Cost of Debt, Managerial Overconfidence, Institutional Shareholding, and ESG Performance: Evidence from the Indonesia Stock Exchange

Abstract

This study examines the influence of the cost of debt, managerial overconfidence, and institutional shareholding on Environmental, Social, and Governance (ESG) performance among firms listed on the Indonesia Stock Exchange (IDX). Using a quantitative approach, the study analyzes 85 firms with available ESG scores in 2024. Multiple linear regression analysis is employed to test both partial and simultaneous effects. The findings indicate that financing conditions, behavioral biases, and ownership structures collectively shape corporate sustainability outcomes. Specifically, the cost of debt reflects financial constraints that influence ESG investments, while managerial overconfidence exhibits a context-dependent effect. Institutional shareholding plays a significant governance role by enhancing monitoring and encouraging ESG engagement. Overall, this study contributes to the limited empirical literature on ESG determinants in emerging markets, particularly Indonesia, and provides insights for investors, regulators, and corporate decision-makers.