The Role of ESG Disclosure and Profitability in Determining Firm Value: The Moderating Effect of Firm Size

Abstract

Companies in Indonesia face challenges and competition that ultimately affect their value, particularly in the mining sector. The share prices of mining companies in Indonesia are highly volatile. Between 2021 and 2024, the price-to-book value (PBV) of mining companies in Indonesia has declined. Some factors can influence company value, namely ESG disclosure, profitability, and firm size. The objective of this study is to determine the effect of ESG disclosure and profitability on company value, with firm size acting as a moderator. This is a quantitative causality study using secondary data in the form of financial reports from mining companies listed on the IDX from 2021 to 2024. The population of this study comprises the financial statements of mining companies listed on the Indonesia Stock Exchange (IDX), using a purposive sampling technique based on several criteria. Secondary data was obtained from the IDX website at https://www.idx.co.id/id. The data obtained was then analysed using multiple linear regression, following a test of classical assumptions to assess the suitability of the regression model. The results of the tests indicate that ESG disclosure has a significant negative effect on firm value; profitability does not affect firm value; firm size moderates the effect of ESG disclosure on firm value and has a significant effect; and firm size does not moderate the effect of profitability on firm value. It is hoped that the findings of this study will provide an empirical contribution to enriching the literature on the influence of firm value and clarify the role of firm size in moderating the influence of ESG disclosure and profitability on firm value.