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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Soesetio Yuli & Siswanto Ely & Subagyo & Fuad Muhammad & Rudiningtyas Dyah Arini & Astutik Siti, 2024. "The role of internationalisation in moderating the impact of ESG disclosure on financial performance," Economics and Business Review, Sciendo, vol. 10(3), pages 112-141.
    • Handle: 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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    More about this item

    Keywords

    CSR; ESG; corporate governance; financial performance;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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