Analysis of Environmental, Social, and Governance Disclosure Effects on Net Profit Margin and Price to Earnings Ratio in Indonesian Banking

Nelly Venyningtias Basuki; Rusdi Hidayat Nugroho

doi:10.70716/emis.v4i3.817

Authors

Nelly Venyningtias Basuki Department of Business Administration, Universitas Pembangunan Nasional “Veteran” Jawa Timur, Surabaya, Indonesia Author
Rusdi Hidayat Nugroho Department of Business Administration, Universitas Pembangunan Nasional “Veteran” Jawa Timur, Surabaya, Indonesia Author

DOI:

https://doi.org/10.70716/emis.v4i3.817

Keywords:

ESG, profitability, market, NPM, PER

Abstract

This study examines how Environmental, Social, and Governance (ESG) Disclosure shapes two distinct performance outcomes among Indonesian banks — internal profitability, captured through Net Profit Margin (NPM), and external market valuation, captured through Price Earning Ratio (PER) — for the 2019–2025 window on the Indonesia Stock Exchange (IDX). A purposive sample of 25 listed banks was tracked across seven years, producing 175 firm-year observations that were tested with covariance-based Structural Equation Modeling (CB-SEM) in AMOS. Both the measurement and structural models met the required validity, reliability, and fit thresholds. All six proposed paths (H1–H6) were supported: each ESG pillar exerted a positive, statistically significant influence on NPM and PER alike. Among the three, Environmental disclosure carried the strongest pull on market valuation, whereas Social and Governance contributed more evenly across both outcomes. Taken together, the results lend empirical weight to Stakeholder, Legitimacy, Agency, and Signaling Theory as complementary lenses for understanding how sustainability reporting translates into corporate performance within an emerging-market banking context, and they point to practical steps regulators and bank managers can take to turn ESG disclosure into a lever for stronger profitability and investor appeal.

References

Akhter, F., Hossain, M. R., Elrehail, H., Rehman, S. U., & Almansour, B. (2023). Environmental disclosures and corporate attributes, from the lens of legitimacy theory: A longitudinal analysis on a developing country. European Journal of Management and Business Economics, 32(3), 342–369. https://doi.org/10.1108/EJMBE-01-2021-0008

Al-Faryan, M. A. S. (2024). Agency theory, corporate governance and corruption: An integrative literature review approach. Cogent Social Sciences, 10(1), Article 2337893. https://doi.org/10.1080/23311886.2024.2337893

Arisanty Razak, L., & Hasan, A. (2025). Pengaruh Environmental, Social and Governance terhadap kinerja perusahaan: Studi empiris pada perusahaan perbankan BUMN yang terdaftar di Bursa Efek Indonesia tahun 2019–2023. Jurnal [Nama Jurnal Tidak Lengkap], 6(7). https://www.idx.co.id

Bayuaji, K., Ukhriyawati, C. F., & Putra, R. E. (2025). Analysis of the impact of Environmental, Social, & Governance (ESG) disclosure and profitability on firm value (Study on banking sector companies listed on the IDX from 2017–2021). Eduvest – Journal of Universal Studies, 5(3), 2907–2920. http://eduvest.greenvest.co.id

Bonani Prastika, R., Hidayat Nugroho, R., Prabowo, B., & Respati Kusumasari, I. (2025). The effect of good corporate governance on corporate social responsibility and company value with profitability as an intervening variable: An empirical study on consumer goods sector companies listed on the Indonesia Stock Exchange for the 2019–2023 period. Indonesian Interdisciplinary Journal of Sharia Economics (IIJSE), 8(3), 11170–11185.

Desi Puspita Sari, F. L. D., L. E. W. N. F. (2023). Implementasi teori agensi, efisiensi pasar, teori sinyal dan teori kontrak dalam pelaporan akuntansi pada PT Eskimo Wieraperdana [Sumber tidak lengkap].

Dwi Asrianingtyas, P., Rahayu, S., Wulansari, C., & Mahardhika Surabaya, S. (2025). Pengaruh Environmental Social dan Governance Disclosure terhadap nilai perusahaan pada perusahaan food product di ASEAN periode 2022–2023. Jurnal [Nama Jurnal Tidak Lengkap], 6(3).

Ferli, O., Ibrahim, I. F., Pranaja, Y., & Simanjuntak, F. S. (2025). Does ESG disclosure or size which matters to profitability? Case of banking companies listed on the Indonesian capital market. Jurnal [Nama Jurnal Tidak Lengkap], 9, 917–926.

Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2019). Multivariate data analysis (8th ed.). Cengage Learning.

Hayati Harahap, R. H. H., & Nahwa Zainab Marpaung. (2023). Analisis teori legitimasi pada konflik rekognisi penguasaan tanah adat antara PT Asam Jawa dengan komunitas terdampak. Jurnal Kajian Agraria dan Kedaulatan Pangan (JKAKP), 2(1), 13–22. https://doi.org/10.32734/jkakp.v2i1.13262

Juanda, A., Setyawan, S., & Naseer, M. S. (2025). Sustainability reporting (ESG) quality: A comparative study between manufacturing and banking companies. IKONOMIKA: Jurnal Ekonomi dan Bisnis Islam, 10(1). https://ejournal.radenintan.ac.id/index.php/ikonomika

Kaptein, M. (2025). Stakeholder ethics: Defining the ethical responsibilities of stakeholders to and for companies. Business and Society Review, 130(2), 209–232. https://doi.org/10.1111/basr.70010

Kasmir. (2019). Analisis laporan keuangan. Rajawali Pers.

Lase, P. D., Telaumbanua, A., & Harefa, A. R. (2022). Analisis kinerja keuangan dengan pendekatan rasio profitabilitas. Jurnal Akuntansi, Manajemen dan Ekonomi (Jamane), 1(2), 254–260.

Nenobais, A. H., Sia Niha, S., & Manafe, H. A. (2022). Pengaruh Return on Asset (ROA), Return on Equity (ROE), Net Profit Margin (NPM) dan Earning Per Share (EPS) terhadap harga saham (Suatu kajian studi literatur manajemen keuangan perusahaan). Jurnal Ekonomi Manajemen Sistem Informasi, 4(1). https://doi.org/10.31933/jemsi.v4i1

Nurahman, D., Majid, M. A., & Hersugondo, H. (2024). ESG disclosure’s positive impact on financial performance in Indonesia’s growth. Research Horizon, 4(6), 25–34.

Otoritas Jasa Keuangan. (2021). The future of finance. OJK

Sari, D. E., Suranto, S., Mustofa, R. H., Asila, N. F., Fadhilah, R., Laksmi, A. C. P., & Abdillah, R. A. (2025). Inovasi teknologi sebagai moderator corporate social responsibility, eco-efficiency dan kinerja keuangan perusahaan manufaktur di Indonesia. Reviu Akuntansi dan Bisnis Indonesia, 9(2), 298–318. https://doi.org/10.18196/rabin.v9i2.26796

Sultan, S. A. M., Ahmad, W. M. W., Bacha, O. I., & Ramlee, R. (2024). Impact of corporate social performance on financial performance: Evidence from Islamic banks, conventional banks, and social banks. ISRA International Journal of Islamic Finance, 16(2), 109–130. https://doi.org/10.55188/ijif.v16i2.697

Syafis, K. S. (2022). Analisis penerapan informasi pengungkapan CSR dan faktor-faktor yang mempengaruhinya berdasarkan teori agency, legitimasi, stakeholder, dan teori kontrak sosial. Jurnal Akuntansi dan Keuangan, 27(2), 113–119. https://doi.org/10.23960/jak.v27i2.576

Vefiadytria, E. A., & Rosyadi, I. (2025). Pengaruh Environmental, Social, dan Governance disclosure terhadap financial performance perusahaan. Jurnal Bisnis Mahasiswa, 5(1), 318–327. https://doi.org/10.60036/jbm.v5i1.369

Wahdan Arum Inawati, & Rahmawati, R. (2023). Dampak Environmental, Social, dan Governance (ESG) terhadap kinerja keuangan. Jurnal Akademi Akuntansi, 6(2), 225–241. https://doi.org/10.22219/jaa.v6i2.26674

Wanta, D., & Herawati, V. (2021). Sustainable finance disclosure on banking sector in Indonesia: The relationship ESG with company performance and institutional ownership. Journal of Research in Business and Management, 9.