ESG Disclosure, Financial Performance, and Firm Value: The Mediating Role of Competitive Advantage

Haya Inayah Khaulah; Anwar Azazi; Ana  Fitriana; Mochammad Ridwan Ristyawan; Uray Ndaru Mustika

doi:10.61987/jemr.v5i3.2017

Authors

Haya Inayah Khaulah Universitas Tanjungpura
Anwar Azazi Universitas Tanjungpura
Ana Fitriana Universitas Tanjungpura
Mochammad Ridwan Ristyawan Universitas Tanjungpura
Uray Ndaru Mustika Universitas Tanjungpura

DOI:

https://doi.org/10.61987/jemr.v5i3.2017

Keywords:

ESG Disclosure, Financial Performance, Firm Value

Abstract

Understanding how sustainability disclosure and financial performance shape firm value remains an important issue in corporate governance and capital market studies. The purpose of this research is to examine the influence of Environmental, Social, and Governance (ESG) disclosure and financial performance on firm value, with competitive advantage acting as a mediating variable. A quantitative approach was employed using panel data from 46 publicly listed companies over the 2021–2024 period. The analysis utilized panel regression combined with path analysis to evaluate both direct and indirect relationships among variables. The findings indicate that financial performance has a positive and significant effect on firm value, confirming its central role in determining market valuation. In contrast, ESG disclosure does not show a significant direct effect on firm value. Furthermore, ESG disclosure demonstrates a negative relationship with competitive advantage, while financial performance positively influences competitive advantage. Mediation analysis reveals that competitive advantage does not mediate the relationship between ESG disclosure and firm value but partially mediates the relationship between financial performance and firm value. These findings imply that companies should strengthen financial performance as a strategic foundation while integrating ESG practices more effectively to enhance long-term competitive positioning and firm value.

References

Adamu, I., & Hamidah, H. (2024). Assessing the impact of capital structure on firm value: A quantitative study of financial ratios and stock prices of Nigeria food and beverage companies. The Indonesian Journal of Accounting Research, 26(3), 483–516. https://doi.org/10.33312/ijar.729

Agbakwuru, V., Onyenahazi, O. B., Antwi, B. O., & Oyewale, K. (2024). The impact of environmental, social, and governance (ESG) reporting on corporate financial performance. International Journal of Research Publication and Reviews, 5(9), 3629–3644. https://doi.org/10.55248/gengpi.5.0924.2710

Aljohani, T. M., Assolami, Y. O., Alrumayh, O., Mohamed, M. A., & Almutairi, A. (2025). Sustainable energy systems in a post-pandemic world: A taxonomy-based analysis of global energy-related markets responses and strategies following COVID-19. Sustainability, 17(5), 2307.

https://doi.org/10.3390/su17052307

Al-Omari, R., Oroud, Y., Makhlouf, M. H., Alshehadeh, A. R., & Al-Khawaja, H. A. (2024). The impact of profitability and asset management on firm value and the moderating role of dividend policy: Evidence from Jordan. Asian Economic and Financial Review, 14(1), 1.

https://doi.org/10.55493/5002.v14i1.4937

Aprilia, N., & Wahjudi, E. (2021a). Pengaruh Kinerja Keuangan Terhadap Nilai Perusahaan dengan Variabel Moderasi Corporate Governance. Jurnal Riset Akuntansi dan Keuangan, 9(3), 525–534. https://doi.org/10.17509/jrak.v9i3.32512

Badawi, A., Utami, W., Marsoem, B., & Kurniasih, A. (2024). The mediating role of sustainable value creation in the relationship between information technology and competitive advantage. Australasian Accounting, Business and Finance Journal, 18(2). https://doi.org/10.14453/aabfj.v18i2.06

Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108

Basuki, A. T. (2021). Analisis Data Panel Dalam Penelitian Ekonomi Dan Bisnis (Dilengkapi Dengan Penggunaan Eviews) (Pertama,).

Bhagavath & Sasirekha. (2025). A Study on Financial Performance Analysis. International Journal of Scientific Research in Engineering and Management (IJSREM), 09(04). https://doi.org/10.55041/IJSREM44008

Cheng, R., Kim, H., & Ryu, D. (2024). ESG performance and firm value in the Chinese market. Investment Analysts Journal, 53(1), 1–15.

https://doi.org/10.1080/10293523.2023.2218124

Elkington, J. (1998). Accounting For The Triple Bottom Line. Measuring Business Excellence, 2(3), 18–22. https://doi.org/10.1108/eb025539

Fahy, J. (2000). The resource‐based view of the firm: Some stumbling‐blocks on the road to understanding sustainable competitive advantage. Journal of European Industrial Training, 24(2-3–4), 94–104. https://doi.org/10.1108/03090590010321061

Freeman, R. E., & McVea, J. (2005). A Stakeholder Approach to Strategic Management. In The Blackwell Handbook of Strategic Management (pp. 183–201). John Wiley & Sons, Ltd. https://doi.org/10.1111/b.9780631218616.2006.00007.x

Global Sustainable Investment Alliance. (2022). Global Sustainable Investment Review 2022. Global Sustainable Investment Alliance. https://www.gsi-alliance.org/wp-content/uploads/2023/12/GSIA-Report-2022.pdf

Han, W., & Wu, D. (2024). ESG ratings, business credit acquisition, and corporate value. International Review of Financial Analysis, 95, 103376.

https://doi.org/10.1016/j.irfa.2024.103376

Indriyani, E. P., Suhariadi, F., Lestari, Y. D., Aldhi, I. F., Rahmawati, E., Hardaningtyas, D., & Abbas, A. (2025). Sustaining infrastructure firm performance through strategic orientation: Competitive advantage in dynamic environments. Sustainability, 17(3), 1194.

https://doi.org/10.3390/su17031194

Kandpal, V., Jaswal, A., Santibanez Gonzalez, E. D. R., & Agarwal, N. (2024). Corporate social responsibility (CSR) and ESG reporting: Redefining business in the twenty-first century. In Sustainable energy transition: Circular economy and sustainable financing for environmental, social and governance (ESG) practices (pp. 239–272). Springer.

https://doi.org/10.1007/978-3-031-52943-6_8

Kayani, U. N., Gan, C., Rabbani, M. R., & Trichilli, Y. (2024). Is short-term firm performance an indicator of a sustainable financial performance? Empirical evidence. Studies in Economics and Finance, 41(3), 619–637.

https://doi.org/10.1108/SEF-03-2023-0136

Kräussl, R., Oladiran, T., & Stefanova, D. (2024). A review on ESG investing: Investors' expectations, beliefs and perceptions. Journal of Economic Surveys, 38(2), 476–502. https://doi.org/10.1111/joes.12599

Krueger, P., Sautner, Z., & Starks, L. T. (2020). The Importance of Climate Risks for Institutional Investors. The Review of Financial Studies, 33(3), 1067–1111. https://doi.org/10.1093/rfs/hhz137

Kumar, A. (2024, January 14). What is an ESG score and How to calculate ESG score? SG Analytics. https://www.sganalytics.com/blog/what-is-esg-score-and-how-is-it-calculated/

Madany, N., Ruliana, R., & Rais, Z. (2022). Regresi Data Panel dan Aplikasinya dalam Kinerja Keuangan terhadap Pertumbuhan Laba Perusahaan Idx Lq45 Bursa Efek Indonesia. VARIANSI: Journal of Statistics and Its Application on Teaching and Research, 4(2), 79–94. https://doi.org/10.35580/variansiunm28

Meilanda, P., Fuadah, L. L., & Mukhtaruddin, M. (2025). Environmental, Social, and Governance (ESG), Intellectual Capital and Firm Value: The Mediating Role of Competitive Advantage in Asia. Dinasti International Journal of Economics, Finance & Accounting, 6(5), 4729–4739. https://doi.org/10.38035/dijefa.v6i5.5551

Novitasari, M., & Agustia, D. (2023). Competitive advantage as a mediating effect in the impact of green innovation and firm performance. Business: Theory and Practice, 24(1), 216–226. https://doi.org/10.3846/btp.2023.15865

Perdana, M., Salim, U., Ratna, K., & Rofiq, A. (2023). The Effect of Environmental Social Governance (ESG) Performance and Financial Performance on Firm Value: Evidence from the Banking Sector in ASEAN. 183–193. https://doi.org/10.2991/978-94-6463-214-9_20

Pertiwi, I., Sihwahjoeni, & Apriyanto, G. (2025). Pengaruh Kinerja Keuangan Terhadap Strategi Bisnis di Era Society 5.0 Dengan Keunggulan Kompetitif Sebagai Variabel Intervening. Jurnal Ekonomi Manajemen, 29(1). https://oaj.jurnalhst.com/index.php/jekma/article/view/9035

Prayogo, E., Handayani, R., & Meitiawati, T. (2023). ESG Disclosure dan Retention Ratio terhadap Nilai Perusahaan dengan Ukuran Perusahaan sebagai Pemoderasi. Reviu Akuntansi Dan Bisnis Indonesia, 7(2), 368–379. https://doi.org/10.18196/rabin.v7i2.18212

Rafique, A., Ali, A., & Audi, M. (2025). Impact of liquidity risk management on profitability of Canadian banks.

Rahmaniati, N. P. G., & Ekawati, E. (2024). The role of Indonesian regulators on the effectiveness of ESG implementation in improving firms' non-financial performance. Cogent Business & Management, 11(1), 2293302. https://doi.org/10.1080/23311975.2023.2293302

Riyanti, R. S., Wulandari, P., Prijadi, R., & Tortosa-Ausina, E. (2025). Green loans: Navigating the path to sustainable profitability in banking. Economic Analysis and Policy, 85, 1613–1624. https://doi.org/10.1016/j.eap.2025.01.028

Rohendi, H., Ghozali, I., & Ratmono, D. (2024). Environmental, social, and governance (ESG) disclosure and firm value: The role of competitive advantage as a mediator. Cogent Business & Management, 11(1), 2297446. https://doi.org/10.1080/23311975.2023.2297446

Sinulingga, S. M., Sianturi, J. A. T. P., & Melianna, S. (2023). Peran Keunggulan Bersaing Dalam Memediasi Pengaruh Rasio Keuangan Terhadap Nilai Perusahaan Pada Perusahaan Sektor Kesehatan Yang Terdaftar di Bursa Efek Indonesia Periode 2015-2021. Jurnal Ilmiah Methonomi, 9(1), 32–45. https://doi.org/10.46880/methonomi.Vol9No1.pp32-45

Spence, M. (2002). Signaling in Retrospect and the Informational Structure of Markets. American Economic Review, 92(3), 434–459. https://doi.org/10.1257/00028280260136200

Su, W., Zhang, M., & Han, P. (2025). The impact of negative ESG disclosure on firm value: Enhancing or diminishing? SAGE Open, 15(4), 21582440251383230. https://doi.org/10.1177/21582440251383232

Tandiawan, V., Ismanto, J., SANA, I., Suyatno, A., & Judijanto, L. (2025). The impact of corporate governance, financial performance, and market competitiveness on firm value in emerging markets. Quality – Access to Success, 26(208). https://doi.org/10.47750/QAS/26.208.15

Tharavanij, P. (2024). Tobin's Q revisited: A theoretical and empirical framework for accurate business valuation. Global Journal of Business Social Sciences Review (GATR-GJBSSR), 12(3). https://doi.org/10.35609/gjbssr.2024.12.3(3)

Zhang, Y., Hou, T., & Matsuoka, H. (2025). Turning loss into gain: How distressed brand's philanthropic corporate social responsibility drives customer citizenship. Journal of Product & Brand Management, 34(7), 990–1007.

https://doi.org/10.1108/JPBM-11-2024-5587