Do ownership structure and board capital matter for ESG performance and firm value? ESG certification as a moderator

Abstract

This study investigates how ownership structure and board capital influence environmental, social, and governance (ESG) performance and firm value in an emerging market context. Unlike prior ESG research predominantly focused on developed economies (Bagh et al., 2024; Saha & Khan, 2024; Alaamri et al., 2024), this study additionally examines the mediating role of ESG performance and the moderating role of ESG certification among Indonesia Stock Exchange (IDX) listed firms over 2018–2023. Using partial least squares structural equation modeling, results show that ESG performance significantly and positively drives firm value, an effect further amplified by formal ESG certification. Regarding ownership, concentrated family and managerial shareholding is associated with weaker ESG outcomes, whereas board capital demonstrates a positive yet statistically insignificant direct effect on firm value. ESG performance does not significantly mediate the relationship between governance variables and market valuation. Theoretically, this study contributes by integrating ownership structure, board capital, and ESG certification into a unified framework suited to a developing-country context where ESG regulation continues to evolve. Practically, the findings highlight how ownership concentration and limited board resources may constrain sustainability performance, underscoring the importance of governance reform, enhanced disclosure, and third-party certification in strengthening ESG credibility and investor confidence.