The Impact of ESG Disclosure on Market Reaction: Sustainability Perspective in the Banking Sector

I Kadek Jonh Stiawan

doi:10.60076/ijeam.v2i5.1893

Authors

I Kadek Jonh Stiawan Universitas Pendidikan Ganesha

DOI:

https://doi.org/10.60076/ijeam.v2i5.1893

Keywords:

Sustainability, Market reaction, ESG disclosure

Abstract

This study aims to assess the sustainability aspects of banking companies and their impact on market response. Corporate sustainability is measured through ESG disclosure, encompassing environmental, social, and governance dimensions. The study was conducted on banking companies listed on the Indonesia Stock Exchange during the 2020–2023 period, with a population of 47 companies. The sample was selected using purposive sampling, resulting in 8 companies observed over 4 years, yielding a total of 32 units of analysis. Data were collected through documentation methods from secondary sources and analyzed using multiple linear regression with the assistance of STATA software. The results indicate that ESG disclosure does not have a significant effect on market response. This condition is likely due to investors’ greater focus on financial fundamentals and macroeconomic conditions, while ESG disclosure is still perceived as a regulatory formality with limited credibility and relevance in investment decision-making.

References

I. W. Widnyana and G. O. Warmana, “Indonesia Composite Index and Market Reaction in Indonesia Due to Covid-19 Pandemic,” Asia Pacific Manag. Bus. Appl., vol. 010, no. 03, pp. 413–424, 2022, doi: 10.21776/ub.apmba.2022.010.03.12.

I. K. J. Stiawan, “The Effect Of Audit Opinion On Market Reaction: Grc As Moderator,” Int. J. Accounting, Manag. Econ. Soc. Sci., vol. 3, no. 6, pp. 2004–2015, 2025

I. K. J. Stiawan, N. K. Sinarwati, and L. S. Musmini, “The Role of Audit Opinion as a Moderator of the Influence of ESG and GRC Disclosure on Market Reaction,” Dinasti Int. J. Econ. Financ. Account., vol. 6, no. 3, pp. 1859–1869, 2025

P. Yuana and Y. A. Prasetya, “Capital Market Reaction to News and Policies Regarding Covid- 19 in Indonesia : Event Study Method,” J. Account. Financ. Manag., vol. 6, no. 3, pp. 1666–1673, 2025.

K. K. Aditha and I. M. P. Adiputra, “Analisis Perbedaan Abnormal Return , Trading Volume Activity , dan Security Return Variability Pada Perusahaan LQ 45 Pra dan Pasca Pengumuman Kabinet Indonesia Maju Periode 2019-2024,” JIMAT (Jurnal Ilm. Mhs. Akuntansi) Univ. Pendidik. Ganesha, vol. 11, no. 2, pp. 299–309, 2020

P. . Kurniawan and B. Basuki, “Sustainability Accounting as A Business Strategy for Small and Medium Enterprises: The Theoretical Arguments,” Qual. - Access to Success, vol. 25, no. 203, pp. 102–109, 2024.

E. Ersoy, B. Swiecka, S. Grima, E. Özen, and I. Romanova, “The Impact of ESG Scores on Bank Market Value? Evidence from the U.S. Banking Industry,” Sustain., vol. 14, no. 15, pp. 1–14, 2022, doi: 10.3390/su14159527.

A. J. Simamora, “Environmental, Social, and Governance (ESG) Risk towards Stock Market Reaction in Indonesia,” Int. J. Financ. Syst., vol. 3, no. 1, pp. 1–20, 2025, doi: 10.61459/ijfs.v3i1.45.

D. N. S. Werastuti, “Sustainability Performance Determinants With Investment Opportunity As Moderation,” Int. J. Environ. Sustain. Soc. Sci., vol. 2, no. 3, pp. 231–238, 2022, doi: 10.38142/ijesss.v2i3.127.

A. F. Adenina and Sudrajat, “Analisis Pengaruh Environmental, Social, Governance (ESG) Disclosure dan Research & Development Intensity Terhadap Financial Performance Pada Perusahaan Manufaktur yang Terdaftar di BEI,” MSEJ Manag. Stud. Entrep. J., vol. 5, no. 2, pp. 9256–9269, 2024

A. Agapova, T. King, and M. Ranta, “Navigating transparency: The interplay of ESG disclosure and voluntary earnings guidance,” Int. Rev. Financ. Anal., vol. 97, no. November 2024, p. 103813, 2025, doi: 10.1016/j.irfa.2024.103813.

R. Amalia and I. W. Kusuma, “Pengaruh Kinerja Lingkungan, Sosial, Dan Tata Kelola Terhadap Kinerja Pasar Dengan Kontroversi Esg Sebagai Variabel Pemoderasi,” ABIS Account. Bus. Inf. Syst. J., vol. 11, no. 2, 2023, doi: 10.22146/abis.v11i2.84771.

P. Krueger, Z. Sautner, D. Y. Tang, and R. Zhong, “The Effects of Mandatory ESG Disclosure Around the World,” J. Account. Res., vol. 62, no. 5, pp. 1795–1847, 2024, doi: 10.1111/1475-679X.12548.

F. G. Admiral and S. Raharja, “Pengaruh Pengungkapan ESG dan Audit Report Lag Terhadap Market Reaction,” Diponegoro J. Account., vol. 12, no. 4, pp. 1–10, 2023

W. M. W. Mohammad and S. Wasiuzzaman, “Environmental, Social and Governance (ESG) disclosure, competitive advantage and performance of firms in Malaysia,” Clean. Environ. Syst., vol. 2, no. February, p. 100015, 2021, doi: 10.1016/j.cesys.2021.100015.

X. Yu and K. Xiao, “Does ESG Performance Affect Firm Value? Evidence from a New ESG-Scoring Approach for Chinese Enterprises,” Sustain., vol. 14, no. 24, pp. 1–40, 2022, doi: 10.3390/su142416940.

B. M. Zahroh and Hersugondo, “Pengaruhkinerja Environmental, Social,Dan Governanceterhadap Kinerja Keuangan Dengan Kekuatan Ceo Sebagai Variabel Moderasi(Studi Pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek,” Diponegoro J. Manag., vol. 10, no. 3, pp. 1–15, 2021.

M. N. Safriani and D. C. Utomo, “Pengaruh Environmental, Social, Governance (Esg) Disclosure Terhadap Kinerja Perusahaan,” Diponegoro J. Account., vol. 9, no. 3, 2020.

K. Hutama and V. Budhidharma, “Analisis Pengaruh Environmental and Sustainable Policies Terhadap Abnormal Return Dan Volatilitas Return Saham Selama Pandemi Covid-19,” J. Finans. dan Perbank., vol. 1, no. 2, pp. 124–149, 2022.

I. N. S. Y. Semadhi and P. R. Masdiantini, “Pengaruh Pengungkapan Environmental, Social, Dan Governance Terhadap Reaksi Pasar,” JIMAT (Jurnal Ilm. Mhs. Akuntansi) Undiksha, vol. 15, no. 04, pp. 1003–1014, 2024, doi: 10.23887/jimat.v15i04.78335.

G. Ningwati, R. Septiyanti, and N. Desriani, “Pengaruh Environment, Social and Governance Disclosure terhadap Kinerja Perusahaan,” Goodwood Akunt. dan Audit. Reviu, vol. 1, no. 1, pp. 67–78, 2022, doi: 10.35912/gaar.v1i1.1500