The role of internationalisation in moderating the impact of ESG disclosure on financial performance

Soesetio Yuli (), Siswanto Ely (), Subagyo (), Fuad Muhammad (), Rudiningtyas Dyah Arini () and Astutik Siti ()
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Soesetio Yuli: Department of Management, Universitas Negeri Malang, Semarang St. 5 Malang 65145 East Java, Indonesia
Siswanto Ely: Department of Management, Universitas Negeri Malang, Semarang St. 5 Malang 65145 East Java, Indonesia
Subagyo: Department of Management, Universitas Negeri Malang, Semarang St. 5 Malang 65145 East Java, Indonesia
Fuad Muhammad: Department of Management, Universitas Negeri Malang, Semarang St. 5 Malang 65145 East Java, Indonesia
Rudiningtyas Dyah Arini: Department of Accounting, University of Islam Malang, Mayjen Haryono St. 193 Malang 65144 East Java, Indonesia
Astutik Siti: Department of Management, Universitas Negeri Malang, Semarang St. 5 Malang 65145 East Java, Indonesia

Economics and Business Review, 2024, vol. 10, issue 3, 112-141

Abstract: This study aims to determine the influence of environmental responsibility, social responsibility, and governance practice disclosures on the financial performance of non-financial companies listed on the Indonesia Stock Exchange from 2012 to 2021. It employs moderated regression analysis and sub-group regression to explain the relationships between the variables. The results suggest a surprising finding that the indicators of environmental responsibility and governance disclosure practices lead to a decline in corporate financial performance, while the social responsibility indicator does not significantly affect corporate financial performance. Expenditures resulting from ESG practices can be perceived as a misuse of corporate resources, a missed opportunity, or, alternatively, as an overinvestment. However, the decline in performance due to environmental responsibility disclosure and governance practices can be mitigated by companies that engage in internationalisation. To sustain environmental, social, and governance activities over the long term, managers are required to deliver consistently increasing and higher financial performance.

Keywords: CSR; ESG; corporate governance; financial performance (search for similar items in EconPapers)
JEL-codes: M14 O16 Q56 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ecobur:v:10:y:2024:i:3:p:112-141:n:1004

DOI: 10.18559/ebr.2024.3.1217

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