ESG DISCLOSURE AND INVESTMENT DECISIONS OF STATE-OWNED ENTERPRISES (SOEs) LISTED IN INDONESIA STOCK EXCHANGE

Abstract

This study aimed to investigate the influence of Environmental, Social, and Governance (ESG) disclosure on investment in state-owned enterprises (SOEs) listed on the Indonesia Stock Exchange (IDX). The independent variables consisted of the ESG disclosure, quantified using the ESG Score and Financial Reporting Quality (FRQ), which proxied with earning management. The dependent variable is measured by total investment. We control the estimation model by firm size, age, and leverage. The study was conducted using quantitative methods. Furthermore, the population included state-owned enterprises that were listed on the Indonesia Stock Exchange (IDX). The data collection technique employed purposive sampling, with a total of 104 firm years of the sample meeting the specified criteria. The sample was selected for a duration of 7 years. Moreover, the data included corporations' annual and sustainability reports from 2016 to 2022, mostly retrieved from the ESGI dataset. In addition, the data analysis technique employed was panel regression using Eviews 12. The data analysis involved doing conventional assumption tests, including normality and multicollinearity. The findings indicated that neither FRQ nor ESG Disclosure significantly influences investment. We argue that state-owned enterprise business strategy, including investment, depends on government assignment and national policy.