Determinants of Corporate Value: ESG Perspective and Financial Performance of IDX ESG Leaders in Indonesia
Keywords:
Company Size, Company Value, Debt to Equity Ratio, ESG, Return on AssetsAbstract
This study aims to analyze the determinants of firm value from an Environmental, Social, Governance (ESG) perspective and financial performance in companies included in the IDX ESG Leaders index for the 2022–2024 period. The research background is based on the increasing investor attention to sustainability practices and the continued fluctuations in firm value in the Indonesian capital market. The study used a quantitative approach with a multiple linear regression method on 15 companies with a total of 45 observations. The independent variables include Environmental, Social, Governance, Debt to Equity Ratio, firm size, and Return on Assets, while firm value is proxied by Price to Book Value. The results show that partially, the variables Social, Governance, Debt to Equity Ratio, firm size, and Return on Assets have a significant effect on firm value, while the Environmental variable has no significant effect. Simultaneously, all independent variables are able to explain variations in firm value with a very high coefficient of determination. These findings indicate that firm value in ESG-based companies is not only determined by sustainability practices but also significantly influenced by financial performance and fundamental characteristics of the company. The implications of this research emphasize the importance of strengthening social aspects, governance, profitability, and capital structure as the main strategy in increasing company value and as a basis for consideration for investors and management in making sustainability-based investment decisions
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