Anti-corruption disclosure as a moderating variable in the impact of environmental, social, and governance disclosure on firm value

This study empirically investigates the effect of anti-corruption disclosures on the association between the quality of environmental, social, and governance (ESG) disclosure and the value of firms in Indonesia by sampling 28 companies from 2015 to 2017. Using panel regression, the findings show a negative relationship between the quality of ESG disclosure and firm value. It indicates that the disclosure of ESG reduces the value of the firm; which might be because the market interprets the increase in disclosure as an attempt by the firm to justify excessive investment in ESG activities. We also found that the anticorruption disclosures strengthen the negative impact of ESGs on firm value. The value of the firm that had initially fallen due to the ESG disclosure is becomes more declining by the existence of high-level anti-corruption disclosures. The findings indicate the paradox of the role of disclosures in an emerging market context where the high level of disclosures has not gained the trust of market participants.