The Effect of Good Corporate Governance, Environmental Social and Governance (Esg), and Firm Size on Firm Value, with Return on Assets as a Mediating Variable, in the Esg Leaders Index for 2020–2024
DOI:
https://doi.org/10.61194/ijat.v4i3.1104Keywords:
good corporate governance, environmental social governance, firm size, return on assets, firm valueAbstract
This study looks at how Environmental, Social, and Governance (ESG), Good Corporate Governance (GCG), and firm size affect firm value in companies listed in the ESG Leaders Index between 2020 and 2024 using Return on Assets (ROA) as a mediating variable. While ESG is represented by the ESG Risk Rating, the GCG variable uses the average of independent commissioners, audit committees, boards of directors, institutional ownership, and managerial ownership. Tobin's Q determines firm value, the natural logarithm of total assets determines firm size, and ROA determines company profitability. This study uses a quantitative methodology and secondary data from sample corporations' annual reports. Purposive sampling is the technique employed. The data is analyzed using panel data regression, the Sobel test, and partial least squares–structural equation modeling (PLS-SEM). The findings indicate that while firm size has a negative impact on ROA, GCG has a positive impact on ROA and ESG has no effect. Additionally, whereas ROA positively affects firm value, firm size, GCG, and ESG do not directly affect firm value. Mediation research indicates that ROA does not mediate the association between ESG and firm value, but it does adversely mediate the relationship between firm size and firm value and the relationship between good corporate governance and firm value. These results emphasize the importance of profitability in explaining how corporate governance, sustainability, firm attributes, and firm value are interrelated.
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