Do ESG Disclosure, Eco-Efficiency, and Green Innovation Enhance Firm Value Evidence from Indonesia’s Energy Sector

Abstract

Purpose: This study examines the effect of ESG disclosure, eco-efficiency, and green innovation on firm value, with company size as a moderator in the short and long terms, focusing on the energy sector due to environmental pressures and firm value volatility. Research Methodology: A quantitative panel data approach is used. From 83 IDX-listed energy firms, 32 were selected using purposive sampling, resulting in 96 firm-year observations (2021–2023). The analysis applies a Panel Vector Error Correction Model (PVECM). Results: The findings indicate that ESG disclosure has a positive and significant impact on firm value in the long term, with firm size strengthening this relationship. In contrast, eco-efficiency and green innovation have a significant negative impact on firm value, whereas their short-term effects are insignificant. Firm size did not moderate the effects of eco-efficiency and green innovation. Conclusions: Green strategies have varying impacts on firm values. ESG disclosure consistently enhances value, whereas eco-efficiency and green innovation require more time and greater organizational capacity to produce visible results. Company size strengthens the impact of ESG but not that of other green strategies. Limitations: This study is limited to a three-year period and focuses on energy firms listed on the IDX, which may limit generalizability across sectors and longer time horizons. Contributions: This study contributes to green strategy theory and provides practical insights for energy companies to enhance ESG implementation while informing policymakers and future research.