ESG Rating and Firm Performance of Indonesian LQ45 Listed Companies: The Role of Female Commissioners

Abdul Rohman (), Agus Purwanto (), Ahmad Nurkhin () and Hasan Mukhibad ()

Indonesian Journal of Sustainability Accounting and Management, 2025, vol. 9, issue 2, 34-43

Abstract: This study examines the impact of environmental, social, and governance (ESG) ratings and governance mechanisms on a firm's performance. The purpose of this research is to also analyze the impact of governance mechanisms on ESG. This research employs a sample of LQ45 listed companies in Indonesia from 2020 to 2023, generating 100 panel data units from 25 companies, which were analyzed using random-effects GLS regression. Documentation was used for data collection. The results indicate that ESG ratings do not provide significant evidence of influencing firm performance as measured by return on assets, return on equity, and earnings per share. The presence of a board of directors with several meetings can negatively affect firm performance. A notable finding of this study is the positive and significant impact of the female board of commissioners' composition on the firm's performance, as measured by return on assets and return on equity. The proportion of female board members also significantly impacts ESG ratings. However, only company size can significantly affect EPS. This study suggests that a female board of commissioners has a positive impact on firm performance and ESG ratings. This study extends the upper echelon theory by proving that gender diversity on boards of commissioners plays a significant role in improving a company's financial performance and ESG rating. This study highlights the role of female commissioners on ESG and company performance, emphasizing the importance of gender diversity in boards of commissioners.

Keywords: ESG rating; earnings per share; female commissioner; independent commissioner; return on assets; return on equity; size. (search for similar items in EconPapers)
Date: 2025
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