Enhancing Firm Value Through ESG and Financial Performance: The Mediating Roles of Green Innovation and Corporate Reputation

Hermanto Hermanto; Zefri Yenni

doi:10.63922/ijebir.v5i06.7100

Hermanto Hermanto Doctoral Student in Management, Faculty of Economics and Business, Universitas Putra Indonesia YPTK, Padang, Indonesia
Zefri Yenni Doctoral Student in Management, Faculty of Economics and Business, Universitas Putra Indonesia YPTK, Padang, Indonesia

DOI: https://doi.org/10.63922/ijebir.v5i06.7100

Keywords: Firm Value, ESG, Financial Performance, Green Innovation, Corporate Reputation

Abstract

This study investigates the effect of Environmental, Social, and Governance (ESG) performance and financial performance on firm value, while examining the mediating roles of green innovation and corporate reputation. Using a quantitative empirical design based on secondary data, the research population comprises constituent companies of the LQ45 index listed on the Indonesia Stock Exchange (IDX). By employing purposive sampling, 10 consistently active issuers publishing quarterly sustainability and financial disclosures across the 2021–2025 period were examined, generating a balanced panel dataset of 200 observations across 20 quarters. The panel data path model and Sobel mediation tests were executed using EViews econometric software. Empirical findings confirm that both financial performance and ESG performance exert a statistically significant positive impact on firm value, both simultaneously and individually. Furthermore, green innovation and corporate reputation serve as significant partial transmitting mediators connecting sustainability and financial indicators with firm market valuation. Harmonizing sustainability accountability and financial capability functions as a crucial strategic lever for sustaining corporate market valuation

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