ESG Performance and Corporate Governance—The Moderating Role of the Big Four Auditors

Puji Handayati, Yeut Hong Tham (), Yuni Yuningsih, Zhiyue Sun, Tatas Ridho Nugroho and Sulis Rochayatun
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Puji Handayati: Faculty of Economics and Business, Universitas Negeri Malang, Malang 65145, Indonesia
Yeut Hong Tham: School of Accounting, Economics and Finance, Faculty of Business and Law, Curtin University, Perth, WA 6102, Australia
Yuni Yuningsih: School of Accounting, Economics and Finance, Faculty of Business and Law, Curtin University, Perth, WA 6102, Australia
Zhiyue Sun: School of Accounting, Economics and Finance, Faculty of Business and Law, Curtin University, Perth, WA 6102, Australia
Tatas Ridho Nugroho: Faculty of Economics and Business, Universitas Negeri Malang, Malang 65145, Indonesia
Sulis Rochayatun: UIN Maliki Malang, Malang 65144, Indonesia

JRFM, 2025, vol. 18, issue 1, 1-19

Abstract: The purpose of this study is to investigate the impact of corporate governance on ESG performance in large publicly listed firms in Indonesia from 2016 to 2023. The study adopts both stakeholder-agency theory and resource dependency theory to explore the relationship between sustainability assurance, board governance characteristics, and the extent of ESG performance. Fixed effects regression controlling both industry and year fixed effects is used to measure the relationship between sustainability assurance, corporate governance characteristics, and ESG performance. We find a positive significant relationship between assurance sustainability reports and ESG performance. Additionally, we also document a positive association between sustainability committees and ESG performance. Adopting the Big Four auditors as a moderating variable, we find a positive relationship between gender-diverse boards and firms audited by the Big Four auditors and sustainability performance. This result suggests that firms with gender-diverse boards audited by the Big Four auditors enhance sustainability performance. Additional robustness tests using GMM estimation, conducted to address endogeneity concerns, corroborated the main test results.

Keywords: ESG; sustainability assurance; gender diversity; sustainability committee; stakeholder-agency theory (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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