The Impact of Sustainability Report Disclosure on Firm Value: Evidence from Indonesia’s Largest Private Conventional Banks (2019-2023)

R. Rizal Malik; Zainal Abidin

doi:10.55927/fjmr.v4i4.140

Authors

R. Rizal Malik Perbanas Institute
Zainal Abidin Perbanas Institute

DOI:

https://doi.org/10.55927/fjmr.v4i4.140

Keywords:

Sustainability Report, ESG, Firm Value, Tobin’s Q, Agency Theory, Triple Bottom Line

Abstract

Sustainability reporting has gained significant importance in the financial sector as it enhances transparency, accountability, and corporate social responsibility. In Indonesia, the implementation of Financial Services Authority Regulation (POJK No. 51/POJK.03/2017) has mandated financial institutions to disclose sustainability-related information. However, the impact of these disclosures on firm value remains debatable. This study examines the relationship between sustainability report disclosure and firm value in six major Indonesian private banks from 2019 to 2023. Using Agency Theory and the Triple Bottom Line framework, this research assesses the effect of economic, environmental, and social disclosure on firm valuation. Employing panel data regression analysis, the findings reveal that social disclosures have a significant positive impact on firm value, while economic disclosures exhibit a weaker but positive effect. Meanwhile, environmental disclosures do not show a significant impact, suggesting that investors in Indonesia's banking sector may not yet fully integrate environmental concerns into their valuation models. This study provides insights for banking executives, regulators, and investors on the importance of sustainability transparency and its role in enhancing corporate value.

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