ESG Pillar Score and Corporate Financial Performance: The Roles of Growth Opportunity and Firm Age As Control Variables

Indonesian Journal of Taxation and Accounting  ·  2026

Annisa Pujijayanti; Dwi Urip Wardoyo;

HIGHLIGHT

Purpose – This study examines whether ESG pillar scores are associated with corporate financial performance, measured by return on assets, among a purposively selected subsample of 13 Kompas 100 Index companies with complete LSEG Refinitiv ESG coverage during 2020-2024, responding to unsettled evidence on ESG financial materiality in the Indonesian large-cap market following mandatory sustainability reporting under OJK Regulation No. 51/POJK.03/2017.

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ABSTRACT

Purpose – This study examines whether ESG pillar scores are associated with corporate financial performance, measured by return on assets, among a purposively selected subsample of 13 Kompas 100 Index companies with complete LSEG Refinitiv ESG coverage during 2020-2024, responding to unsettled evidence on ESG financial materiality in the Indonesian large-cap market following mandatory sustainability reporting under OJK Regulation No. 51/POJK.03/2017.Methods – A quantitative panel design was applied to 13 purposively selected companies, producing 65 firm year observations. ESG pillar scores were obtained from LSEG Refinitiv, while ROA, growth opportunity, and firm age were collected from IDX-published reports. The Random Effect Model was selected following the Chow, Hausman, and Lagrange Multiplier Tests, supported by multicollinearity, heteroscedasticity, and autocorrelation diagnostics.Findings – The panel regression model is statistically significant (F-prob. = 0.033; Adjusted R² = 0.112), although this overall significance reflects the contribution of all variables including Firm Age rather than ESG pillars alone. None of the Environmental, Social, or Governance pillars exert a significant effect on ROA at the 5% level, although Governance shows a marginally significant negative association (β = -0.000350; p = 0.056). Firm Age shows a significant positive association (β = 0.001685; p = 0.036), whereas Growth Opportunity is insignificant.Research Implications – Managers and investors should interpret individual ESG pillar scores cautiously rather than as reliable short term profitability signals, and consider firm maturity a more consistent indicator of asset returns.Originality – This study offers pillar level ESG evidence from Kompas 100 firms in a post POJK setting, showing that once an appropriate estimator is applied, firm age rather than any individual ESG pillar shows the strongest association with ROA as a predictor within the model.

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