The value relevance of sustainability disclosure quality

Rahman, Aulia Fuad ORCID: https://orcid.org/0000-0001-6767-5334, Kurniawati, Desi Tri ORCID: https://orcid.org/0000-0003-2887-7923, Dewi, Ayu Aryista ORCID: https://orcid.org/0000-0002-1299-3922 and Kholilah, Kholilah ORCID: https://orcid.org/0000-0003-1828-9642 (2023) The value relevance of sustainability disclosure quality. JIA: Jurnal Ilmiah Akuntansi, 8 (2). pp. 379-398. ISSN 2528-1399

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Abstract

In the contemporary landscape, ESG (environmental, social, and governance) performance has emerged as a pivotal concern for capital market investors. Despite its prominence, the ongoing debate in the literature regarding the value relevance of ESG underscores the need for empirical insights. This study addresses this gap by investigating the moderating role of ESG disclosure quality in shaping the relationship between earnings, annual changes in earnings, and stock returns. Drawing on a dataset comprising 254 firm-year ESG reports in Indonesia from 2017 to 2022 and employing panel data regression, the research unveils compelling results. It demonstrates that high-quality ESG disclosure not only reinforces the impact of earnings and annual changes in earnings on stock returns but also signifies a lower risk of future sustainability and long-term growth. These findings substantiate the idea that robust integration of sustainability principles in business practices contributes significantly to the creation of shareholder value. Importantly, this research carries profound implications for Indonesian companies, emphasizing the critical role of ESG disclosure in fostering sustainable business practices and enhancing shareholder value in the evolving landscape of capital markets.

Item Type:	Journal Article
Keywords:	ESG disclosure; earnings; annual change in earnings; stock returns; value relevance
Subjects:	15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1501 Accounting, Auditing and Accountability > 150106 Sustainability Accounting and Reporting
Divisions:	Faculty of Economics > Department of Accounting
Depositing User:	Kholilah Kholilah
Date Deposited:	25 Feb 2025 10:39

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