitable banks can maximize the benefits of ESG disclosure. Conversely, bank size negatively and significantly moderates this relationship, indicating that larger banks may face challenges in communicating ESG disclosures effectively. The Financial Services Authority (OJK) can encourage banks with strong financial performance to be more proactive in implementing and disclosing their sustainability policies, which will positively impact the market and banks' reputations. The originality of this research lies in the integration of the influence of profitability and bank size using the Bank Group classification based on core capital (KBMI) as a moderator in the relationship between ESG and firm value, a topic that has not been widely discussed in previous research, particularly in the Indonesian banking sector.
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Copyright (c) 2026 Momon Momon, Lela Nurlaela Wati, Nanda Fatimah Azzahra
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