The Impact of ESG Factors on Stock Price through Profitability and Finance Performance
DOI:
https://doi.org/10.47747/fmiic.vi2.2945Abstract
This study investigates how ESG (environment, social and Governance) factors influence stock prices through profitability and finance performance listed on the Indonesia Stock Exchange (IDX), specifically those included in the 2024 has ESG scored. The study applies with structural equation modelling and analyzes cross section data to examine the relationship between ESG score and stock prices. The results showed that ESG significantly affected finance performance; ESG also significantly affected stock prices. Then, ESG does not influence profitability, finance performance does not influence stock prices and profitability doesn't influence finance performance. Profitability could not moderate ESG, and finance performance could not moderate ESG. This finding indicates that companies with strong ESG practices tend to be more highly valued by investors, as ESG is increasingly viewed as a key indicator of long-term sustainability, lower risk, and responsible corporate behavior. The positive response from the market suggests that ESG is no longer just a symbolic or ethical consideration, but a strategic factor that contributes to enhancing firm value and investor confidence.
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