The Effect of Environmental, Social, and Governance Disclosure on Firm Value

Accounting Department, BINUS Online Learning, Bina Nusantara University, Jakarta, Indonesia 11480

^* Corresponding author: thalia.angela@binus.ac.id

Abstract

Awareness of adopting Environmental, Social, and Governance (ESG) elements is important to achieve corporate sustainability. The basic consideration for investors in deciding to invest in a company is the implementation of ESG elements in their operational activities. This study examines the effect of Environmental, Social, and Governance (ESG) disclosure on firm value. The research object used is all companies listed on the Indonesia Stock Exchange that publish sustainability reports using GRI along with the company’s annual report. This study uses a purposive sampling method, which is not random and uses certain criteria. ESG as an independent variable measured by ESG score. Meanwhile, the dependent variable is the firm value measured by price to book value. The results of this study indicate that environmental and social disclosure has no significant effect on firm value, but governance disclosure has a positive significant effect on firm value. This shows that these companies are still unable to provide all the environmental disclosure and social disclosure information needed to increase the price to book value. On the other hand, governance disclosure information can increase the price to book value.