Proceedings of The 12th International Conference on New Ideas in Management, Economics and Accounting
Year: 2023
DOI:
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ESG Disclosure and Firm Performance: The moderating role of Audit Quality on Indonesian Companies
Alhamdi Zuhri, Szu Hsien-Lin
ABSTRACT:
The purpose of this study is to provide an extended knowledge on existing literature and practical implications. Derived on agency theory and legitimacy theory as an underpinnings theory for investigating the relationship between environmental, social, governance (ESG); firm performance; with audit quality as a moderating variable. This study relied on partial least square-structural equation modeling (PLS-SEM) to analyze the data gathered from OSIRIS and Refinitiv Database. Furthermore, the study adopts multiple linear regression to test the proposed hypothesis. The study contributes to the literature, theory, and practice in numerous ways. Firstly, it contributes to the literature by reinvestigating the impact of ESG and each of its three dimensions on financial performance in a developing country such as Indonesia. Because, the prior literature mostly related to developed countries focused either on ESG or some of its dimensions in relation with firms’ accounting or market performance and produced mixed results which do not apply to developing countries. Secondly, this study aimed to bridge this gap in literature by analyzing the impact of ESG practices on the financial performance with audit quality as a moderating variable. Thirdly, this study aimed to promote the implementation of ESG relating strategies, enabling to protect stakeholders and their environment through a superior audit quality.
keywords: Accounting, Agency Theory, Auditing, Legitimacy, Sustainability