When Green Hurts Value Unless You Run Lean
How Operational Efficiency and Board Size Shape ESG’s Impact on Firm Value
DOI:
https://doi.org/10.33062/ajb.v10i02.158Keywords:
ESG performance, firm value, asset utilization, capital-incentive sectorsAbstract
This study investigated the ESG-firm value relationship in asset-heavy industries listed on the Indonesia Stock Exchange, where sustainability efforts often involve high capital intensity and long-term payoffs. Previous research offered mixed results, with limited attention to internal firm-level moderators in emerging markets. Addressing this gap, this study examined whether asset utilization enhanced the valuation impact of ESG performance. Using unbalanced panel data from 165 firm-year observations (2018–2023), ESG performance negatively affected firm value, reflecting market skepticism in capital-intensive sectors. However, asset utilization positively moderated this effect, suggesting that operational efficiency could mitigate ESG-related value erosion. Board size also showed a negative effect, indicating governance inefficiencies. These findings emphasized the importance of embedding ESG in operations to strengthen investor confidence.
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