Financial Credit, Firm Size, and Their Implications for ESG Performance
Keywords:
Financial Credit, Firm Size, ESG
Abstract
This study investigates the influence of financial credit and firm size on Environmental, Social, and Governance (ESG) practices in infrastructure companies listed on the Indonesia Stock Exchange (IDX) from 2021 to 2024. A quantitative approach was applied using Partial Least Squares Structural Equation Modeling (SEM-PLS), with a sample of 20 companies selected through purposive sampling. The results indicate that financial credit has a significant positive effect on environmental and social performance but not on governance. Firm size significantly affects environmental and governance performance, while its effect on the social dimension is not significant. These findings highlight the differing contributions of financial credit and firm size to ESG practices and emphasize their strategic relevance in supporting corporate sustainability.
References
Alves, C. F., & Meneses, L. L. (2024). ESG scores and debt costs: Exploring indebtedness, agency costs, and financial system impact. International Review of Financial Analysis, 94. https://doi.org/10.1016/J.IRFA.2024.103240
Amarna, K., Garde Sánchez, R., López-Pérez, M. V., & Marzouk, M. (2024). The effect of environmental, social, and governance disclosure and real earning management on the cost of financing. Corporate Social Responsibility and Environmental Management, 31(4), 3181–3193. https://doi.org/10.1002/CSR.2740
ANTARA News. (2024). Indonesia attracts US$18.8 bln in investment via ESG scheme -. ANTARA News. https://en.antaranews.com/news/359133/indonesia-attracts-us188-bln-in-investment-via-esg-scheme
Aydoğmuş, M., Gülay, G., & Ergun, K. (2022). Impact of ESG performance on firm value and profitability. Borsa Istanbul Review, 22, S119–S127. https://doi.org/10.1016/J.BIR.2022.11.006
Brammer, S. J., & Pavelin, S. (2006). Corporate reputation and social performance: The importance of fit. Journal of Management Studies, 43(3), 435–455. https://doi.org/10.1111/J.1467-6486.2006.00597.X;CTYPE:STRING:JOURNAL
Chen, Y., Li, T., Zeng, Q., & Zhu, B. (2023). Effect of ESG performance on the cost of equity capital: Evidence from China. International Review of Economics and Finance, 83, 348–364. https://doi.org/10.1016/J.IREF.2022.09.001
Cheng, B., Ioannou, I., & Serafeim, G. (2014). Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), 1–23. https://doi.org/10.1002/SMJ.2131
Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. P. (2008). Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis. Accounting, Organizations and Society, 33(4–5), 303–327. https://doi.org/10.1016/J.AOS.2007.05.003
Dihardjo, J. F., & Hersugondo, H. (2023). EXPLORING THE IMPACT OF ESG DISCLOSURE, DIVIDEND PAYOUT RATIO, AND INSTITUTIONAL OWNERSHIP ON FIRM VALUE: A MODERATED ANALYSIS OF FIRM SIZE. Jurnal Ekonomi Bisnis Dan Kewirausahaan (JEBIK), 12(2), 184–207. https://doi.org/10.26418/jebik.v12i2.64129
Garcia, A. S., Mendes-Da-Silva, W., & Orsato, R. (2017). Sensitive industries produce better ESG performance: Evidence from emerging markets. Journal of Cleaner Production, 150, 135–147. https://doi.org/10.1016/J.JCLEPRO.2017.02.180
Hermawan, S., Sari, Y. A., Biduri, S., Rahayu, D., & Rahayu, R. A. (2023). CORPORATE SOCIAL RESPONSIBILITY, FIRM VALUE, AND PROFITABILITY: EVIDENCE FROM PHARMACEUTICAL COMPANIES IN INDONESIA AND MALAYSIA. International Journal of Professional Business Review, 8(2). https://doi.org/10.26668/BUSINESSREVIEW/2023.V8I2.625
Husted, B. W., & Allen, D. B. (2007). Strategic Corporate Social Responsibility and Value Creation among Large Firms. Lessons from the Spanish Experience. Long Range Planning, 40(6), 594–610. https://doi.org/10.1016/J.LRP.2007.07.001,
Husted, B. W., & De Jesus Salazar, J. (2006). Taking friedman seriously: Maximizing profits and social performance. Journal of Management Studies, 43(1), 75–91. https://doi.org/10.1111/J.1467-6486.2006.00583.X
Khan, M., Serafeim, G., & Yoon, A. (2016). Corporate Sustainability: First Evidence on Materiality. SSRN Electronic Journal. https://doi.org/10.2139/SSRN.2575912
Li, W., Zhu, J., & Liu, C. (2024). Environmental, social, and governance performance, financing constraints, and corporate investment efficiency: Empirical evidence from China. Heliyon, 10(22), e40401. https://doi.org/10.1016/J.HELIYON.2024.E40401
Li, Y. (2025). SOE’s ESG Performance on Financial Flexibility: The Evidence from the Hong Kong Stock Market. https://arxiv.org/pdf/2502.14261
Michelon, G., & Parbonetti, A. (2012). The effect of corporate governance on sustainability disclosure. Journal of Management and Governance, 16(3), 477–509. https://doi.org/10.1007/S10997-010-9160-3
Minggu, A. M., Aboladaka, J., & Neonufa, G. F. (2023). Environmental, Social dan Governance (ESG) dan Kinerja Keuangan Perusahaan Publik di Indonesia. Owner, 7(2), 1186–1195. https://doi.org/10.33395/OWNER.V7I2.1371
Ridwan, M., & Alghifari, E. S. (2025). Evaluating the impact of ESG on financial risk: the moderating effects of operational ability and profitability in Indonesian infrastructure firms. Journal of Accounting & Organizational Change. https://doi.org/10.1108/JAOC-08-2024-0281
Song, S., & Deng, M. (2023). The impact of Firms’ ESG Performance on Financing Constraints. International Journal of Management Science Research , 6(5), 60–72. https://doi.org/10.53469/IJOMSR.2023.6(05).10
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
Wahba, H., & Elsayed, K. (2015). The mediating effect of financial performance on the relationship between social responsibility and ownership structure. Future Business Journal, 1(1–2), 1–12. https://doi.org/10.1016/J.FBJ.2015.02.001
Yunica, A. S., & Rokhim, R. (2023). Unveiling the hidden power: How ESG enhanced Indonesian companies’ financial flexibility. Jurnal Siasat Bisnis, 171–187. https://doi.org/10.20885/JSB.VOL27.ISS2.ART4
Amarna, K., Garde Sánchez, R., López-Pérez, M. V., & Marzouk, M. (2024). The effect of environmental, social, and governance disclosure and real earning management on the cost of financing. Corporate Social Responsibility and Environmental Management, 31(4), 3181–3193. https://doi.org/10.1002/CSR.2740
ANTARA News. (2024). Indonesia attracts US$18.8 bln in investment via ESG scheme -. ANTARA News. https://en.antaranews.com/news/359133/indonesia-attracts-us188-bln-in-investment-via-esg-scheme
Aydoğmuş, M., Gülay, G., & Ergun, K. (2022). Impact of ESG performance on firm value and profitability. Borsa Istanbul Review, 22, S119–S127. https://doi.org/10.1016/J.BIR.2022.11.006
Brammer, S. J., & Pavelin, S. (2006). Corporate reputation and social performance: The importance of fit. Journal of Management Studies, 43(3), 435–455. https://doi.org/10.1111/J.1467-6486.2006.00597.X;CTYPE:STRING:JOURNAL
Chen, Y., Li, T., Zeng, Q., & Zhu, B. (2023). Effect of ESG performance on the cost of equity capital: Evidence from China. International Review of Economics and Finance, 83, 348–364. https://doi.org/10.1016/J.IREF.2022.09.001
Cheng, B., Ioannou, I., & Serafeim, G. (2014). Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), 1–23. https://doi.org/10.1002/SMJ.2131
Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. P. (2008). Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis. Accounting, Organizations and Society, 33(4–5), 303–327. https://doi.org/10.1016/J.AOS.2007.05.003
Dihardjo, J. F., & Hersugondo, H. (2023). EXPLORING THE IMPACT OF ESG DISCLOSURE, DIVIDEND PAYOUT RATIO, AND INSTITUTIONAL OWNERSHIP ON FIRM VALUE: A MODERATED ANALYSIS OF FIRM SIZE. Jurnal Ekonomi Bisnis Dan Kewirausahaan (JEBIK), 12(2), 184–207. https://doi.org/10.26418/jebik.v12i2.64129
Garcia, A. S., Mendes-Da-Silva, W., & Orsato, R. (2017). Sensitive industries produce better ESG performance: Evidence from emerging markets. Journal of Cleaner Production, 150, 135–147. https://doi.org/10.1016/J.JCLEPRO.2017.02.180
Hermawan, S., Sari, Y. A., Biduri, S., Rahayu, D., & Rahayu, R. A. (2023). CORPORATE SOCIAL RESPONSIBILITY, FIRM VALUE, AND PROFITABILITY: EVIDENCE FROM PHARMACEUTICAL COMPANIES IN INDONESIA AND MALAYSIA. International Journal of Professional Business Review, 8(2). https://doi.org/10.26668/BUSINESSREVIEW/2023.V8I2.625
Husted, B. W., & Allen, D. B. (2007). Strategic Corporate Social Responsibility and Value Creation among Large Firms. Lessons from the Spanish Experience. Long Range Planning, 40(6), 594–610. https://doi.org/10.1016/J.LRP.2007.07.001,
Husted, B. W., & De Jesus Salazar, J. (2006). Taking friedman seriously: Maximizing profits and social performance. Journal of Management Studies, 43(1), 75–91. https://doi.org/10.1111/J.1467-6486.2006.00583.X
Khan, M., Serafeim, G., & Yoon, A. (2016). Corporate Sustainability: First Evidence on Materiality. SSRN Electronic Journal. https://doi.org/10.2139/SSRN.2575912
Li, W., Zhu, J., & Liu, C. (2024). Environmental, social, and governance performance, financing constraints, and corporate investment efficiency: Empirical evidence from China. Heliyon, 10(22), e40401. https://doi.org/10.1016/J.HELIYON.2024.E40401
Li, Y. (2025). SOE’s ESG Performance on Financial Flexibility: The Evidence from the Hong Kong Stock Market. https://arxiv.org/pdf/2502.14261
Michelon, G., & Parbonetti, A. (2012). The effect of corporate governance on sustainability disclosure. Journal of Management and Governance, 16(3), 477–509. https://doi.org/10.1007/S10997-010-9160-3
Minggu, A. M., Aboladaka, J., & Neonufa, G. F. (2023). Environmental, Social dan Governance (ESG) dan Kinerja Keuangan Perusahaan Publik di Indonesia. Owner, 7(2), 1186–1195. https://doi.org/10.33395/OWNER.V7I2.1371
Ridwan, M., & Alghifari, E. S. (2025). Evaluating the impact of ESG on financial risk: the moderating effects of operational ability and profitability in Indonesian infrastructure firms. Journal of Accounting & Organizational Change. https://doi.org/10.1108/JAOC-08-2024-0281
Song, S., & Deng, M. (2023). The impact of Firms’ ESG Performance on Financing Constraints. International Journal of Management Science Research , 6(5), 60–72. https://doi.org/10.53469/IJOMSR.2023.6(05).10
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
Wahba, H., & Elsayed, K. (2015). The mediating effect of financial performance on the relationship between social responsibility and ownership structure. Future Business Journal, 1(1–2), 1–12. https://doi.org/10.1016/J.FBJ.2015.02.001
Yunica, A. S., & Rokhim, R. (2023). Unveiling the hidden power: How ESG enhanced Indonesian companies’ financial flexibility. Jurnal Siasat Bisnis, 171–187. https://doi.org/10.20885/JSB.VOL27.ISS2.ART4
Published
2026-11-05
How to Cite
Hakim, L., Oktayani, D., Elsa Tomisa, M., Rahmany, S., & Candri, K. (2026). Financial Credit, Firm Size, and Their Implications for ESG Performance. International Journal of Business and Quality Research, 4(04), 495-505. https://doi.org/10.63922/ijbqr.v4i04.7336
.png)
Contact Person +628563636289
Email : editor.ijbqr@gmail.com
