Financial Performance from an ESG Perspective: Insights from Indonesia's Transportation Sector

Abstract

The purpose of this study is to analyze the effect of Environmental, Social, and Governance (ESG) disclosure and firm size on financial performance, with a focus on the transportation sector during 2021–2023. A quantitative approach was employed, using panel data regression as the analytical method. The sample was selected through purposive sampling, involving 23 companies, resulting in 69 observations. The regression test results indicate that the studied factors influence financial performance by 67.71%, while the remaining 32.29% are affected by other variables that are not examined in this study. The F-test showed a simultaneously significant effect with a probability value of < 0.05. The T-test results reveal that ESG disclosure does not significantly affect financial performance, as each probability value is > 0.05. By contrast, firm size significantly influenced financial performance, with a probability value of 0.0001 < 0.05. These findings provide insights for companies to develop ESG disclosure policies as a strategic step to improve financial performance, especially considering that ESG factors currently have no significant impact. However, firm size plays a role in enhancing financial performance, suggesting that companies should consider optimally managing their resources.