When political embeddedness shapes ESG practice corporate governance

This study examines how corporate governance mechanisms relate to ESG practice in Indonesian listed firms and asks a narrower question: why do governance tools that should strengthen ESG oversight appear to lose force once firms are politically embedded. Drawing on agency theory, the study focuses on five governance dimensions: audit committee characteristics, external audit quality, board size, board independence, and board gender diversity. Using a balanced panel of 42 firms listed on the Indonesia Stock Exchange from 2017 to 2022, the analysis covers 210 firm year observations and uses Bloomberg ESG scores as the outcome measure. The evidence shows that board size, board independence, and board gender diversity are positively associated with ESG practice, whereas audit committee characteristics are negatively associated with it and external audit quality is not consistently significant. Political embeddedness is positively associated with ESG practice and conditions selected governance relationships, most clearly by weakening the effect of board independence and, more cautiously, board gender diversity. These findings are best read as conditional evidence from a small pooled panel setting rather than as universal governance effects.