The Effect of ESG Disclosure on Company Performance and Value: The Mediating Role of Intellectual Capital Efficiency in Indonesian Banking

Abstract

This study examines the effect of Environmental, Social, and Governance (ESG) disclosure on corporate performance and firm value. It investigates whether intellectual capital efficiency mediates these relationships in Indonesian banking companies. The study uses 20 listed banks observed over five years (2020–2025), resulting in 100 firm-year observations. The study employs a panel regression with a Fixed-Effects Model and mediation analysis using the Value Added Intellectual Coefficient (VAIC). ESG disclosure is measured using 30 indicators based on the 2016 Global Reporting Initiative Standards, while corporate performance and firm value are measured by Return on Assets (ROA) and Tobin’s Q, respectively. The results show that ESG disclosure has no significant effect on ROA but has a significant negative effect on Tobin’s Q and VAIC. VAIC has no significant effect on ROA or Tobin’s Q and does not mediate the relationship between ESG disclosure and these outcomes. These findings suggest that ESG disclosure does not automatically create economic value, particularly in the short term, when implementation and reporting costs may exceed operational benefits.