From Sustainability to Profitability: How ESG-Driven Business Models Influence Financial Performance through Report Disclosures
Keywords:
ESG, Financial Performance, Profitability, Sustainability ReportAbstract
This study aims to analyze the effect of sustainability report disclosures, encompassing the economic, environmental, and social dimensions, on the profitability of manufacturing companies listed on the Indonesia Stock Exchange (IDX). The research employs secondary data obtained from sustainability reports and financial statements for the 2019–2021 period, with a sample of 16 companies selected through purposive sampling. The analysis method utilizes panel data regression with the assistance of EViews, involving model selection tests (Chow, Hausman, and Lagrange Multiplier), model estimation, and hypothesis testing. The results indicate that economic disclosure has a negative and significant effect on profitability, environmental disclosure has no significant effect, while social disclosure has a positive and significant effect on profitability. These findings suggest that the social dimension serves as the main driver of profitability in Indonesia’s manufacturing sector, whereas economic and environmental aspects require more effective disclosure strategies to generate long-term added value. This study reinforces stakeholder theory, legitimacy theory, and signaling theory within the context of emerging markets and provides practical implications for companies and regulators to enhance the quality of sustainability disclosures.
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