ESG, Women on Board, and Firm Performance: Evidence from Indonesia

Abstract

This study examines the impact of Environmental, Social, and Governance (ESG) practices and the presence of women on corporate boards (Women on Board/WOB) on firm performance in Indonesia. Using a panel dataset of 40 non-financial companies listed on the Indonesia Stock Exchange from 2021 to 2024, this research employs multiple linear regression and moderation analysis to test three hypotheses. Return on Assets (ROA) is used as a proxy for firm performance. The results show that ESG has a significant and positive effect on firm performance, supporting the legitimacy and stakeholder theories. This finding suggests that companies with higher ESG scores tend to achieve better financial outcomes. However, the presence of women on the board does not significantly influence firm performance, either directly or as a moderating variable. The interaction between ESG and WOB also yields no statistically significant result, indicating that gender diversity on boards does not strengthen the ESG–performance relationship in the Indonesian context. These findings highlight the importance of sustainable business practices while pointing to the limited structural role of gender diversity in governance outcomes. The study is limited by its sample size, the use of a single financial performance metric (ROA), and the absence of longitudinal dynamic models. Future research is encouraged to adopt broader performance measures, extend the observation period, and implement advanced panel data techniques to capture long-term ESG effects.