Environmental, social and governance (ESG) disclosure and cost of equity: the moderating effects of board structures
One of the main issues in the field of sustainable finance is environmental, social, and governance (ESG). This study examines how ESG disclosure impacts the cost of equity. Additionally, it explores how the structure of the board of commissioners moderates this relationship. The structure of the bo...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2024-12-01
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| Series: | Cogent Business & Management |
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| Online Access: | https://www.tandfonline.com/doi/10.1080/23311975.2024.2429794 |
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| _version_ | 1846161354889625600 |
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| author | Rosmiati Jafar Basuki Basuki Windijarto Windijarto Rahmat Setiawan Zulnaidi Yaacob |
| author_facet | Rosmiati Jafar Basuki Basuki Windijarto Windijarto Rahmat Setiawan Zulnaidi Yaacob |
| author_sort | Rosmiati Jafar |
| collection | DOAJ |
| description | One of the main issues in the field of sustainable finance is environmental, social, and governance (ESG). This study examines how ESG disclosure impacts the cost of equity. Additionally, it explores how the structure of the board of commissioners moderates this relationship. The structure of the board of commissioners is represented by three key factors: the proportion of independent commissioners, the board of commissioners’s size, and the proportion of female commissioners. The sample used in this research was 215 non-financial companies that published sustainability reports (SR) and were listed on the Indonesia Stock Exchange (BEI) with research years 2017, 2021, and 2022 with a total of 309 observations. The research employed Ordinary Least Square (OLS) and Moderated Regression Analysis (MRA) to test the hypotheses. The findings indicate that ESG disclosure negatively impacts the cost of equity. Additionally, the study reveals that a higher proportion of independent commissioners, a larger board of commissioners’s size, and a greater proportion of female commissioners mitigate company risk. These factors weaken the negative effect of ESG disclosure on the cost of equity by substituting its risk-reducing benefits. The results of these findings were further validated through additional moderating variable analysis techniques. Specifically, subgroup analysis and regression models incorporating a one-year lag for the ESG variables were employed, yielding consistent results. |
| format | Article |
| id | doaj-art-15e76e93450a4596a7e7b09e6e8193ec |
| institution | Kabale University |
| issn | 2331-1975 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Business & Management |
| spelling | doaj-art-15e76e93450a4596a7e7b09e6e8193ec2024-11-21T08:57:31ZengTaylor & Francis GroupCogent Business & Management2331-19752024-12-0111110.1080/23311975.2024.2429794Environmental, social and governance (ESG) disclosure and cost of equity: the moderating effects of board structuresRosmiati Jafar0Basuki Basuki1Windijarto Windijarto2Rahmat Setiawan3Zulnaidi Yaacob4Department of Management, Universitas Airlangga, Surabaya, IndonesiaDepartment of Accounting, Universitas Airlangga, Surabaya, IndonesiaDepartment of Management, Universitas Airlangga, Surabaya, IndonesiaDepartment of Management, Universitas Airlangga, Surabaya, IndonesiaManagement Section, School of Distance Education, Universiti Sains Malaysia, MalaysiaOne of the main issues in the field of sustainable finance is environmental, social, and governance (ESG). This study examines how ESG disclosure impacts the cost of equity. Additionally, it explores how the structure of the board of commissioners moderates this relationship. The structure of the board of commissioners is represented by three key factors: the proportion of independent commissioners, the board of commissioners’s size, and the proportion of female commissioners. The sample used in this research was 215 non-financial companies that published sustainability reports (SR) and were listed on the Indonesia Stock Exchange (BEI) with research years 2017, 2021, and 2022 with a total of 309 observations. The research employed Ordinary Least Square (OLS) and Moderated Regression Analysis (MRA) to test the hypotheses. The findings indicate that ESG disclosure negatively impacts the cost of equity. Additionally, the study reveals that a higher proportion of independent commissioners, a larger board of commissioners’s size, and a greater proportion of female commissioners mitigate company risk. These factors weaken the negative effect of ESG disclosure on the cost of equity by substituting its risk-reducing benefits. The results of these findings were further validated through additional moderating variable analysis techniques. Specifically, subgroup analysis and regression models incorporating a one-year lag for the ESG variables were employed, yielding consistent results.https://www.tandfonline.com/doi/10.1080/23311975.2024.2429794ESG disclosurecost of equityboard of commissionersboard structuresindependent commissionersboard of commissioners’ size |
| spellingShingle | Rosmiati Jafar Basuki Basuki Windijarto Windijarto Rahmat Setiawan Zulnaidi Yaacob Environmental, social and governance (ESG) disclosure and cost of equity: the moderating effects of board structures Cogent Business & Management ESG disclosure cost of equity board of commissioners board structures independent commissioners board of commissioners’ size |
| title | Environmental, social and governance (ESG) disclosure and cost of equity: the moderating effects of board structures |
| title_full | Environmental, social and governance (ESG) disclosure and cost of equity: the moderating effects of board structures |
| title_fullStr | Environmental, social and governance (ESG) disclosure and cost of equity: the moderating effects of board structures |
| title_full_unstemmed | Environmental, social and governance (ESG) disclosure and cost of equity: the moderating effects of board structures |
| title_short | Environmental, social and governance (ESG) disclosure and cost of equity: the moderating effects of board structures |
| title_sort | environmental social and governance esg disclosure and cost of equity the moderating effects of board structures |
| topic | ESG disclosure cost of equity board of commissioners board structures independent commissioners board of commissioners’ size |
| url | https://www.tandfonline.com/doi/10.1080/23311975.2024.2429794 |
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