The Influence of Financial Performance and ESG on Firm Value with Firm Size as Moderator

Ika Nur Avinda; Agus Maolana Hidayat; Budi Rustandi Kartawinata

doi:10.32535/ijafap.v8i2.4003

The Influence of Financial Performance and ESG on Firm Value with Firm Size as Moderator

Ika Nur Avinda, Agus Maolana Hidayat, Budi Rustandi Kartawinata

Abstract

Firm value illustrates how investors and the market view the company's ability to effectively manage its resources effectively. There are several factors that influence firm value, including financial performance, ESG, and firm size. This research aims to assess the impact of financial performance, ESG, and firm size on firm value, along with the role of firm size in influencing the relationship between financial performance and ESG on firm value. The analytical approach employed in this research is moderated regression analysis (MRA). The sample for this research includes firms engaged in the coal sector that are listed on the Indonesian Stock Exchange (IDX) from 2021 to 2023. Based on purposive sampling, 16 companies were selected. The results of the research indicate that there is a significant partial influence of financial performance, as measured by ROA, CR, and DER, on firm value. ESG disclosure also significantly influences firm value, and firm size also significantly influences firm value. Additionally, firm size, which is also used as a moderating variable, moderates the relationship between liquidity and firm value, as well as leverage and firm value. Through simultaneous testing, the independent variables and interaction variables significantly influence firm value.

Keywords

ESG; Financial Performance; Firm Size; Firm Value; Moderated Regression Analysis

Full Text:

PDF

References

Abbas, Y., & Nainggolan, Y. A. (2023). Profit, cash flow, and leverage: The case of ASEAN stock market performance during the COVID-19 pandemic. Journal of Accounting in Emerging Economies, 13(5), 898-921. https://doi.org/10.1108/JAEE-09-2021-0294

Abdi, Y., Li, X., & Càmara-Turull, X. (2022). Exploring the impact of sustainability (ESG) disclosure on firm value and financial performance (FP) in airline industry: the moderating role of size and age. Environment, Development and Sustainability, 24(4), 5052-5079. https://doi.org/10.1007/s10668-021-01649-w

Apriyani, R. (2021). Pengaruh Profitabilitas Dan Likuiditas Terhadap Nilai Perusahaan Dengan Ukuran Perusahaan Sebagai Variabel Moderating (Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar di Bursa Efek Indonesia Periode Tahun 2017–2020) [Undergraduate thesis, Universitas Muhammadiyah Magelang]. Repositori Unimma. https://repositori.unimma.ac.id/3167/

Aryantini, S., & Jumono, S. (2021). Profitability and value of firm: An evidence from manufacturing industry in Indonesia. Accounting, 7(4), 735-746. http://dx.doi.org/10.5267/j.ac.2021.2.011

Aydo?mu?, M., Gülay, G., & Ergun, K. (2022). Impact of ESG performance on firm value and profitability. Borsa Istanbul Review, 22, S119-S127. https://doi.org/10.1016/j.bir.2022.11.006

Battilana, J., Obloj, T., Pache, A. C., & Sengul, M. (2022). Beyond shareholder value maximization: Accounting for financial/social trade-offs in dual-purpose companies. Academy of Management Review, 47(2), 237-258. https://doi.org/10.5465/amr.2019.0386

Chen, Y., & Zhang, Z. (2024). Industry Heterogeneity and the Economic Consequences of Corporate ESG Performance for Good or Bad: A Firm Value Perspective. Sustainability, 16(15), 6506. https://doi.org/10.3390/su16156506

Christiana, I., Purnama, N. I., & Ardila, I. (2020). Financial ratio in the analysis of earnings management. International Journal of Accounting & Finance in Asia Pasific, 3(1), 8-17. https://doi.org/10.32535/ijafap.v3i1.714

Cyril, E. J., & Singla, H. K. (2020). Comparative analysis of profitability of real estate, industrial construction and infrastructure firms: Evidence from India. Journal of Financial Management of Property and Construction, 25(2), 273-291.https://doi.org/10.1108/JFMPC-08-2019-0069

Dang, T. D., & Do, T. V. T. (2021). Does capital structure affect firm value in Vietnam?. Investment Management & Financial Innovations, 18(1), 33-41. https://doi.org/10.21511/imfi.18(1).2021.03

Fernando, K., Jocelyn, H., Frista, F., & Kurniawan, B. (2024). The effect of green accounting disclosure on the firm value of listed mining and agriculture companies in Southeast Asia countries. International Journal of Energy Economics and Policy, 14(1), 377-382. https://doi.org/10.32479/ijeep.15151

Gunadi, I. G. N. B., Putra, I., & Yuliastuti, I. A. N. (2020). The effects of profitabilitas and activity ratio toward firms value with stock price as intervening variables. International Journal of Accounting & Finance in Asia Pasific, 3(1), 56-65. https://doi.org/10.32535/ijafap.v3i1.736

Hapsoro, D., & Falih, Z. N. (2020). The effect of firm size, profitability, and liquidity on the firm value moderated by carbon emission disclosure. Journal of Accounting and Investment, 21(2), 240-257. https://doi.org/10.18196/jai.2102147

Harasheh, M., & De Vincenzo, F. (2023). Leverage-value nexus in Italian small-medium enterprises: further evidence using dose-response function. EuroMed Journal of Business, 18(2), 165-183. https://doi.org/10.1108/EMJB-11-2021-0166

Ibrahim, I., & Falkenbach, H. (2023). International diversification and European firm value: the role of operating efficiency. Journal of European Real Estate Research, 16(3), 381-397. https://doi.org/10.1108/JERER-07-2023-0025

Khalifaturofi’ah, S. O., & Setiawan, R. (2025). Profitability’s impact on firm value in Indonesia’s real estate firms: A panel data investigation. Property Management, 43(2), 169-186. https://doi.org/10.1108/PM-08-2023-0082

Ma?kowska, A., & Uhruska, M. (2022). Factors affecting SMEs growth: The case of the real estate valuation service industry. Oeconomia Copernicana, 13(1), 79-108. https://doi.org/10.24136/OC.2022.003

Miah, M. D., & Uddin, H. (2017). Efficiency and stability: A comparative study between islamic and conventional banks in GCC countries. Future Business Journal, 3(2), 172-185. https://doi.org/10.1016/j.fbj.2017.11.001

Migliaccio, G., & De Palma, A. (2024). Profitability and financial performance of Italian real estate companies: quantitative profiles. International Journal of Productivity and Performance Management, 73(11), 122-160. https://doi.org/10.1108/IJPPM-02-2023-0075

Muliawati, F. D. (2024, March 15). 70% PLTU Dunia Ada di Asia Pasifik, Batu Baranya dari RI! CNBC Indonesia. https://www.cnbcindonesia.com/news/20240315185754-4-522416/70-pltu-dunia-ada-di-asia-pasifik-batu-baranya-dari-ri?

Nur'aeni, N. A., & Sari, W. (2023). The effect of environmental, social and governance (ESG) on firm value in companies listed on the Indonesia Stock Exchange. Indonesian Journal of Economics and Management, 4(1), 129-139. https://doi.org/10.35313/ijem.v4i1.5479

Nurwulandari, A. (2021). Effect of liquidity, profitability, firm size on firm value with capital structure as intervening variable. ATESTASI: Jurnal Ilmiah Akuntansi, 4(2), 257-271. https://doi.org/10.57178/atestasi.v4i2.271

Purnamasari, N. K. P., & Baskara, I. G. K. (2019). Pengaruh leverage profitabilitas dan economic value added terhadap nilai perusahaan pertambangan di Bursa Efek Indonesia. Jurnal Manajemen dan Kearifan Lokal Indonesia, 3(1), 12-24. https://doi.org/10.26805/jmkli.v3i1.39

Rahmani, N. A., Maksum, A., Fachrudin, K. A., & Silalahi, A. S. (2020). Analysis of the effect of profitability on general corporate information and forward-looking information and its impact on the company's share prices listed on the Indonesia Stock Exchange. International Journal of Accounting & Finance in Asia Pasific, 3(3), 32-38. https://doi.org/10.32535/ijafap.v3i3.950

Ramadan, M. M., & Hassan, M. K. (2022). Board gender diversity, governance and Egyptian listed firms' performance. Journal of Accounting in Emerging Economies, 12(2), 279-299. https://doi.org/10.1108/JAEE-02-2021-0057

Razali, M. W. M., Yi, P. X., Nordin, N. A., Muhammad, A., & Lunyai, J. (2023). Board diversity and firm value: A study on Malaysian listed firms in manufacturing and non-manufacturing sectors. Asian Development Policy Review, 11(2), 110-122. https://doi.org/10.55493/5008.v11i2.4843

Sadiq, M., Singh, J., Raza, M., & Mohamad, S. (2020). The impact of environmental, social and governance index on firm value: Evidence from Malaysia. International Journal of Energy Economics and Policy, 10(5), 555-562. https://doi.org/10.32479/ijeep.10217

Sharma, R. K. (2018). Factors affecting financial leveraging for BSE listed real estate development companies in India. Journal of Financial Management of Property and Construction, 23(3), 274-294. https://doi.org/10.1108/JFMPC-01-2017-0002

Singla, H. K., & Prakash, A. (2023). Financial determinants of value based performance of construction firms in India. International Journal of Productivity and Performance Management, 72(4), 1025-1050. https://doi.org/10.1108/IJPPM-05-2021-0264

Siwei, D., & Chalermkiat, W. (2023). An analysis on the relationship between ESG information disclosure and enterprise value: A case of listed companies in the energy industry in China. Cogent Business & Management, 10(3), 2207685. https://doi.org/10.1080/23311975.2023.2207685

Sulistyani, S., & Salim, N. (2022). Analysis of profitability determinants and effect value of automotive companies in Indonesia. Asian Journal of Economics, Business and Accounting, 3(3), 26-35. https://doi.org/10.9734/ajeba/2022/v22i2230707

Talunohi, D., & Bertuah, E. (2022). Profitability as the main determining factor of the firm value. Berkala Akuntansi dan Keuangan Indonesia, 7(1), 48-63. https://doi.org/10.20473/baki.v7i1.29961

Vigren, O., Kadefors, A., & Eriksson, K. (2022). Digitalization, innovation capabilities and absorptive capacity in the Swedish real estate ecosystem. Facilities, 40(15/16), 89-106. https://doi.org/10.1108/F-07-2020-0083

Wuryandani, D. (2024, March). Peningkatan Produksi Batu Bara di Tengah Upaya Pencapaian Target NZE 2060. DPR RI. https://berkas.dpr.go.id/pusaka/files/isu_sepekan/Isu%20Sepekan---III-PUSLIT-Maret-2024-206.pdf.

Zarei, H., Yazdifar, H., Ghaleno, M. D., & azhmaneh, R. (2020). Predicting auditors’ opinions using financial ratios and non-financial metrics: evidence from Iran. Journal of Accounting in Emerging Economies, 425-446. https://doi.org/10.1108/JAEE-03-2018-0027

DOI: https://doi.org/10.32535/ijafap.v8i2.4003