ESG Disclosure, Political Connection, And Firm Value: An Empirical Analysis

Abstract

This study aims to analyze the effect of ESG (Environment, Social, Governance) disclosure and political connections on firm value. The object of this study is companies listed on the Indonesia Stock Exchange and included in the Liquid 45 Index (LQ45) list in 2022-2024. ESG disclosure is measured based on the Global Reporting Initiative Standard checklist, while political connections are measured by the ratio between the members of the board of commissioners and directors who are politically connected to the total members of the board of commissioners and directors in the company. Meanwhile, firm value is measured using the Tobin’s Q calculation method. This study uses a purposive sampling method with a sample of 39 companies. The analysis was conducted using panel data regression. The results of the study show that ESG disclosure and political connections have no effect on firm value, which indicates that sustainability signals and political affiliations have not been fully appreciated by the market as drivers of fundamental company value in the LQ45 index.