Impact of Environmental, Social, Governance (ESG) and Company Size on Company Value: The Moderating Role of Profitability in Energy Sector Companies (2020-2024)
Diah Iskandar *
Mercu Buana University, Jakarta, Indonesia.
Sely Megawati Wahyudi
Mercu Buana University, Jakarta, Indonesia.
Putri Renalita Sutra Tanjung
Mercu Buana University, Jakarta, Indonesia.
*Author to whom correspondence should be addressed.
Abstract
Aims: This study examines the effects of Environmental, Social, and Governance (ESG) performance and company size on company value, measured by Price to Book Value (PBV), and tests whether profitability, measured by Return on Assets (ROA), moderates these relationships in Indonesian energy-sector companies.
Study Design: The study employed a quantitative explanatory design using firm-year panel observations.
Place and Duration of Study: The sample was selected through purposive sampling among energy-sector companies listed on the Indonesia Stock Exchange (IDX) during 2020–2024. The final dataset comprised 495 firm-year observations.
Methodology: SmartPLS was used to estimate the structural relationships among ESG score, company size, profitability, company value, and the two interaction terms. The evaluation used descriptive statistics, R-square, path coefficients, t-statistics, and p-values.
Results: The structural model explained 1.2% of the variance in company value (R-square = 0.012; adjusted R-square = 0.002). ESG score had a positive but statistically non-significant association with company value (beta = 0.029; t = 1.198; p = 0.231), while company size had a negative and statistically non-significant association (beta = -0.187; t = 0.753; p = 0.451). Profitability was also not significant as a direct predictor (beta = 15.328; t = 0.802; p = 0.422). The interaction between profitability and ESG was statistically non-significant (beta = -0.004; t = 0.113; p = 0.910), as was the interaction between profitability and company size (beta = -0.593; t = 0.880; p = 0.379).
Conclusion: The findings indicated that ESG score, company size, and profitability did not provide statistically detectable explanations of PBV in the observed energy-sector sample, and profitability did not strengthen either focal relationship. The very low explanatory power of the model suggested that company value during 2020–2024 was predominantly associated with factors outside the variables included in this study.
Keywords: Environmental, Social, Governance (ESG), Company Value (PBV), Company Size (SIZE), Profitability (ROA)