Voluntary Adoption of Integrated Reporting and Firm Valuation: The Moderating Effect of ESG Performance
DOI:
https://doi.org/10.9744/jak.26.2.131-141Keywords:
Integrated reporting, voluntary adoption, ESG performance, firm valuationAbstract
This study addresses a research gap by examining the impact of the voluntary adoption of integrated reporting on company value (TOBINSQ) for companies listed on the Indonesian Stock Exchange. A purposive sampling method was used to select the sample, which included companies with available ESG scores from 2018 to 2022 and accessible annual reports for the same period. The final sample consists of 83 companies, totalling 299 observations. Multiple regression analysis was employed to assess the direct effects of integrated reporting and the moderating role of ESG performance (ESGSCORE) on company value. Our findings reveal that integrated reporting positively influences company value and that ESG performance significantly moderates this relationship, enhancing the benefits of integrated reporting. The results underscore the importance for companies to adopt integrated reporting and enhance ESG performance to improve market valuation. The study also suggests that promoting integrated reporting and ESG disclosures can enhance market transparency and accountability. Future research should focus on longitudinal studies, sector-specific analyses, geographical variations, and the role of digital technologies in integrated reporting and ESG performance to provide deeper insights and practical recommendations.
References
Abogazia, A. H., Hashim, H. A., Salleh, Z., & Ettish, A. A. (2022). The moderating effect of external financing on the relationship between integrated reporting and firm value in Egypt. Journal of Financial Reporting and Accounting, 22(5), 1380-1409. https://doi.org/10.1108/JFRA-05-2022-0195
Ademi, B., & Klungseth, N. J. (2022). Does it pay to deliver superior ESG performance? Evidence from US S&P 500 companies. Journal of Global Responsibility, 13(4), 421–449. https://doi.org/10.1108/JGR-01-2022-0006
Akpan, D. C., Charles, U. J., & Robinson, A. G. (2022). Effect of integrated reporting on firm’s value: The Nigeria manufacturing sector experience. European Journal of Accounting, Auditing and Finance Research, 10(8), 10–26. https://doi.org/10.37745/ejaafr.2013/vol10n81026
AlHares, A. (2020). Corporate governance mechanisms and R&D intensity in OECD courtiers. Corporate Governance: The International Journal of Business in Society, 20(5), 863–885. https://doi.org/10.1108/CG-11-2019-0349
Almaqtari, F. A., Elsheikh, T., Tawfik, O. I., & Youssef, M. A. E.-A. (2022). Exploring the impact of sustainability, board characteristics, and firm-specifics on firm value: A comparative study of the United Kingdom and Turkey. Sustainability, 14(24), 16395. https://doi.org/10.3390/su142416395
Aydoğmuş, M., Gülay, G., & Ergun, K. (2022). Impact of ESG performance on firm value and profitability. Borsa Istanbul Review, 22(2), S119–S127. https://doi.org/10.1016/j.bir.2022.11.006
Baboukardos, D., & Rimmel, G. (2016). Value relevance of accounting information under an integrated reporting approach: A research note. Journal of Accounting and Public Policy, 35(4), 437–452. https://doi.org/10.1016/j.jaccpubpol.2016.04.004
Carmo, C., Correia, I., Leite, J., & Carvalho, A. (2023). Towards the voluntary adoption of integrated reporting: Drivers, barriers, and practices. Administrative Sciences, 13(6), 148. https://doi.org/10.3390/admsci13060148
Chang, Y.-J., & Lee, B.-H. (2022). The impact of ESG activities on firm value: Multi-level analysis of industrial characteristics. Sustainability, 14(21), 14444. https://doi.org/10.3390/su142114444
Cheng, R., Kim, H., & Ryu, D. (2023). ESG performance and firm value in the Chinese market. Investment Analysts Journal, 53(1), 1–15. https://doi.org/10.1080/10293523.2023.2218124
Ching, H. Y., & Gerab, F. (2017). Sustainability reports in Brazil through the lens of signaling, legitimacy and stakeholder theories. Social Responsibility Journal, 13(1), 95–110. https://doi.org/10.1108/SRJ-10-2015-0147
Chouaibi, S., Chouaibi, Y., & Zouari, G. (2022). Board characteristics and integrated reporting quality: Evidence from ESG European companies. EuroMed Journal of Business, 17(4), 425–447. https://doi.org/10.1108/EMJB-11-2020-0121
Cooray, T., Senaratne, S., Gunarathne, A. D. N., Herath, R., & Samudrage, D. (2020). Does integrated reporting enhance the value relevance of information? Evidence from Sri Lanka. Sustainability, 12(19), 8183. https://doi.org/10.3390/su12198183
Cosma, S., Soana, M. G., & Venturelli, A. (2018). Does the market reward integrated report quality? African Journal of Business Management, 12(4), 78–91. https://doi.org/10.5897/AJBM2017.8469
Dang, T. D., & Do, T. V. T. (2021). Does capital structure affect firm value in Vietnam? Investment Management and Financial Innovations, 18(1), 33–41. https://doi.org/10.21511/imfi.18(1).2021.03
De Villiers, C., Rinaldi, L., & Unerman, J. (2014). Integrated reporting: Insights, gaps and an agenda for future research. Accounting, Auditing & Accountability Journal, 27(7), 1042–1067. https://doi.org/10.1108/AAAJ-06-2014-1736
Deloitte. (2023). Commentary on developments concerning integrated reporting. https://www2.deloitte.com/
Diantimala, Y., Syahnur, S., Mulyany, R., & Faisal, F. (2021). Firm size sensitivity on the correlation between financing choice and firm value. Cogent Business & Management, 8(1), 1926404. https://doi.org/10.1080/23311975.2021.1926404
Eccles, R. G., & Krzus, M. P. (2010). One report: Integrated reporting for a sustainable strategy. USA, Hoboken: John Wiley & Sons, 26(2), 28-33. https://doi.org/10.1002/9781119199960.ch1
El-Deeb, M. S. (2019). The impact of integrated reporting on firm value and performance: Evidence from Egypt. Alexandria Journal of Accounting Research, 3(2), 1–50. https://doi.org/10.21608/aljalexu.2019.56831
Esch, M., Schnellbächer, B., & Wald, A. (2019). Does integrated reporting information influence internal decision making? An experimental study of investment behavior. Business Strategy and the Environment, 28(4), 599–610. https://doi.org/10.1002/bse.2267
Fatemi, A., Glaum, M., & Kaiser, S. (2017). ESG performance and firm value: The moderating role of disclosure. Global Finance Journal, 38, 45–64. https://doi.org/10.1016/j.gfj.2017.03.001
Fayad, A. A. S., Ariff, A. H. B. M., & Ooi, S. C. (2022). Does board characteristics influence integrated reporting quality? Empirical evidence from an emerging market. Cogent Economics & Finance, 10(1), 2140907.
https://doi.org/10.1080/23322039.2022.2140907
García‐Sánchez, I., & Noguera‐Gámez, L. (2017). Integrated reporting and stakeholder engagement: The effect on information asymmetry. Corporate Social Responsibility and Environmental Management, 24(5), 395–413. https://doi.org/10.1002/csr.1415
Giannopoulos, G., Fagernes, R. V. K., Elmarzouky, M., & Hossain, K. A. B. M. A. (2022). The ESG disclosure and the financial performance of Norwegian listed firms. Journal of Risk and Financial Management, 15(6), 237. https://doi.org/10.3390/jrfm15060237
Grassmann, M. (2021). The relationship between corporate social responsibility expenditures and firm value: The moderating role of integrated reporting. Journal of Cleaner Production, 285, 124840. https://doi.org/10.1016/j.jclepro.2020.124840
Gupta, S., & Bhalla, L. (2022). Impact of integrated reporting on firm value: An Indian perspective. International Journal of Sustainable Society, 14(4), 323–334. https://doi.org/10.1504/IJSSOC.2022.127983
Halid, S., Rahman, R. A., Mahmud, R., Mansor, N., & Wahab, R. A. (2023). A literature review on ESG score and its impact on firm performance. International Journal of Academic Research in Accounting, Finance and Management Sciences, 13(1), 272-282. https://doi.org/10.6007/IJARAFMS/v13-i1/15101
Ibrahim, U. A., & Isiaka, A. (2020). Effect of financial leverage on firm value: Evidence from selected firms quoted on the Nigerian Stock Exchange. European Journal of Business and Management, 12(3), 124-135. https://doi.org/10.7176/EJBM/12-3-16
Islam, Md. S. (2021). Investigating the relationship between integrated reporting and firm performance in a voluntary disclosure regime: Insights from Bangladesh. Asian Journal of Accounting Research, 6(2), 228–245. https://doi.org/10.1108/AJAR-06-2020-0039
Jihadi, M., Vilantika, E., Hashemi, S. M., Arifin, Z., Bachtiar, Y., & Sholichah, F. (2021). The effect of liquidity, leverage, and profitability on firm value: Empirical evidence from Indonesia. The Journal of Asian Finance, Economics and Business, 8(3), 423–431. https://doi.org/10.13106/JAFEB.2021.VOL8.NO3.0423
Jin, X., & Lei, X. (2023). A study on the mechanism of ESG’s impact on corporate value under the concept of sustainable development. Sustainability, 15(11). https://doi.org/10.3390/su15118442
Juniarti, J., Theja, D. D., Tenoyo, N., & Darmasaputra, A. (2023). Does the market respond differently to the timing of the announcement of corporate actions? Cogent Economics & Finance, 11(1). https://doi.org/10.1080/23322039.2023.2203986
Komar, S., Ahmar, N., & Darminto, D. P. (2020). Integrated reporting disclosure, business complexity and firm value. Jurnal Riset Akuntansi Kontemporer, 12(1), 1–6. https://doi.org/10.23969/jrak.v12i1.2342
Kurniawati, D. (2018). The effect of implementation of integrated reporting on company value. Journal of Economics, Finance And Management Studies, 5(11), 3146-3151. https://doi.org/10.47191/jefms/v5-i11-03
Kuruppu, S. C., Milne, M. J., & Tilt, C. A. (2019). Gaining, maintaining and repairing organisational legitimacy: When to report and when not to report. Accounting, Auditing & Accountability Journal, 32(7), 2062–2087. https://doi.org/10.1108/AAAJ-03-2013-1282
Lee, K.-W., & Yeo, G. H.-H. (2016). The association between integrated reporting and firm valuation. Review of Quantitative Finance and Accounting, 47(4), 1221–1250. https://doi.org/10.1007/s11156-015-0536-y
Lokuwaduge, C. S. D. S., & Heenetigala, K. (2017). Integrating environmental, social and governance (ESG) disclosure for a sustainable development: An Australian study. Business Strategy and the Environment, 26(4), 438–450. https://doi.org/10.1002/bse.1927
Lubis, M. F. F., & Rokhim, R. (2021). The effect of environmental, social, and governance (ESG) disclosure and competitive advantage on companies’ performance as an implementation of sustainable economic growth in Indonesia for period of 2015-2019. IOP Conference Series: Earth and Environmental Science, 940(1), 012059. https://doi.org/10.1088/1755-1315/940/1/012059
Lumapow, L. S., & Tumiwa, R. A. F. (2017). The effect of dividend policy, firm size, and productivity to the firm value. Research Journal of Finance and Accounting, 8(22), 20–24.
Makri, M., & Kabra, K. C. (2023). Integrated reporting and firm value in an emerging economy: The moderating role of firm size. Indonesian Journal of Sustainability Accounting and Management, 7(1), 235-247. https://doi.org/10.28992/ijsam.v7i1.697
Maryana, M., & Carolina, Y. (2021). The impact of firm size, leverage, firm age, media visibility and profitability on sustainability report disclosure. Jurnal Keuangan Dan Perbankan, 25(1), 36–47. https://doi.org/10.26905/jkdp.v25i1.4941
Meng, T., Yahya, M. H. D. H., Ashhari, Z. M., & Yu, D. (2023). ESG performance, investor attention, and company reputation: Threshold model analysis based on panel data from listed companies in China. Heliyon, 9(10), e20974. https://doi.org/10.1016/j.heliyon.2023.e20974
Moloi, T., & Iredele, O. (2020). Firm value and integrated reporting quality of South African listed firms. Academy of Strategic Management Journal, 19(1), 1-12.
Montecalvo, M., Farneti, F., & De Villiers, C. (2018). The potential of integrated reporting to enhance sustainability reporting in the public sector. Public Money & Management, 38(5), 365–374. https://doi.org/10.1080/09540962.2018.1477675
Nurkumalasari, I. S., Restuningdiah, N., & Sidharta, E. A. (2019). Integrated reporting disclosure and its impact on firm value: Evidence in Asia. International Journal of Business, Economics and Law, 18(5), 99-108.
Odriozola, M. D., & Baraibar‐Diez, E. (2017). Is corporate reputation associated with quality of CSR reporting? Evidence from Spain. Corporate Social Responsibility and Environmental Management, 24(2), 121–132. https://doi.org/10.1002/csr.1399
Pratama, I. S., & Deviyanti, D. R. (2022). Pengaruh pengungkapan corporate social responsibility terhadap institutional ownership pada perusahaan high-profile yang listing di bursa efek Indonesia. INOVASI: Jurnal Ekonomi, Keuangan dan Manajemen, 18(3), 540–550. https://doi.org/10.29264/jinv.v18i3.11701
Qaderi, S. A., Chandren, S. and Abdullah, Z. (2023). Integrated reporting disclosure in Malaysia: regulations and practice. Journal of Financial Reporting and Accounting, 21(3), 607-632.
Radwan, S.R.A. and Xiongyuan, W. (2024). The value relevance of integrated reporting quality: evidence from Asia. Journal of Financial Reporting and Accounting.
Refinitiv. (2022). Environmental, social and governance scores from LSEG.
Rezaee, Z. (2017). Corporate sustainability: Theoretical and integrated strategic imperative and pragmatic approach. The Journal of Business Inquiry, 16(1).
Richardson, G., Taylor, G., & Lanis, R. (2015). The impact of financial distress on corporate tax avoidance spanning the global financial crisis: Evidence from Australia. Economic Modelling, 44, 44–53. https://doi.org/10.1016/j.econmod.2014.09.015
Rochayatun, S., & Kholifah, F. (2021). Corporate social responsibility: Grasping legitimacy, reaching sustainability. International Conference on Engineering, Technology and Social Science, 529, 175–183. https://doi.org/10.2991/assehr.k.210421.02
Ruan, L., & Liu, H. (2021). Environmental, social, governance activities and firm performance: Evidence from China. Sustainability, 13(2), 767. https://doi.org/10.3390/su13020767
Santosa, P. W., Setianingrum, A., & Yusuf, C. (2022). Corporate governance and leverage on firm value: Evidence of Indonesian large firms. Jurnal Keuangan dan Perbankan, 26(4), 862–873. https://doi.org/10.26905/jkdp.v26i4.7764
Sany, S., Novica, C., & Valentina, C. (2024). Do Board Multiple Directorships and ESG Score Drive Firm Value? Study of Non-Financial Companies in Thailand. Jurnal Akuntansi Dan Keuangan, 26(1), 67–76. https://doi.org/10.9744/jak.26.1.67-76
Satria, R., & Supatmi. (2013). Reaksi pasar sebelum dan sesudah internet financial reporting. Jurnal Akuntansi dan Keuangan, 15(2), 86–94. https://doi.org/10.9744/jak.15.2.86-94
Setiawan, A. (2016). Integrated reporting: Are Indonesian companies ready to do it? Asian Journal of Accounting Research, 1(2), 62–70. https://doi.org/10.1108/AJAR-2016-01-02-B004
Shen, Y. (2023). ESG and firm performance: A literature review. BCP Business & Management, 46, 283–288. https://doi.org/10.54691/bcpbm.v46i.5107
Shuaibu, K., Ali, I., & Amin, I. M. (2019). Company attributes and firm value of listed consumer goods companies in Nigeria. Journal of Research in Humanities and Social Science, 7(5), 40–49.
Sokil, O., Zvezdov, D., Zhuk, V., Kucherkova, S., & Sakhno, L. (2020). Social and environmental costs: The impact of accounting and analytical support on enterprises’ sustainable development in Germany and Ukraine. Economic Annals-ХХI, 181(1–2), 124–136. https://doi.org/10.21003/ea.V181-11
Srivastava, A., & Anand, A. (2023). ESG performance and firm value: The moderating role of ownership concentration. Corporate Ownership and Control, 20(3), 169–179. https://doi.org/10.22495/cocv20i3art11
Torelli, R., Balluchi, F., & Lazzini, A. (2020). Greenwashing and environmental communication: Effects on stakeholders’ perceptions. Business Strategy and the Environment, 29(2), 407–421. https://doi.org/10.1002/bse.2373
Utomo, S. D., & Hapsari, D. I. (2022). The moderating effect of integrated reporting to company value (empirical study on companies in Indonesia). Journal of Positive School Psychology, 6(11), 123–132.
Velte, P. (2017). Does ESG performance have an impact on financial performance? Evidence from Germany. Journal of Global Responsibility, 8(2), 169–178. https://doi.org/10.1108/JGR-11-2016-0029
Velte, P. (2022). Archival research on integrated reporting: A systematic review of main drivers and the impact of integrated reporting on firm value. Journal of Management and Governance, 26(3), 997–1061. https://doi.org/10.1007/s10997-021-09582-w
Wahl, A., Charifzadeh, M., & Diefenbach, F. (2020). Voluntary adopters of integrated reporting – Evidence on forecast accuracy and firm value. Business Strategy and the Environment, 29(6), 2542–2556. https://doi.org/10.1002/bse.2519
Wong, W. C., Batten, J. A., Ahmad, A. H., Mohamed-Arshad, S. B., Nordin, S., & Adzis, A. A. (2020). Does ESG certification add firm value? Finance Research Letters, 39, 101593. https://doi.org/10.1016/j.frl.2020.101593
Wu, S., Li, X., Du, X., & Li, Z. (2022). The impact of ESG performance on firm value: The moderating role of ownership structure. Sustainability, 14(21), 14507. https://doi.org/10.3390/su142114507
Yoon, B., Lee, J., & Byun, R. (2018). Does ESG performance enhance firm value? Evidence from Korea. Sustainability, 10(10), 3635. https://doi.org/10.3390/su10103635
Yu, E. P., Guo, C. Q., & Luu, B. V. (2018). Environmental, social and governance transparency and firm value. Business Strategy and the Environment, 27(7), 987–1004. https://doi.org/10.1002/bse.2047
Zhou, S., Simnett, R., & Green, W. (2017). Does integrated reporting matter to the capital market? Abacus : A Journal of Accounting, Finance and Business Studies, 53(1), 94–132. https://doi.org/10.1111/abac.12104
Zijl, W. V., Wöstmann, C., & Maroun, W. (2017). Strategy disclosures by listed financial services companies: Signalling theory, legitimacy theory and South African integrated reporting practices. South African Journal of Business Management, 48(3), 73–85. https://doi.org/10.4102/sajbm.v48i3.37
Zumente, I., & Bistrova, J. (2021). ESG importance for long-term shareholder value creation: Literature vs. practice. Journal of Open Innovation: Technology, Market, and Complexity, 7(2), 127. https://doi.org/10.3390/joitmc7020127
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Juniarti, Cynthia Halim, Evelyn Wehantouw, Alan Darmasaputra, James Wright

This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain the copyright and publishing right, and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) followingthe publication of the article, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).<a href="http://creativecommons.org/lice