The use of Environmental, Social, and Governance (ESG) scores has been gaining a lot of attention in both the academic research and the industry practices. A voluminous study has examined the effects of ESG scores on the operating performances and market performances of the firm and found mix results. Although the dominant literature provided the evidence of positive impact of ESG scores on firm’s performance, most of the studies have focused only on developed countries, hence still there is a lack of empirical findings in developing countries. The aim the paper was to provide preliminary analysis on the value relevance of ESG disclosure in Indonesian listed banks. The study observed a sample of five listed banks in the period 2009-2019. Using multiple regression analyses, the study finds that ESG disclosure has a value relevance. The finding is robust, even after controlling for internal and market performance of the bank. Further analysis shows that the social component of ESG is the driver of the value relevance of ESG in banks. The study argues that the focus of Indonesian banks’ CSR activities is on the society, therefore the social aspects of ESG affect the market value of the banks.

Link: The Value Relevance of ESG Disclosure in Indonesian Listed Bank: A Preliminary Study