The influence of Environmental, Social & Governance (ESG) risk rating on corporate financial risk in companies listed on IDX ESG leaders with board gender diversity as a moderating variable

Authors

  • Dina Lare Dunensa Udayana University, Denpasar, Indonesia
  • I Gde Kajeng Baskara Udayana University, Denpasar, Indonesia

Keywords:

ESG, ESG Risk Rating, Financial Risk, Board Gender Diversity

Abstract

This study analyzes the impact of Environmental, Social, and Governance (ESG) Risk Ratings on Corporate Financial Risk for companies listed on the IDX ESG Leaders index between 2020 and 2024. A quantitative research approach was employed, utilizing secondary data from the annual reports of companies listed on the Indonesia Stock Exchange (IDX). Data was collected through saturated sampling, including 30 companies from the IDX ESG Leaders for each year over the five-year observation period, resulting in a total of 150 samples. Moderated Regression Analysis (MRA) was applied to the data. The results demonstrate that the ESG Risk Rating has a significantly negative impact on Corporate Financial Risk. However, gender diversity does not exert a significant moderating influence on the relationship between Environmental, Social, and Governance (ESG) performance and corporate financial risk. These findings align with both stakeholder and signaling theories, indicating that firms with reasonable ESG performance exhibit lower total risk. The insights gained from this study will assist investors and portfolio managers in evaluating the influence of ESG and Board Gender Diversity on corporate financial risk, thereby facilitating improved investment decisions.

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Published

2025-07-03

How to Cite

Dunensa, D. L., & Baskara, I. G. K. (2025). The influence of Environmental, Social & Governance (ESG) risk rating on corporate financial risk in companies listed on IDX ESG leaders with board gender diversity as a moderating variable. International Journal of Economic Perspectives, 19(7), 57–67. Retrieved from https://ijeponline.org/index.php/journal/article/view/1103

Issue

Vol. 19 No. 7 (2025): Online First

Section

Peer Review Articles
Copyright & Licensing

Copyright (c) 2025 Dina Lare Dunensa, I Gde Kajeng Baskara

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