Environmental Social Governance (ESG) and Its Dimensions on Bank Value
Lailatussafiil Ummah, SM(a) and Dr. Rahmat Setiawan, SE., MM., CFP(b)

Faculty of Economics and Business, Airlangga University

Abstract

This research aims to determine the influence of environmental social governance (ESG) disclosures and its dimensions on the value of banking companies in Indonesia. The sample used in this research are 23 banking companies listed on the Indonesia Stock Exchange (IDX) and issuing sustainability reports for the 2010-2021 period. This study uses a multiple linear regression model to determine the effect of ESG disclosures and its dimensions on the value of banking companies. The result shows that ESG disclosures has a nonlinear effect in the form of an inverted U-shape on the value of banking companies. The environmental dimension and the social dimension disclosures have no significant effect on the bank value. On the other hand, the governance dimension disclosure has a non-linear effect in the form of an inverted U-shape on the bank value. The control variables in this study consisting of bank size, capitalization, and deposit to asset ratio have a significant positive effect on the value of banking companies.

Keywords: environmental social governance, bank value, inverted U-shape.

Topic: Financial management