Assessing the Impact of Financial Risk and Ownership Structure on ESG Disclosure: Insights from the Energy Sector in Indonesia

Aloysius Harry Mukti (), Oda I. B. Hariyanto and Oswald Timothy Edward
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Aloysius Harry Mukti: Department of Accounting, Faculty Economic and Business, Universitas Bhayangkara Jakarta Raya, Bekasi 17142, Indonesia
Oda I. B. Hariyanto: Faculty of Business and Management, Universitas Internasional Batam, Batam 29426, Indonesia
Oswald Timothy Edward: Faculty of Business and Management, Universiti Teknologi MARA, Segamat Campus, Johor Darul Ta’zim 42300, Malaysia

Risks, 2025, vol. 13, issue 12, 1-23

Abstract: Environmental, social, and governance (ESG) disclosure has gained global prominence, yet its implementation in emerging markets particularly in environmentally intensive sectors remains fragmented. In Indonesia’s energy industry, ESG transparency still struggles to meet rising global expectations, especially amid increased foreign investment flows and sustainability demands following the country’s G20 presidency. While prior research has separately examined financial performance and ownership structure, fewer studies have explored their combined impact on ESG disclosure within this institutional context. This study investigates how financial risk indicators and ownership composition influence ESG disclosure levels among publicly listed energy firms in Indonesia during the 2020–2024 period. Drawing on 98 firm-year observations, ESG performance is measured using the Nasdaq ESG Reporting Guide, and multiple linear regression is used to assess the influence of return on assets, liquidity, and various ownership types (managerial, institutional, and foreign), controlling for firm age and COVID-19 impact. The findings reveal that institutional ownership significantly enhances ESG disclosure, while other predictors such as return on assets, liquidity, managerial, and foreign ownership show no meaningful effect. The results underscore the role of institutional investors as key drivers of ESG adoption, offering insights into how ownership structures shape sustainability reporting in a high-impact sector of an emerging economy.

Keywords: ESG disclosure; financial risk; ownership structure; energy sector; Indonesia (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2025
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