Available online at JIME website: https://journal.ibs.ac.id/index.php/jime/

Integration of ESG, Profitability, and Good Corporate Governance:
Strategy for Increasing Firm Value
Fatkhiyatul Azizah1* , Suhita Whini Setyahuni2, Lenni Yovita3 , Vicky Oktavia4
Management study program, Dian Nuswantoro University, Semarang, Indonesia
Received: 26 th May 2025. Revised: 27 th May 2025, Accepted: 02 nd June 2025.
Available online: 30 th June 2025, Published regularly: June 2025

Abstract
This study aims to determine the effect of ESG disclosure, profitability, and governance (GCG) on
firm value proxied by Tobins’Q. This study falls into the category of quantitative research. A total of
67 non-financial companies listed on the IDX were included in the sample for 2019 to 2023. The
sampling method used was purposive sampling. Data analysis was carried out using multiple
regression methods. The results showed that ESG, institutional ownership, independent board of
commissioners and audit committee have an effect on firm value. While financial performance has
no effect on firm value. These findings are deepened by including profitability and governance (GCG)
variables, with a concentration on non-financial companies listed on the IDX. The theoretical
framework applied includes legitimacy theory and agency theory.
Keywords
Keyword: ESG 1, profitability 2, good corporate governance 3, company value 4.
Abstrak
Penelitian ini bertujuan untuk mengetahui pengaruh pengungkapan ESG, profitabilitas, dan tata
kelola (GCG) terhadap nilai perusahaan yang diproksikan dengan Tobin’s Q. Penelitian ini termasuk
dalam kategori penelitian kuantitatif. Sebanyak 67 perusahaan non-keuangan yang tercatat di BEI
dimasukkan dalam sampel untuk tahun 2019 hingga 2023. Metode pengambilan sampel yang
digunakan adalah purposive sampling. Analisis data dilakukan dengan menggunakan metode regresi
berganda. Data diolah menggunakan software SPSS 25. Hasil penelitian menunjukkan bahwa ESG,
kepemilikan institusional, dewan komisaris independen dan komite audit berpengaruh terhadap nilai
perusahaan. Sedangkan profitabilitas tidak berpengaruh terhadap nilai perusahaan. Temuan ini
diperdalam dengan memasukkan variabel kinerja keuangan dan tata kelola (GCG), dengan
konsentrasi pada perusahaan non-keuangan yang tercatat di BEI.Kerangka teori yang diterapkan
meliputi teori legitimasi dan teori keagenan.
Kata Kunci: ESG 1, profitabilitas 2, good corporate governance 3, nilai perusahaan 4.

*) Corresponding Author
Email: 211202106858@mhs.dinus.ac.id (Fatkhiyatul Azizah)
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INTRODUCTION
Sustainability aspect become the firm’s focus, because it is a factor that determines the company's
business continuity. The company not only focuses on short-term profits but also considers long-term
profits so that it has the potential to increase the company's value optimally. The main purpose of
establishing a business is to increase the value of the company in order to realize the welfare of
shareholders (Rukmana, 2022). According to Christy & Sofie (2023), company value reflects the
extent to which a company can manage its operations, which can shape stakeholder perception of the
company's performance and capabilities.
Investors' opinions about a company's achievements can be seen from the value of the company,
which is usually shown through its share price (Susanto & Suryani, 2024). Before making an
investment or providing significant funds for expansion, investors assess how much a company is
worth because its high value describes the success achieved by the shareholder. The high value of a
company correlates with its stock price, so it is an important element in determining investment
(Murniati & Ingra, 2023). Companies can utilize sustainability strategies to build investor trust and
maximize company value, which reflects the company's performance and shareholder welfare
through controlling financial and non-financial aspects in support of long-term sustainability
(Hapsari, 2023).
Some of the factors that affect company value are profitability, Good Corporate Governance
(GCG), and ESG (Environmental, Social, and Governance). Profitability is the ability of a business
to generate profits when using its resources (Ambarwati & Vitaningrum, 2021). Based on research
by Ambarwati & Vitaningrum (2021), profitability is measured by Return on Asset (ROA).
A system designed to ensure optimal company management which will later have an impact on
increasing the company's value is called Good Corporate Governance (Sari & Pratiwi, 2023). In this
research, good corporate governance is used, namely institutional ownership, independent
commissioners, and audit committees.
ESG is a non-financial indicator that evaluates governance, social, and sustainability aspects in a
company (Mudzakir & Pangestuti, 2023) In this research, ESG is measured using the Bloomberg
Score, with values ranging from 0 to 100. With 882 sustainability reports submitted in 2023, which
include 94% of companies listed on the IDX, there has been a significant increase. This number
increased from 661 reports (80% filed in 2021) to 842 reports (90%) in 2022 (Ramadhani, 2025).
The Financial Services Authority Regulation (POJK) No. 51/POJK.03/2017 concerning the
obligation to implement sustainable finance in the Financial Services, Issuers, and Public Companies
sector which requires sustainability performance reporting from listed companies, has provided
benefits in the form of increased compliance.
The dedication to follow this regulation shows the increasing awareness among Indonesian

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business people, and Indonesia is committed to realizing the Sustainable Development Goals (SDGs)
through the implementation of ESG in the company's business strategy, in order to achieve a stable
and sustainable economy.
Based on data from Databoks in 2024 of 162 public companies, the majority (95%) implement
ESG because of their company principles, followed by environmental and social contribution reasons
(91%), regulatory compliance (86%), maintaining reputation (80%), and business strategy (70%).
Although fewer companies are implementing ESG, many companies still face implementation
challenges such as difficulty in achieving performance indicators, cost constraints, and inadequate
understanding of issues (Ahdiat, 2024).
Currently, the Indonesia Stock Exchange (IDX) is partnering with Morningstar Sustainalytics to
conduct an ESG evaluation. Sustainalytics uses the ESG risk assessment method through the concept
of risk decomposition which assesses two main aspects of ESG issues, namely exposure and
managements. Exposure to the level of insecurity of a company in the face of significant ESG risks
can impede the assessment of the overall quality. Seid, management shows the dedication of the
company, and the implementation of real policies and initiatives aimed at overcoming ESG-related
challenges. The listed companies are divided into five categories according to the ESG score
assessment: companies with a risk score of 0-10 are categorized as Negligible (negligible ESG risk),
10-20 categorized Low (ESG risk restored), 20-30 categorized Medium (moderate ESG risk), 30-40
categorized High (high ESG risk), and > score 40 categorized as companies with significant ESG
risks (Vauzi, 2023).
Data analysis from 9 non-financial companies in March 22, 2025, by IDX shown in Figure 1,
indicating an interesting pattern between ESG and ROA values. PT Pertamina Geothermal Energy
Tbk (PGEO) from the infrastructure sector recorded an ESG score of 7.11 which is included in the
Negligible category, with a moderate ROA of 5.52%. PT Unilever Indonesia Tbk (UNVR) from the
Primary Consumer Goods sector has an ESG score of 18.21 (Low category) but the results recorded
the highest ROA of 27.5%, showing excellent operational efficiency despite the higher ESG risk
compared to PGEO. PT Industri Jamu dan Pharmacy Sido Muncul Tbk (SIDO) f rom the health sector
has an ESG score of 21.97 (category Medium) with ROA which is also very good, which is 25.27%,
indicating that the company is able to mitigate ESG risks while generating high profits.
PT Astra International Tbk (ASII) from Industry sector recorded the highest ESG score of 34.49
(category High) but was still able to produce a positive ROA of 10%. Similarly, two companies with
ESG scores that were actually low experienced improvements, namely PT Elang Mahkota Teknologi
Tbk (EMTK) from the Technology sector with an ESG score of 14.17 with a low ROA of 0.6%, and
PT Chandra Asri Pacific Tbk (TPIA) from the Raw Goods sector with an ESG score of 16.28, with
ROA of 0.6%. These indicate that there is no direct correlation between ESG risk and corporate
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Energy = PGAS (PT Perusahaan Gas Negara Tbk)

Basic Materials = TPIA (PT Chandra Asri Pacific Tbk)
Industry = ASII (PT Astra International Tbk)

Consumer Non-Cyclicals = UNVR (PT Unilever…
Consumer Cyclicals = MPMX (PT Mitra Pinasthika…

Health = SIDO (PT Industri Jamu Dan Farmasi…
Property & Real Estate = BSDE (PT Bumi Serpong…

Technology = EMTK (PT Elang Mahkota Teknologi…
Infrastructure = PGEO (PT Pertamina Geothermal…
0

5

10

15

20

25

30

35

40

ESG Risk Assessment by Sustainalytics (Non-Financial Sector Companies on the IDX 2025)

Figure 1. ESG Risk Assessment according to Sustainalytics for Non-Financial
Sector Companies Listed on the IDX
Source: IDX (2025)

profitability, where some companies with ESG risks actually record poor profitability, while some
companies with high ESG risks are still able to generate satisfactory profits, so that to optimize the
value of the company we must align several factors including profitability, corporate governance, and
corporate governance. It is good to apply the aspect of continuation.
Based on previous research on ESG impact on firm’s value, there are a significant result in research
of Raheilliameilinda & Handoko (2024) and Mudzakir & Pangeistuti (2023). Whereas results show
that there is no significant impact on the research from (Paramitha & Deivi, 2024). Research
conducted by Ambarwati & Vitaningrum (2021) and Elisa (2021) revealed that the profitability of
the company is positive to firm value. Different result in research by Farizki et al. (2021) which states
that profitability does not have to be based on the value of the company.
The results of research by P. P. Sari & Pratiwi (2023) and Prabawati eit al. (2021) reveal that Good
Corporate Governance affect the firm’s value. According to research by Sri Utami & Wulandari
(2021), that Good Corporate Governance does not have impact on firm’s value. Various factors that
affect firm value in non-financial companies are analyzed in this study. The formulation of research
problem is formulated according to the background that has been explained:
1. How Environmental, Social, and Governance (ESG) affects the firm’s value
2. How profitability affects the firm’s value
3. How institutional ownership affects the firm’s value
4. How the independent board of commissioners affects the firm’s value
5. How the audit committee affects the firm’s value.

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LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT
Le gitimacy The ory
Legitimation theory was first described by Dowling and Preffer (1975) as a basic idea that is still
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growing. This theory states that the community is involved in supporting the firm’s sustainability
development. Legitimacy theory is also developed by the latest research by Aruan et al. (2021) states
that the legitimacy theory is focused on social equality which requires each company to convince the
public that the operation and its results are in line with public goals.
Hence, firms are trying to impede legitimacy and develop strong relationships with the social
community in the business environment. If the public feels that the business does not comply with
the rules, then the business can lose its legitimate status. Therefore, the company is obliged to comply
with the regulations in the community so that its operations can be carried out sustained and smoothly.
Age ncy The ory
Jensen and Meckling (1976) view that, agency relationship consists of shareholders who bears the
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funds to supervise agent performance. In the agency theory, management has the responsibility to
prioritize the interests of shareholders as principals. According to Sirait & Fuad (2024), two aspects
of agency theory are shareholder (principal) and management (agent). In accordance with the
principal's wishes, the shareholder impedes the management to supervise the power supply and carry
out the daily business operation.
In essence, managers and stockholders are rational individuals who have personal desires or
motivations. This situation oftentimes encourages the management to take decisions that are
beneficial for them self, even if it can sacrifice the interest of the stockholders. Management also
realizes that they know and keep a lot of secret information so that it does not have transparency to
the principal which causes information asymmetry (Sirait & Fuad, 2024). Lack of supervision can
open the door for management to misuse their authority or mislead the company's resources, which
can harm the firm’s long-term interest. This phenomenon is known as the Agency Problem (Josua &
Seiptiani, 2024).
The Influence of Environme ntal, Social, dan Gove rnance (ESG) on Firm Value
ESG performance disclosure is very important to do it in a transparent way to the public, this needs
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to be understood by the firm. The sustainability report continues to serve as a communication tool
between firms and stakeholders in the context of their initiative in monitoring environmental, social
and governance issues. ESG provides a framework for evaluating and monitoring the effectiveness
of firms in those three key areas (Sadiq et al., 2023)
Based on the perspective of legitimacy theory, the firm tries to harmonize the operation and their
presence in accordance with the social norms and values recognized by public (Panjaitan & Suranta,

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2024). Practice of ESG principles in firm is a sign of strong dedication to sustainable practices and
social accountability, so it will be legitimate by the public, investors and other stakeholders. If the
public rate that the firm does not comply with the rules, then the firm can lose its legitimacy status
(Puspitaningrum & Indriani, 2021). The more optimize the performance of the company in the field
of ESG, it is usually tended to increase the value of investment for investors and the public. Research
by Raheilliameilinda & Handoko (2024) and Mudzakir & Pangeistuti (2023) shows that ESG is
positively impact firm value.
H1: Environme ntal, Social, and Gove rnance (ESG) positively impact Firm Value
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The Influence of Profitability on Firm Value
The ability of the firm to generate profits from the assets used. The profitability ratio used in this
research are Return on Asset, is considered to be able to reflect the ability of firm to achieve margins
(Ambarwati & Vitaningrum, 2021). Broadly speaking, companies with a high level of profitability
are usually more open in conveying information, because they have a greater capacity to access and
present information than companies with low profitability (Sidik & Yuneline, 2022).
According to the perspective of agency theory, the manager (agent) has an opportunistic nature
that gives priority to personal attention. Their focus on increasing company profit (ROA) and
achieving targets that have been set. Oftentimes the manager makes an effort to achieve this for
personal gain, like salary increase and promotion. However, an opportunistic nature can encourage
managers to focus on achieving targets that increase the profitability of the company and generate
high profits to align with the goal of the stock holder, which is to increase the firm value. The results
of this research are in line with the research by Ambarwati & Vitaningrum (2021) which shows that
the increase in profitability implies the value of the business as a whole.
H2: Profitability positively impact Firm Value
The Influence of Institutional Ownership on Firm Value
Institutional ownership refers to the ownership of shares controlled by the ownership of the firm’s
external holdings. These shareholders can come from various type of institution, including
government agencies, financial institutions, legal institutions, private companies and other
institutions (Pratomo & Rana, 2021). With the existence of institutional investors, it can reflect
complete governance, where the role as a supervisor to the course of firm management (Paulina et
al., 2020).
According to agency theory, there is a collaborative relationship between the entity that transmits
authority (principal) and the party that receives authority (agent). This relationship must have been
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through a covenant which was known as the nexus of contract. The essence of this relationship is the
existence of information inequality, where managers have a wider access to the detail of the firm’s
condition than the stockholder (Baha, 2021). Research conducted by Baha (2021) and Azharin &
Ratnawati (2022) suggests that institutional ownership contributes positively to the growth of firm
values.
H3: Institutional Ownership positively impact Firm Value
The Influence of Independent Board of Commissioners on Firm Value
The independent board of commissioners is a board member who is free from interesting
relationships with internal parties of the company. This ensures that they can carry out their duties
independently without any influence and always prioritize the interests of the company (Hidayat et
al., 2021). The independent board of commissioners’ functions to create control and supervision
functions over management, so that good management is realized and the company's value increases
(Laksana & Handayani, 2022).
According to the perspective of the agency theory, the independent board of commissioners who
have the main responsibility to monitor the policies implemented by top-level management, are
considered the highest monitoring mechanism in the management structure. In addition, the agency
theory also states that a larger composition of independent commissioners can optimize the quality
of supervision of management activities (Rahmawati, 2021). According to research conducted by
Laksana & Handayani (2022) and Hidayat et al. (2021), it is indicated that the existence of an
independent board of commissioners has a role in significantly increasing the company's value.
H4: Independent Board of Commissioners positively impact Firm Value
The Influence of Audit Committee on Firm Value
By emphasizing the principles of governance such as accountability, transparency of information,
responsibility, and fairness. The audit committee plays an important role in corporate governance by
preventing manipulation and fraud in financial statements (Hidayat et al., 2021). The audit committee
plays a role in supervising company activities, such as overseeing the internal control system
(Laksana & Handayani, 2022).
From the perspective of agency theory, the audit committee is very important to enforce corporate
responsibility. Its main tasks include supervision and monitoring of the evaluation or financial
reporting process, including internal and external audits. This is done to reduce the possibility of
information asymmetry, an important issue highlighted in agency theory (R. Sari & Sayadi, 2020).

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The independence of the audit committee will arise from the increasing number of audit committees.
As a result, the existence of an independent audit committee has the potential to reduce the risk of
conflicts of interest and encourage increased financial transparency. This is in line with research and
indicates that the existence of an audit committee has a positive influence on increasing the company's
value.
H5: Audit Committee positive impact on Firm Value
RESEARCH METHODS
Based on the type of data, including quantitative analysis. ESG, Profitability, institutional
ownership, independent board of commissioners, and audit committee refer to secondary data as the
main source of analysis, which are obtained through annual reports and firm financial condition on
the Indonesia Stock Exchange and Bloomberg. The external and independent variables used in this
study are detailed as follows in table 1.
This study took samples from non-financial companies because they have characteristics and
activities faced by non-financial companies as well as different from the financial sector. Likewise,
non-financial companies tend to be more sensitive to issues related to ESG (Environmental, Social,
and Governance) because the impact is more direct on daily operations and corporate reputation.
The purposive sampling method was used to determine the research sample. The research subjects
included 67 non-financial companies listed on the Indonesia Stock Exchange for five years (20192023) that met the sample criteria. You can see in table 2.
The research model can be formulated as follows:
Yit = α + β1 ESG it + β2 ROA it + β3 KIit + β4 DKIit + β5 KAit + ε

Description:
Y= Company Value (Tobin’s Q)
α = Constant
β = Coefficient
ε = Other factors outside the model

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Table 1. Operational Description of Variables
Variable
Company Value
(Tobin’s Q)
ESG (SEG)

Profitability (ROA)
Institutional
ownership (KI)
Independent Board of
Commissioners
(DKI)
Audit Committee
(KA)

Measurement
Tobin's Q is a proxy for company value which uses the following formula:
Tobin’s Q Ratio = Market equity value + Total Debt
Total Asset
ESG disclosure is measured by the Bloomberg score. The Bloomberg ESG score is
a percentage of the number of items disclosed by a company based on the
Bloomberg standard disclosure. The ESG score ranges from 0 to 100, consisting of
three main elements, namely environmental, social and governance.
The Return on Asset (ROA) indicator is used to measure profitability.
ROA = Net Profit x 100%
Total Assets
Institutional ownership is measured using the following formula:
KI = Total number of shares held by institutions
Number of shares in circulation
The calculations of the independent board of commissioners are formulated as
follows:
DKI = Number of independent board of commissioners
Number of members of the board of commissioners
The audit committee is calculated using the following formula:
KA = Number of audit committee members
Table 2. Sample formation process

No
1
2
3
4
5

Description
Non-Financial Companies listed on the Indonesia Stock Exchange
Non-financial companies that are not listed on the IDX since 2019
Does not have ESG completeness for the period 2019 - 2023
Does not have complete institutional ownership data 2019 - 2023
A company that is currently suspended
Research Sample
Total Samples (Company x Year)
Outlier Data
Total sample after outlier data (335-3)

Number of companies
845
(285)
(490)
(0)
(3)
67
335
(3)
332

Source: Data processed, 2025

Figure 3. Conceptual Framework

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RESULT, DISCUSSION, AND MANAGERIAL IMPLICATION
Descriptive Statistical Analysis
Table 3. Descriptive Statistical Test Results
N
ESG Disclosurei (X1)
335
Profitability (X2)
335
Institutional ownership (X3)
335
Independent Board of Commissioners (X4) 335
Audit Committee (X5)
335
Company Value (Y)
335
Valid N (listwisei)
335

Minimum
18,43
0,00
0,01
0,20
2,00
-0,11

Maximum
74,85
0,20
92,13
0,70
4,00
2,36

Meia n
45,1207
0,0662
34,9360
0,4218
3,0806
1,0473

Std. Deiv iation
11,28484
0,04707
29,92428
0,10455
0,42674
0,47264

Source: Data processed, 2025

Infrastructure S ector
13%
Technology S ector
2%
Property and real
estate sector
9%
Health S ector
7%

Consumer
Cylicals S ector
15%

Energy S ector
9%
Basic Materials
S ector…

Industry S ector
8%

Consumer Non-Cylicals S ector
19%

Figure 4. Diagram of non-financial companies disclosing ESG by sector
Source: Data processed, 2025

In Table 3, the results of the descriptive statistical analysis show that ESG has the best value of
18.43. While the highest value is 74.85. The ESG variable in non-financial companies has an average
value of 45.1207, which shows that the disclosure of ESG ind icators carried out by non-financial
companies in Indonesia is included in the medium or medium category. It can be concluded that nonfinancial companies in Indonesia have begun to integrate ESG principles in carrying out their
performance.
In Figure 4, it can be seen that the largest percentage of non-financial corporate sectors that have
implemented ESG is the Consumer Non-Cyclicals sector, which is 19% of the 67 companies studied
in this study. This sector is basically engaged in the field of basic needs such as food, beverages,
household products, and medicines that are routinely consumed by the community every day.
Therefore, the implementation of ESG is an important factor in ensuring the sustainability of company
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operations.
Based on Table 4, in the normality test, there were outlier data including Siloam International
Hospitals Tbk (data 242), PP Peirseiro Tbk (data 258), and Timah Tbk PT (data 288). Then retesting
showed the Asymp. Sig. (2 tailed) value was 0.200. It can be concluded that the data used in the
analysis was normally distributed or spread evenly because this value is more than the significance
of 0.05.
The multicollinearity test, all independent variables show a tolerance value above 0.1 and a VIF
value below 10. Thus, the regression model is declared free from indications of multicollinearity. In
the Heterocedasticity test, the significance level for the ESG variable (ESG) is 97.3%. The significant
level of the Profitability variable (ROA) is 94.2%. The significance level of the Institutional
Ownership variable (KI) is at 5.6%. The Independent Board of Commissioners variable (DKI) has a
significant value of 98.2%. The Audit Committee variable (KA) has a significant value of 77.5%. It
can be concluded that there is no indication of heteroscedasticity in the independent variables.
While in the Autocorrelation test with 332 observations (N) and a significance level of 5% (0.05),
based on the results of the Durbin-Watson (D-W) value is 2.063. The value of 4 0 d U is 2.156 based
on these criteria, with a lower limit (dL) value of 1.79495 and an upper limit (dU) of 1.84400. Because
the D-W value is between dU and 4-dU (1.8440 < 2.063 < 2.156), it can be said that this regression
model does not show any indication of autocorrelation.
Based on Table 5, the F statistical test shows the F-count value of 15.796 and a significance of
0.001 (<0.05). ESG, Profitability, Institutional Ownership, Independent Board of Commissioners,
and Audit Committee are proven to have a significant influence simultaneously on firm value. Based
on Table 5, in the determination coefficient test, the Adjusted R Square value of 0.287 listed indicates
that the model has a fairly good explanation capability with a positive direction. So, it can be
concluded that 28.7% of the variation in company performance can be explained through the
independent variables analyzed in this study. While 71.3% is influenced by other external factors not
included in this research model.
Based on Table 6, in the t-test, ESG shows a regression coefficient with a significance value of
0.039 (<0.05) and a positive direction of 0.087. Thus, the first hypothesis (H1) can be accepted, which
means that ESG has a significant effect on company value (Tobin's Q). The regression coefficient for
Profitability (ROA) is 0.015 with a positive direction and has a significant level of 0.247 (>0.05). So,
it can be said that Profitability has a positive and insignificant effect on company value, or the second
hypothesis (H2) is rejected. Institutional ownership (KI) shows a significant value of 0.001 (<0.05)
and a regression coefficient with a positive direction of 0.048. So, it can be concluded that the third
hypothesis (H3) is accepted, or institutional ownership (KI) has a significant effect on company value
(Tobin's Q).
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Classical Assumption Test
Table 4. Results of the Classical Assumption Test
Panel A. Normality Test
Model
Sig. Kolmogorov-Smirnov
Y = α + β 1 ESG + β 2 ROA
0, 200
+ β 3 KI + β 4 DKI + β 5 KA + ε
Panel B. Multicollinearity Test
Variables
Tolerance

Number of samples
335
VIF

ESG

0.966

1,035

Profitability (ROA)

0.993

1,007

Institutional ownership (IP)

0.989

1,011

Independent board of
commissioners (DKI)

0.972

1,028

Audit Committee (AC)

0.981

1,019

Panel C. Autocorrelation Test
You
DW
1.8440
2,068
Panel D. Heteroscedasticity Test
Variables
Sig. Spearma's Rho
ESG
0.973
Profitability (ROA)
0.942
Institutional ownership (IP)
0.56
Independent board of
0.982
commissioners (DKI)
Audit Committee (AC)
0.775

Conclusion
There is no
multicollinearity
There is no
multicollinearity
There is no
multicollinearity
There is no
multicollinearity
There is no
multicollinearity

4-DU
2,156

Conclusion
No autocorrelation

Conclusion
There is no heteroscedasticity
There is no heteroscedasticity
There is no heteroscedasticity
There is no heteroscedasticity
There is no heteroscedasticity

Source: Data processed, 2025

Hypothesis Test
Table 5. Results of F Test and Determination Coefficient
Panel A. F-Test Results
Model
Sum of Squares
Regression
3,076
Residual
12,698
Total
15,774
Panel B. Results of Determination Coefficient
Model
Y = α + β 1 ESG + β 2 ROA + β 3 KI + β 4 DKI + β 5 KA + ε

Df
5
326
331

Mean
0.615
0.039

R

R Square Adjusted R Square

0.548 0.300

Source: Data processed, 2025

124

F
Significance
15,796 < 0.001

0.287

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Table 6. Hypothesis Testing Results

Constant
ESG

Variable
Coefficient
(Beta)
-682
0.087

-3,764
2,073

Significance
(Probability
Value)
0.001
0.039

T-value
count

Conclusion

Profitability (ROA)

0.015

1,160

0.247

Institutional ownership (IP)
Independent
board
of
commissioners (DKI)
Audit Committee (AC)

0.048

6,777

0.001

H1 Accepted
H2 Not
Accepted
H3 Accepted

0.149

3,401

0.001

H4 Accepted

0.310

3,966

0.001

H5 Accepted

Source: Processed data, 2025

The independent board of commissioners (DKI) has a significance value of 0.001 (<0.05) and a
regression coefficient with a positive direction of 0.149. So, it can be concluded that the fourth
hypothesis (H4) is accepted, or the independent board of commissioners (DKI) has a significant effect
on company value (Tobin's Q). The audit committee (AC) has a significant value of 0.001 (<0.05)
and a regression coefficient with a positive direction of 0.310. So, it can be concluded that the fifth
hypothesis (H5) is accepted, or the audit committee (AC) has a significant effect on company value
(Tobin's Q).
The influence of ESG (Environmental, Social, and Governance) on company value
The value of non-financial companies listed on the IDX is significantly positively influenced by
the relationship between ESG and company value (Tobin's Q), as shown in Table 9. ESG (X1)
produces a positive regression coefficient of the ESG variable of 0.087 and a significant level of 0.039
(<0.05). ESG has a significant positive impact on company value. This finding shows that the higher
the ESG disclosure score, the more it will have an impact on increasing company value. The research
results produced are in accordance with Mudzakir & Pangeistuti (2023) which shows that ESG has a
significant positive effect on company value. Increasing company value is influenced by transparency
and accountability.
This is proven in this study, in non-financial companies in Indonesia in 2019 - 2023 that apply
ESG principles including the middle or middle category, meaning that non-financial companies in
Indonesia have begun to be aware of and apply ESG principles in carrying out company performance.
This result is in line with the theory of legitimacy, where companies ensure that their activities
must be in accordance with the regulations in force in society, so that their operations can run
smoothly and sustainably. The implementation of ESG principles in companies shows a strong
commitment to sustainability and social responsibility is considered more legitimate (legitimacy) in
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the eyes of society.
The Influence of Profitability on Company Value
The results of the analysis show that Return on Asset (ROA) has a positive and insignificant effect
on company value, so H2 is rejected. Profitability (X2) produces a significant value of 0.247 (> 0.05)
and a positive regression coefficient of 0.015. According to this study, a high ROA ratio does not
affect the value of the companies included in the research sample. During the Covid -19 pandemic,
Profitability decreased because economic activity was limited so that all sectors of the company were
directly affected. Therefore, the company was unable to increase its company value.
Based on the agency theory, managers (agents) tend to want to maximize profits or high returns.
On the other hand, return on assets (ROA) only provides a general picture of the level of return on all
company assets. However, agents do not always make ROA the main benchmark in assessing the
performance or value of the company. Agent pays more attention to other indicators such as Return
on Equity (ROE), Net Profit Margin (NPM) and Gross Profit Margin (GPM) in an effort to increase
the overall value of the company.
The Influence of Institutional Ownership on Company Value
Based on the results of the analysis, institutional ownership has a positive and significant effect on
company value, so H3 is accepted. Institutional ownership (X3) has a significance level of 0.001
(<0.05) with a positive regression coefficient of 0.048. Thus, institutional ownership has a positive
effect on company value. The results of this study are supported by Baha (2021) and Azharin &
Ratnawati (2022) who state that the existence of institutional ownership can significantly maximize
company value. This study shows how institutional ownership by institutions affects the increase or
decrease in company value. The greater the institutional ownership, the more effectively the
company's assets are used, thereby minimizing the potential for waste by management (Rukmana,
2022).
According to agency theory, there is a contractual relationship between the party that establishes
the principal and the party that establishes the principal in the form of cooperation, which highlights
the influence of information imbalance on the company's valuation. This shows that the control
function of shareholders is very important to increase the value of the company (Baha, 2021).
The Influence of the Independent Board of Commissioners on Company Value
Hypothesis H4 is accepted because the test results show that the independent board of
commissioners has a positive and significant effect on the company's value. The independent board
of commissioners (X4) produces a significant value of 0.001 (<0.05) and a positive regression

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coefficient of 0.149. Thus, the independent board of commissioners has a positive effect on the
company's value. This is supported by research by Laksana & Handayani (2022) and Hidayat et al.
(2021) indicating that the existence of an independent board of commissioners can encourage an
increase in company value.
This study shows that the independent board of commissioners is thought to create a control and
supervisory function over management, so that good management can be realized and the company's
value can be increased (Laksana & Handayani, 2022). According to agency theory, the independent
board of commissioners is seen as the main supervisory body in corporate governance, which is
tasked with overseeing the policies taken by top management. A large number of independent
commissioner members can increase management supervision, which leads to increased supervisory
and governance functions which ultimately increase the company's value (Rahmawati, 2021).
The Influence of the Audit Committee on Company Value
Based on the test results, H5 is accepted because the results of the audit committee test have a
positive and significant effect on company value. The audit committee (X5) produces a positive
regression coefficient of 0.310 and a significant value of 0.001 (<0.05). Thus, the audit committee
increases the value of the company. This is in accordance with the research conducted by Khoirunnisa
& Aminah (2022) and Saragih & Tampubolon (2023) which states that the audit committee has a
positive and significant effect on company value.
This shows how important the audit committee is in strengthening managerial oversight of
financial reporting. Not only that, the audit committee contributes to the prevention of fraud and
manipulation in financial reporting. The implementation of optimal corporate governance principles,
such as information transparency, responsibility, fairness, and accountability (Hidayat et al., 2021).
According to the agency theory, it states that the audit committee's responsibilities include overseeing
the business financial reporting system and internal and external audit procedures to prevent
information asymmetry (R. Sari & Sayadi, 2020). As the number of audit committees increases, it
will affect the independence of the audit committee. Thus, the existence of an ind ependent audit
committee can reduce the risk of conflict of interest, increase financial transparency, and support the
increase in corporate value.
CONCLUSION, SUGGESTION, AND LIMITATIONS
The purpose of this study is to determine the impact of ESG, financial performance, and good
corporate governance (GCG) on company value in the non-financial sector listed on the IDX in 20192023. This finding reveals that ESG (Environmental, Social, and Governance) and good corporate
governance (GCG) principles measured by institutional ownership, independent board of
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commissioners, and audit committees have a positive and significant impact on company value.
Companies can demonstrate their dedication to environmental, social, and good corporate governance
obligations by implementing ESG and corporate governance practices. This will help build a positive
image of the company, which will ultimately increase its value in the long term. Meanwhile, financial
performance has a negative and insignificant effect on company value.
The limitation in this research lies in the approach used to assess profitability indicators that only
rely on Return on Asset (ROA), so it has not been widely covered in measuring the company's value.
With this limitation, suggestions for further research include the use of various profitability
measurement methods such as Return on Equity (ROE), Net Profit Margin (NPM) and Gross Profit
Margin (GPM).
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