Building Sustainability: The Effect Of Sustainability Reports And Debt To Equity Ratio On The Financial Performance Of Idx30 Issuers
Keywords:
sustainability report, ESG, debt to equity ratio, ROA, ROE , market capitalization, IDX30Abstract
This research investigates how sustainability reporting encompassing environmental, social, and governance (ESG) factors along with capital structure (measured by Debt to Equity Ratio), company size, and liquidity (Current Ratio) influence the financial performance of IDX30-listed firms between 2019 and 2023. Performance indicators include Return on Assets (ROA), Return on Equity (ROE), and Market Capitalization (MC). The study utilized panel data regression techniques: Fixed Effect Model for ROA analysis, Random Effect Model for MC evaluation, and Seemingly Unrelated Regression for ROE due to statistical assumption violations. Findings demonstrate that higher debt levels (DER) negatively impact asset profitability (ROA), while larger company size positively enhances ROA. Surprisingly, ESG reporting, liquidity position, and all variables in ROE and MC models showed statistically insignificant effects. This evidence suggests that leverage management and organizational scale are critical drivers of profitability, whereas sustainability disclosures and short-term financial health provide minimal contribution to IDX30 companies' financial outcomes. Management should prioritize optimal debt levels and capitalize on scale advantages while reassessing sustainability reporting effectiveness in the Indonesian context.
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