IDEAS home Printed from https://ideas.repec.org/a/wly/corsem/v32y2025i3p3181-3192.html
   My bibliography  Save this article

How ESG and Gender Diversity Affect Firm Performance

Author

Listed:
  • Johan Hadisurya
  • Joni Joni
  • Tan Kwang En
  • Sinta Setiana

Abstract

This study investigates the impact of Environmental, Social, and Governance (ESG) disclosure and gender diversity on the board of commissioners on operating and market performance in Indonesia from 2018 to 2022. The sample for this study consisted of 218 listed companies in Indonesia with ESG disclosures. Ordinary least‐squares regression was used to test this affiliation. The generalized moment method was also applied to address the endogeneity problem. This empirical research found that ESG disclosure and gender diversity on the board of commissioners have a positive and statistically significant effect on company performance in a patriarchal society where women experience negative stereotypes regarding their leadership and managerial skills. The results remained consistent after endogeneity testing. The findings of this study have practical implications for academics and policymakers interested in the role of ESG and gender diversity in improving company performance in developing countries, such as mobilizing resources to support ESG and increasing the percentage of women on corporate boards of commissioners. The findings of this study can also help investors decide whether to invest in companies that have implemented ESG in developing countries. This study differs from previous research in that it was conducted in Indonesia, a developing country. Most previous studies have been conducted in developed countries, such as China and Europe. This study examines the associations in Indonesia, which has a distinct corporate governance mechanism called the dual‐board system, and where the patriarchal system still influences corporate governance in Indonesia.

Suggested Citation

  • Johan Hadisurya & Joni Joni & Tan Kwang En & Sinta Setiana, 2025. "How ESG and Gender Diversity Affect Firm Performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(3), pages 3181-3192, May.
  • Handle: RePEc:wly:corsem:v:32:y:2025:i:3:p:3181-3192
    DOI: 10.1002/csr.3122
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/csr.3122
    Download Restriction: no

    File URL: https://libkey.io/10.1002/csr.3122?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hua Tang, 2022. "The Effect of ESG Performance on Corporate Innovation in China: The Mediating Role of Financial Constraints and Agency Cost," Sustainability, MDPI, vol. 14(7), pages 1-21, March.
    2. Lili Liu, 2022. "Subnational debt: developing a sustainable market," Chapters, in: Benno Ferrarini & Marcelo M. Giugale & Juan J. Pradelli (ed.), The Sustainability of Asia’s Debt, chapter 6, pages 167-187, Edward Elgar Publishing.
    3. Joni Joni & Maria Natalia & Leliana Leliana, 2023. "The investment behavior of politically connected firms in Indonesia," Asian Journal of Accounting Research, Emerald Group Publishing Limited, vol. 8(4), pages 348-355, May.
    4. Nisar Ahmad & Asma Mobarek & Naheed Nawazesh Roni, 2021. "Revisiting the impact of ESG on financial performance of FTSE350 UK firms: Static and dynamic panel data analysis," Cogent Business & Management, Taylor & Francis Journals, vol. 8(1), pages 1900500-190, January.
    5. Ng, Anthony C. & Rezaee, Zabihollah, 2020. "Business sustainability factors and stock price informativeness," Journal of Corporate Finance, Elsevier, vol. 64(C).
    6. Letian Zhang, 2020. "An Institutional Approach to Gender Diversity and Firm Performance," Organization Science, INFORMS, vol. 31(2), pages 439-457, March.
    7. Zhu, Bo & Wang, Yansen, 2024. "Does social trust affect firms' ESG performance?," International Review of Financial Analysis, Elsevier, vol. 93(C).
    8. Sanjukta Brahma & Chioma Nwafor & Agyenim Boateng, 2021. "Board gender diversity and firm performance: The UK evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5704-5719, October.
    9. Srinidhi, Bin & Sun, Ye & Zhang, Hao & Chen, Shiqiang, 2020. "How do female directors improve board governance? A mechanism based on norm changes," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(1).
    10. Herenia Gutiérrez-Ponce & Sigit Arie Wibowo, 2023. "Do Sustainability Activities Affect the Financial Performance of Banks? The Case of Indonesian Banks," Sustainability, MDPI, vol. 15(8), pages 1-17, April.
    11. Ararat, Melsa & Yurtoglu, B. Burcin, 2021. "Female directors, board committees, and firm performance: Time-series evidence from Turkey," Emerging Markets Review, Elsevier, vol. 48(C).
    12. Joni Joni & Kamran Ahmed & Jane Hamilton, 2020. "Politically connected boards, family business groups and firm performance," Journal of Accounting & Organizational Change, Emerald Group Publishing Limited, vol. 16(1), pages 93-121, April.
    13. Garcia-Blandon, Josep & Josep Maria, Argilés-Bosch & Diego, Ravenda, 2024. "Female directors and the firm's cost of debt: Evidence from a quasi-natural experiment," European Management Journal, Elsevier, vol. 42(2), pages 224-232.
    14. Stavros E. Arvanitis & Evangelos G. Varouchas & George M. Agiomirgianakis, 2022. "Does Board Gender Diversity Really Improve Firm Performance? Evidence from Greek Listed Firms," JRFM, MDPI, vol. 15(7), pages 1-19, July.
    15. Li, Ying & Cen, Hongyi & Lin, Tai-Yu & Lin, Yi-Nuo & Chiu, Yung-Ho, 2022. "Sustainable coal mine and coal land development in China," Resources Policy, Elsevier, vol. 79(C).
    16. Jiatao Li & Haoyuan Ding & Yichuan Hu & Guoguang Wan, 2021. "Dealing with dynamic endogeneity in international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(3), pages 339-362, April.
    17. Ni Putu Gita Rahmaniati & Erni Ekawati, 2024. "The role of Indonesian regulators on the effectiveness of ESG implementation in improving firms’ non-financial performance," Cogent Business & Management, Taylor & Francis Journals, vol. 11(1), pages 2293302-229, December.
    18. Adams, Renée B. & Ferreira, Daniel, 2009. "Women in the boardroom and their impact on governance and performance," Journal of Financial Economics, Elsevier, vol. 94(2), pages 291-309, November.
    19. Iman Harymawan & Fajar Kristanto Gautama Putra & Bayu Arie Fianto & Wan Adibah Wan Ismail, 2021. "Financially Distressed Firms: Environmental, Social, and Governance Reporting in Indonesia," Sustainability, MDPI, vol. 13(18), pages 1-18, September.
    20. Lishi Zeng & Xuemei Jiang, 2023. "ESG and Corporate Performance: Evidence from Agriculture and Forestry Listed Companies," Sustainability, MDPI, vol. 15(8), pages 1-18, April.
    21. Areneke, Geofry & Adegbite, Emmanuel & Tunyi, Abongeh & Hussain, Tanveer, 2023. "Female directorship and ethical corporate governance disclosure practices in highly patriarchal contexts," Journal of Business Research, Elsevier, vol. 164(C).
    22. Liu, Yonghong & Lei, Lijun & Buttner, E. Holly, 2020. "Establishing the boundary conditions for female board directors’ influence on firm performance through CSR," Journal of Business Research, Elsevier, vol. 121(C), pages 112-120.
    23. Leonardo Becchetti & Emanuele Bobbio & Federico Prizia & Lorenzo Semplici, 2022. "Going Deeper into the S of ESG: A Relational Approach to the Definition of Social Responsibility," Sustainability, MDPI, vol. 14(15), pages 1-22, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Usama Laique & Fahad Abdullah & Ijaz Ur Rehman & Bruno S. Sergi, 2023. "Two decades of research on board gender diversity and financial outcomes: Mapping heterogeneity and future research agenda," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2121-2144, September.
    2. Katarina Gomoryova, 2024. "Female Leadership and Financial Performance: A Meta-Analysis," Working Papers IES 2024/6, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jan 2024.
    3. Ana Beatriz Hernández-Lara & Juan Pablo Gonzales-Bustos & Amado Alarcón-Alarcón, 2021. "Social Sustainability on Corporate Boards: The Effects of Female Family Members on R&D," Sustainability, MDPI, vol. 13(4), pages 1-13, February.
    4. Muhammad Ali & Mirit K Grabarski & Sana Ahmed & Nazish Imtiaz, 2024. "Does leadership gender diversity drive corporate social responsibility and organizational outcomes? The role of organization size," Australian Journal of Management, Australian School of Business, vol. 49(3), pages 319-339, August.
    5. Mariya Gubareva & Zaghum Umar & Tatiana Sokolova & Valentina Antonyuk, 2023. "For whom does it pay to be a moral capitalist? Sustainability of corporate financial performance of ESG investment," PLOS ONE, Public Library of Science, vol. 18(5), pages 1-14, May.
    6. Brahma, Sanjukta & Boateng, Agyenim, 2025. "Board gender diversity, CEO power and LGBTQ-supportive corporate policies," Research in International Business and Finance, Elsevier, vol. 74(C).
    7. Adela Socol & Iulia Cristina Iuga, 2025. "Does democracy matter in banking performance? Exploring the linkage between democracy, economic freedom and banking performance in the European Union member states," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 86-116, January.
    8. Maria Boutchkova & Angelica Gonzalez & Brian G.M. Main & Vathunyoo Sila, 2021. "Gender diversity and the spillover effects of women on boards," Corporate Governance: An International Review, Wiley Blackwell, vol. 29(1), pages 2-21, January.
    9. Shanshan Lyu & Mingzeng Yang & Qincheng Zhang, 2024. "Top Management Team Heterogeneity, Top Management Incentives, and ESG Performance: Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 16(18), pages 1-32, September.
    10. Quynh Trang Phan & Vu Gia Bao Nguyen, 2025. "Gender diversity and firm value: Evidence from an emerging market," Economics Bulletin, AccessEcon, vol. 45(1), pages 88-99.
    11. Ali Amin & Rizwan Ali & Ramiz ur Rehman & Mudassar Hasan, 2024. "Family ownership, control, and firm performance: Does gender diversity matter?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 14(2), pages 501-525, June.
    12. Conor Callahan & Arjun Mitra & Steve Sauerwald, 2024. "Ethics of Care and Employees: The Impact of Female Board Representation and Top Management Leadership on Human Capital Development Policies," Journal of Business Ethics, Springer, vol. 195(3), pages 615-629, December.
    13. Chu, Shaner, 2024. "Are women greener? Board gender diversity and corporate green technology innovation in China," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 1001-1020.
    14. Rey Đặng & L.’Hocine Houanti & Michel Simioni & Jean-Michel Sahut, 2025. "The role of endogeneity in the relationship between board gender diversity and corporate social performance: evidence from a control function method," Annals of Operations Research, Springer, vol. 347(1), pages 333-365, April.
    15. Ahmad Yuosef Alodat & Yunhong Hao, 2025. "Environmental, social and governance (ESG) disclosure and firm performance: Moderating role of board gender diversity and sustainability committee," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(1), pages 636-651, February.
    16. Safiullah, Md & Akhter, Tanzina & Saona, Paolo & Azad, Md. Abul Kalam, 2022. "Gender diversity on corporate boards, firm performance, and risk-taking: New evidence from Spain," Journal of Behavioral and Experimental Finance, Elsevier, vol. 35(C).
    17. Olayinka Oyekola & Olapeju C. Ogunmokun & Martha A. Omolo & Samuel Odewunmi, 2023. "Gender, Legal Origin, and Accounting Disclosure: Evidence from More Than 140,000 Firms," Discussion Papers 2313, University of Exeter, Department of Economics.
    18. Beloskar, Ved Dilip & Haldar, Arunima & Gupta, Anupama, 2024. "Gender equality and women’s empowerment: A bibliometric review of the literature on SDG 5 through the management lens," Journal of Business Research, Elsevier, vol. 172(C).
    19. Foster, Benjamin P. & Manikas, Andrew & Preece, Dianna & Kroes, James R., 2021. "Noteworthy diversity efforts and financial performance: Evidence from DiversityInc's top 50," Advances in accounting, Elsevier, vol. 53(C).
    20. Maria Camila Arango-Home & Juan David González-Ruiz & Alejandro Valencia-Arias, 2023. "Relationship between Women on Board Directors and Economic Value Added: Evidence from Latin American Companies," Sustainability, MDPI, vol. 15(17), pages 1-21, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:corsem:v:32:y:2025:i:3:p:3181-3192. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1535-3966 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.