Assessing the impact of Environmental, Social, and Governance (ESG) performance on corporate profitability: The moderating role of firm size

Ni Putu Ariani; Eka Ardhani Sisdyani; Gerianta Wirawan Yasa; Ni Made Dwi Ratnadi

doi:10.21744/ijbem.v8n2.2398

Authors

Ni Putu Ariani
Putuariani1108@gmail.com
Udayana University, Denpasar, Indonesia
Eka Ardhani Sisdyani Udayana University, Denpasar, Indonesia
Gerianta Wirawan Yasa Udayana University, Denpasar, Indonesia
Ni Made Dwi Ratnadi Udayana University, Denpasar, Indonesia

Keywords:

Environmental Performance, Firm Size, Governance Performance, Profitability, Social Performance

Abstract

This study aims to empirically test the extent to which environmental performance, social performance and governance performance can affect company profitability and empirically test the ability of company size to moderate the influence of environmental performance, social performance and governance performance on company profitability. This study was conducted on non-financial companies listed on the Indonesia Stock Exchange. The independent variables in this study are environmental performance, social performance and governance performance where data were obtained from Refinitiv Eikon. The dependent variable in this study is company profitability. The moderating variable in this study is company size. The sampling technique used was purposive sampling technique and obtained a sample of 61 companies or 294 total observations. The data analysis technique was carried out using Moderated Regression Analysis. The results of the analysis empirically show that environmental performance, social performance and governance performance have a positive effect on profitability. Company size is able to moderate the positive effect of environmental performance. Company size cannot moderate the effect of social performance and governance performance on profitability. This study can help companies understand the importance of integrating ESG risks into planning and decision-making.

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