Shaping performance in downturns: the role of ESG and Shariah compliance in Indonesia
This study investigates the impact of corporate ethics, measured by ESG scores and Shariah compliance, on stock performance during crises. Using Indonesia’s COVID-19 pandemic as a case study, daily stock data from Q3 2019 to Q2 2020 is analyzed for firms in the IDX KOMPAS-100 index. Ethical stocks a...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2025-12-01
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| Series: | Cogent Business & Management |
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| Online Access: | https://www.tandfonline.com/doi/10.1080/23311975.2025.2537798 |
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| author | Mohamad Ikhsan Modjo Yanthi Hutagaol-Martowidjojo Madelaine Victoria |
| author_facet | Mohamad Ikhsan Modjo Yanthi Hutagaol-Martowidjojo Madelaine Victoria |
| author_sort | Mohamad Ikhsan Modjo |
| collection | DOAJ |
| description | This study investigates the impact of corporate ethics, measured by ESG scores and Shariah compliance, on stock performance during crises. Using Indonesia’s COVID-19 pandemic as a case study, daily stock data from Q3 2019 to Q2 2020 is analyzed for firms in the IDX KOMPAS-100 index. Ethical stocks are defined as those with high ESG scores and Shariah compliance, represented as dummy variables. Cumulative abnormal return (CAR) serves as the primary performance measure, controlling for firm characteristics. The research findings indicate that ethical stocks tend to outperform non-ethical ones during crises, suggesting a potential investor preference for ethical practices. Preliminary results show that high ESG scores and Shariah compliance positively affect CAR, with Shariah compliance potentially moderating the ESG-CAR relationship. A triple-difference test is employed to assess the combined impact of high ESG scores and Shariah compliance. By examining both pre- and post-COVID-19 periods, this paper captures immediate market reactions while considering potential lagged effects. This research contributes to the ongoing debate on ESG, Shariah compliance, and stock performance during crises, offering insights for investors seeking ethical investment opportunities in Indonesia’s growing Shariah-compliant stock market. |
| format | Article |
| id | doaj-art-e0fbdadad5794bdd9bb01bb173296ef2 |
| institution | DOAJ |
| issn | 2331-1975 |
| language | English |
| publishDate | 2025-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Business & Management |
| spelling | doaj-art-e0fbdadad5794bdd9bb01bb173296ef22025-08-20T02:44:59ZengTaylor & Francis GroupCogent Business & Management2331-19752025-12-0112110.1080/23311975.2025.2537798Shaping performance in downturns: the role of ESG and Shariah compliance in IndonesiaMohamad Ikhsan Modjo0Yanthi Hutagaol-Martowidjojo1Madelaine Victoria2Finance International Program School of Accounting, BINUS University, West Jakarta, IndonesiaFinance International Program School of Accounting, BINUS University, West Jakarta, IndonesiaFinance International Program School of Accounting, BINUS University, West Jakarta, IndonesiaThis study investigates the impact of corporate ethics, measured by ESG scores and Shariah compliance, on stock performance during crises. Using Indonesia’s COVID-19 pandemic as a case study, daily stock data from Q3 2019 to Q2 2020 is analyzed for firms in the IDX KOMPAS-100 index. Ethical stocks are defined as those with high ESG scores and Shariah compliance, represented as dummy variables. Cumulative abnormal return (CAR) serves as the primary performance measure, controlling for firm characteristics. The research findings indicate that ethical stocks tend to outperform non-ethical ones during crises, suggesting a potential investor preference for ethical practices. Preliminary results show that high ESG scores and Shariah compliance positively affect CAR, with Shariah compliance potentially moderating the ESG-CAR relationship. A triple-difference test is employed to assess the combined impact of high ESG scores and Shariah compliance. By examining both pre- and post-COVID-19 periods, this paper captures immediate market reactions while considering potential lagged effects. This research contributes to the ongoing debate on ESG, Shariah compliance, and stock performance during crises, offering insights for investors seeking ethical investment opportunities in Indonesia’s growing Shariah-compliant stock market.https://www.tandfonline.com/doi/10.1080/23311975.2025.2537798ESGshariah stocksstock performanceethical investingemerging marketsIndonesia |
| spellingShingle | Mohamad Ikhsan Modjo Yanthi Hutagaol-Martowidjojo Madelaine Victoria Shaping performance in downturns: the role of ESG and Shariah compliance in Indonesia Cogent Business & Management ESG shariah stocks stock performance ethical investing emerging markets Indonesia |
| title | Shaping performance in downturns: the role of ESG and Shariah compliance in Indonesia |
| title_full | Shaping performance in downturns: the role of ESG and Shariah compliance in Indonesia |
| title_fullStr | Shaping performance in downturns: the role of ESG and Shariah compliance in Indonesia |
| title_full_unstemmed | Shaping performance in downturns: the role of ESG and Shariah compliance in Indonesia |
| title_short | Shaping performance in downturns: the role of ESG and Shariah compliance in Indonesia |
| title_sort | shaping performance in downturns the role of esg and shariah compliance in indonesia |
| topic | ESG shariah stocks stock performance ethical investing emerging markets Indonesia |
| url | https://www.tandfonline.com/doi/10.1080/23311975.2025.2537798 |
| work_keys_str_mv | AT mohamadikhsanmodjo shapingperformanceindownturnstheroleofesgandshariahcomplianceinindonesia AT yanthihutagaolmartowidjojo shapingperformanceindownturnstheroleofesgandshariahcomplianceinindonesia AT madelainevictoria shapingperformanceindownturnstheroleofesgandshariahcomplianceinindonesia |