Exploring the Influence of ESG Transparency and Profitability Ratios on Firm Value in Emerging Markets

Summary

Iqbal Pangestu Santoso's 2025 research paper, "Exploring the Influence of ESG Transparency and Profitability Ratios on Firm Value in Emerging Markets," examines the impact of Environmental, Social, and Governance (ESG) disclosure and various financial performance indicators on firm value. The study focuses on companies within Indonesia's food and beverage industry listed on the Indonesia Stock Exchange (IDX) over the period of 2020 to 2023. Employing a quantitative research approach, the author utilized panel data regression with a Fixed Effect Model (FEM) for statistical analysis. A purposive sampling method was applied, resulting in a sample of 24 companies and a total of 96 observations for the analysis. The independent variables investigated included ESG disclosure, Net Profit Margin (NPM), Return on Assets (ROA), Return on Equity (ROE), and Leverage. Firm value was measured using the Price to Book Value (PBV) ratio as the dependent variable. The findings indicate that ESG disclosure and ROA significantly and positively influence firm value. Conversely, Return on Equity (ROE) was found to have a significant but negative relationship with firm value. Interestingly, Net Profit Margin (NPM) and Leverage did not show a significant impact on firm value in this context. A joint test revealed that all independent variables collectively explain a substantial 96.12% of the variations in firm value, underscoring their combined importance. These results highlight the critical role of sustainability reporting and efficient asset utilization in boosting corporate valuation and suggest that ESG transparency is a strategic factor shaping investor perception and competitiveness in emerging markets.