Can ESG Reduce Company Risk? Evidence from Indonesia

Made Aryani; Dian Farista

Proceedings of the 2nd International Conference on Contemporary Risk Studies, ICONIC-RS 2023, 21-22 September 2023, Bali, Indonesia

Research Article

Can ESG Reduce Company Risk? Evidence from Indonesia

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@INPROCEEDINGS{10.4108/eai.21-9-2023.2347060,
    author={Made Gitanadya Ayu Aryani and Dian Rifda Farista},
    title={Can ESG Reduce Company Risk? Evidence from Indonesia},
    proceedings={Proceedings of the 2nd International Conference on Contemporary Risk Studies, ICONIC-RS 2023, 21-22 September 2023, Bali, Indonesia},
    publisher={EAI},
    proceedings_a={ICONIC-RS},
    year={2024},
    month={6},
    keywords={esg score systematic risk total risk stakeholder asymmetric information},
    doi={10.4108/eai.21-9-2023.2347060}
}

Made Gitanadya Ayu Aryani
Dian Rifda Farista
Year: 2024
Can ESG Reduce Company Risk? Evidence from Indonesia
ICONIC-RS
EAI
DOI: 10.4108/eai.21-9-2023.2347060

Made Gitanadya Ayu Aryani¹^,*, Dian Rifda Farista¹

1: Universitas Airlangga

*Contact email: made.gitanadya.ayu.a@feb.unair.ac.id

Abstract

This study aims to determine the effect of environmental, social, and governance (ESG) on systematic and total risk in public companies in Indonesia. This research was based on the asymmetric information theory and stakeholder theory. The number of observations used in this study were 62 companies listed on the IDX and had Refinitiv ESG scores during 2017-2021. This study used a multiple linear regression model to determine the effect of ESG score on systematic risk and total risk. Based on the results, it can be concluded that ESG did not have any significant effect on systematic risk. On the other hand, ESG could decrease the total risk for the company.

Keywords: esg score systematic risk total risk stakeholder asymmetric information

Published: 2024-06-11
Publisher: EAI

: http://dx.doi.org/10.4108/eai.21-9-2023.2347060