Istnieje nowsza wersja tego artykułu opublikowanego 2022-12-30. Przeczytaj wersję najnowszą.

Non-linear effect of Environmental, Social, and Governance on corporate performance (study in non-financial firms listed on Indonesia Stock Exchange)

Autor

Ninditya Nareswari Institute of Economics and Finance, Doctoral School of University of Szczecin, Poland https://orcid.org/0000-0001-9715-0109
Małgorzata Tarczyńska-Łuniewska Department of Econometrics and Statistics, Institute of Economics and Finance, University of Szczecin https://orcid.org/0000-0002-7338-1989
Geodita Woro Bramanti Department of Business Management, Institut Teknologi Sepuluh Nopember, Indonesia

DOI:

https://doi.org/10.18778/2082-4440.40.01

Słowa kluczowe:

corporate performance, ESG, Indonesia, sustainability finance

Abstrakt

Environmental, Social, and Governance (ESG) factors have become essential considerations for stakeholders. Balancing external and internal performance is crucial. However, there are some constraints to implementing ESG at the corporate level, especially in Indonesia. This study aims to test the effect of ESG on corporate performance. The non-financial firms listed on Indonesia Stock Exchange from 2016–2020 were used as a sample. Empirical evidence found the U-shaped effect of ESG rating on corporate performance. Further, robustness tests are conducted by dividing the sample annually and removing the 2020 period to show more robust evidence. In contrast, the results showed no evidence of a U-shaped effect. The robustness test showed that the ESG rating positively affected corporate performance in 2016–2019 and turned negative in 2020, the first time COVID-19 happened in Indonesia. This result indicated that in a crisis time, implementing ESG will be costly and reflected in financial performance. In contrast, during a non-crisis time, ESG positively impacts financial performance.

Pobrania

Statystyki pobrań niedostępne.

Bibliografia

Bagnoli, M., Watts, S.G. (2003), Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods, “Journal of Economics Management Strategy”, 12(3): 419–445. https://doi.org/10.1111/j.1430-9134.2003.00419.x DOI: https://doi.org/10.1162/105864003322309536

Bayu, D.J. (2021, September 1), Komisaris BEI sebut emiten didorong terapkan ESG mulai 2022.

Borhan, N.A., Ahmad, N. (2018), Identifying the determinants of Malaysian corporate Sukuk rating. “International Journal of Islamic and Middle Eastern Finance and Management”, 11(3): 432–448. https://doi.org/10.1108/IMEFM-02-2017-0045 DOI: https://doi.org/10.1108/IMEFM-02-2017-0045

Brigham, E.F., Houston, J.F. (2014), Dasar-Dasar Manajemen Keuangan. Buku 1 (11th ed.), Salemba Empat.

Buchanan, B., Cao, C.X., Chen, C. (2018), Corporate social responsibility, firm value, and influential institutional ownership, “Journal of Corporate Finance”, 52: 73–95. https://doi.org/10.1016/j.jcorpfin.2018.07.004 DOI: https://doi.org/10.1016/j.jcorpfin.2018.07.004

Chan, M.C., Watson, J., Woodliff, D. (2014), Corporate Governance Quality and CSR Disclosures, “Journal of Business Ethics”, 125(1): 59–73. https://doi.org/10.1007/s10551-013-1887-8 DOI: https://doi.org/10.1007/s10551-013-1887-8

Deegan, C. (2002), Introduction, “Accounting, Auditing & Accountability Journal”, 15(3): 282–311. https://doi.org/10.1108/09513570210435852 DOI: https://doi.org/10.1108/09513570210435852

Drukker, D.M. (2003), Testing for serial correlation in linear panel-data models, “Stata Journal”, 3: 168–177. DOI: https://doi.org/10.1177/1536867X0300300206

Fernández-Kranz, D., Santaló, J. (2010), When Necessity Becomes a Virtue: The Effect of Product Market Competition on Corporate Social Responsibility, “Journal of Economics & Management Strategy”, 19(2): 453–487. https://doi.org/10.1111/j.1530-9134.2010.00258.x DOI: https://doi.org/10.1111/j.1530-9134.2010.00258.x

Gillan, S.L., Koch, A., Starks, L.T. (2021), Firms and social responsibility: A review of ESG and CSR research in corporate finance, “Journal of Corporate Finance”, 66: 101889. https://doi.org/10.1016/j.jcorpfin.2021.101889 DOI: https://doi.org/10.1016/j.jcorpfin.2021.101889

Giuli, A.Di, Kostovetsky, L. (2014), Are red or blue companies more likely to go green? Politics and corporate social responsibility, “Journal of Financial Economics”, 111(1): 158–180. https://doi.org/10.1016/j.jfineco.2013.10.002 DOI: https://doi.org/10.1016/j.jfineco.2013.10.002

Gujarati, D., Porter, D. (2004), Basic Econometrics, Mc.Graw Hill.

Hoechle, D. (2007), Robust standard errors for panel regressions with cross-sectional dependence, “Stata Journal”, 7(3): 281–312. DOI: https://doi.org/10.1177/1536867X0700700301

Jayal, A.D., Badurdeen, F., Dillon, O.W., Jawahir, I.S. (2010), Sustainable manufacturing: Modeling and optimization challenges at the product, process and system levels, “CIRP Journal of Manufacturing Science and Technology”, 2(3): 144–152. https://doi.org/10.1016/j.cirpj.2010.03.006 DOI: https://doi.org/10.1016/j.cirpj.2010.03.006

Kim, B., Jung, J., Cho, S. (2021), Can ESG Mitigate the Diversification Discount in Cross-border M&A? “Borsa Istanbul Review”. https://doi.org/10.1016/j.bir.2021.09.002 DOI: https://doi.org/10.1016/j.bir.2021.09.002

La Torre, M., Mango, F., Cafaro, A., Leo, S. (2020), Does the ESG Index Affect Stock Return? Evidence from the Eurostoxx50, “Sustainability”, 12(16): 6387. https://doi.org/10.3390/su12166387 DOI: https://doi.org/10.3390/su12166387

Lanis, R., Richardson, G. (2012), Corporate social responsibility and tax aggressiveness: a test of legitimacy theory, “Accounting, Auditing & Accountability Journal”, 26(1): 75–100. https://doi.org/10.1108/09513571311285621 DOI: https://doi.org/10.1108/09513571311285621

Mardikanto, T. (2014), CSR (Corporate Social Responsibility) (Tanggung Jawab Sosial Perusahaan), Alfabeta.

Masulis, R.W., Reza, S.W. (2015), Agency problems of corporate philanthropy, “Review of Financial Studies”, 28(2): 592–636. DOI: https://doi.org/10.1093/rfs/hhu082

Miroshnychenko, I., Barontini, R., Testa, F. (2017), Green practices and financial performance: A global outlook, “Journal of Cleaner Production”, 147: 340–351. https://doi.org/10.1016/j.jclepro.2017.01.058 DOI: https://doi.org/10.1016/j.jclepro.2017.01.058

Mohammad, W.M.W., Wasiuzzaman, S. (2021), Environmental, Social and Governance (ESG) disclosure, competitive advantage and performance of firms in Malaysia, “Cleaner Environmental Systems”, 2: 100015. https://doi.org/10.1016/j.cesys.2021.100015 DOI: https://doi.org/10.1016/j.cesys.2021.100015

Nur, M., Priantinah, D. (2012), Analisis Faktor-Faktor Yang Mempengaruhi Pengungkapancorporate Social Responsibility di Indonesia (Studi Empiris Pada Perusahaan Berkategori High Profile Yang Listing di Bursa Efek Indonesia), “Nominal, Barometer Riset Akuntansi Dan Manajemen”, 1(2). https://doi.org/10.21831/nominal.v1i2.996 DOI: https://doi.org/10.21831/nominal.v1i2.996

Octavia, D., Suharti, S., Murniati, Dharmawan, I.W.S., Nugroho, H.Y.S.H., Supriyanto, B., Rohadi, D., Njurumana, G.N., Yeny, I., Hani, A., Mindawati, N., Suratman, Adalina, Y., Prameswari, D., Hadi, E.E.W., Ekawati, S. (2022), Mainstreaming Smart Agroforestry for Social Forestry Implementation to Support Sustainable Development Goals in Indonesia: A Review, “Sustainability”, 14(15): 9313. https://doi.org/10.3390/su14159313 DOI: https://doi.org/10.3390/su14159313

Odagiri, M., Cronin, A.A., Thomas, A., Kurniawan, M.A., Zainal, M., Setiabudi, W., Gnilo, M.E., Badloe, C., Virgiyanti, T.D., Nurali, I.A., Wahanudin, L., Mardikanto, A., Pronyk, P. (2020), Achieving the Sustainable Development Goals for water and sanitation in Indonesia – Results from a five-year (2013–2017) large-scale effectiveness evaluation, “International Journal of Hygiene and Environmental Health”, 230: 113584. https://doi.org/10.1016/j.ijheh.2020.113584 DOI: https://doi.org/10.1016/j.ijheh.2020.113584

Otoritas J.K. (2017), Peraturan Otoritas Jasa Keuangan Nomor 51/Pojk.03/2017.

Öcal, H., Kamil, A.A. (2021), The impact of risk indicators on sustainability (ESG) and broad-based indices: an empirical analysis from Germany, France, Indonesia and Turkey, “International Journal of Sustainable Economy”, 13(1): 18. https://doi.org/10.1504/IJSE.2021.113319 DOI: https://doi.org/10.1504/IJSE.2021.113319

Paniagua, J., Rivelles, R., Sapena, J. (2018), Corporate governance and financial performance: The role of ownership and board structure, “Journal of Business Research”, 89: 229–234. https://doi.org/10.1016/J.JBUSRES.2018.01.060 DOI: https://doi.org/10.1016/j.jbusres.2018.01.060

Santika, W.G., Anisuzzaman, M., Simsek, Y., Bahri, P.A., Shafiullah, G.M., Urmee, T. (2020), Implications of the Sustainable Development Goals on national energy demand: The case of Indonesia, “Energy”, 196: 117100. https://doi.org/10.1016/j.energy.2020.117100 DOI: https://doi.org/10.1016/j.energy.2020.117100

Shank, T., Paul Hill, R., Stang, J. (2013), Do investors benefit from good corporate governance? “Corporate Governance: The International Journal of Business in Society”, 13(4): 384–396. https://doi.org/10.1108/CG-03-2010-0027 DOI: https://doi.org/10.1108/CG-03-2010-0027

Sharp, Z., Zaidman, N. (2010), Strategization of CSR, “Journal of Business Ethics”, 93(1): 51–71. https://doi.org/10.1007/s10551-009-0181-2 DOI: https://doi.org/10.1007/s10551-009-0181-2

Sugiyono (2015), Metode Penelitian dan Pengembangan Pendekatan Kualitatif, Kuantitatif, dan R&D, [in:] Metode Penelitian dan Pengembangan Pendekatan Kualitatif, Kuantitatif, dan R&D.

Surroca, J., Tribó, J.A., Waddock, S. (2009), Corporate responsibility and financial performance: the role of intangible resources, “Strategic Management Journal”, 31(3): 463–490. https://doi.org/10.1002/smj.828 DOI: https://doi.org/10.1002/smj.820

Sustainalitycs (2022), ESG (Environmental, Social, and Governance) as attribute of SDGs.

Witt, M.A., Kabbach de Castro, L.R., Amaeshi, K., Mahroum, S., Bohle, D., Saez, L. (2018), Mapping the business systems of 61 major economies: a taxonomy and implications for varieties of capitalism and business systems research, “Socio-Economic Review”, 16(1): 5–38. https://doi.org/10.1093/ser/mwx012 DOI: https://doi.org/10.1093/ser/mwx012

Wooldridge, J.M. (2002), Econometric Analysis of Cross Section and Panel Data, MIT Press.

Yawika, M.K., Handayani, S. (2019), The Effect of ESG Performance on Economic Performance in the High Profile Industry in Indonesia. “Journal of International Business and Economics”, 7(2). https://doi.org/10.15640/jibe.v7n2a12 DOI: https://doi.org/10.15640/jibe.v7n2a12

Pobrania

PDF (Angielski)

Opublikowane

2022-12-30

Wersje

2023-12-12 - (2)
2022-12-30 - (1)

Numer

Nr 40 (2022)

Dział

Articles

Licencja

Utwór dostępny jest na licencji Creative Commons Uznanie autorstwa – Użycie niekomercyjne – Bez utworów zależnych 4.0 Międzynarodowe.

Jak cytować

Nareswari, Ninditya, Małgorzata Tarczyńska-Łuniewska, and Geodita Woro Bramanti. 2022. “Non-Linear Effect of Environmental, Social, and Governance on Corporate Performance (study in Non-Financial Firms Listed on Indonesia Stock Exchange)”. Ekonomia Międzynarodowa, no. 40 (December): 154-70. https://doi.org/10.18778/2082-4440.40.01.