From Strategy and ESG to Shareholder Value: The Mediating Role of Sustainable Financial Performance and The Moderating Effect of Shariah Value Added in Indonesia

From Strategy and ESG to Shareholder Value: The Mediating Role of Sustainable Financial Performance and The Moderating Effect of Shariah Value Added in Indonesia

Authors

  • Agung Budi Sulistiyo Universitas Jember
  • Novi Wulandari Widiyanti Universitas Jember
  • Imamatin Listya Putri Universitas Jember
  • Muhammad Miqdad Universitas Jember

DOI:

https://doi.org/10.33603/jka.v9i2.11005

Keywords:

Corporate strategy, ESG performance, Shareholder value, Shariah value added, Sustainable financial performance

Abstract

This study examines the effects of corporate strategy, ESG performance, investment efficiency, and risk management on shareholder value in Indonesian publicly listed companies. It also investigates the mediating role of sustainable financial performance and the moderating role of Shariah Value Added. Using panel regression on data from 72 firms between 2019 and 2022, the findings show that only corporate strategy significantly enhances sustainable financial performance. ESG performance, investment efficiency, and risk management do not show meaningful effects, indicating that many firms focus on meeting ESG compliance requirements rather than integrating ESG strategically. Sustainable financial performance also does not directly increase shareholder value. However, when moderated by Shariah Value Added, its effect becomes significant. This demonstrates that Islamic ethical principles can strengthen corporate legitimacy, enhance investor trust, and bridge financial outcomes with ethical values. These findings enrich legitimacy theory by incorporating cultural and religious dimensions into sustainability research. Practically, companies should integrate ESG more substantively, while regulators are encouraged to consider including Shariah-based indicators in sustainable finance frameworks. The study’s limitations include a relatively small sample size and a short observation period. Future research should extend the timeframe and explore additional variables that may influence these relationships.

References

Abbas, D. (2025). Is Ethical Governance Enough? Green Finance, Disclosure, and the Islamic Corporate Ethos. Jurnal Minds: Manajemen Ide dan Inspirasi, 12(1), 213-224. https://doi.org/10.24252/minds.v12i1.53547.

Angela, T., & Sari, N. (2023). The effect of environmental, social, and governance disclosure on firm value. E3S Web of Conferences, 426, 01078. https://doi.org/10.1051/e3sconf/202342601078.

Antonio, M. S., Sanrego, Y. D., & Taufiq, M. (2014). An Analysis of Islamic Banking Performance: Maqashid Index Implementation in Indonesia and Jordania. Journal of Islamic Finance, 1(1). https://doi.org/10.31436/jif.v1i1.2.

Ascarya, A., Rahmawati, S., & Sukmana, R. (2016, October 11–13). Measuring the Islamicity of Islamic banks in Indonesia and other countries based on Shari’ah objectives. Paper presented at the 11th International Conference on Islamic Economics and Finance (ICIEF), Kuala Lumpur, Malaysia. Retrieved from https://www.researchgate.net/publication/314093831.

Aydoğmuş, M., Gülay, G., & Ergun, K. (2022). Impact of ESG performance on firm value and profitability. Borsa Istanbul Review, 22(S2), S119–S127. https://doi.org/10.1016/j.bir.2022.11.006.

Badan Pusat Statistik (BPS). (2023). Produk domestik bruto Indonesia menurut lapangan usaha 2023. Jakarta: BPS. https://www.bps.go.id.

Bagh, T., Fuwei, J., & Khan, M. A. (2024). From risk to resilience: Climate change risk, ESG investments engagement and firm's value. Heliyon, 10, e26757. https://doi.org/10.1016/j.heliyon.2024.e26757.

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108.

Biddle, G. C., Hilary, G., & Verdi, R. S. (2009). How does financial reporting quality relate to investment efficiency? Journal of Accounting and Economics, 48(2–3), 112–131. https://doi.org/10.1016/j.jacceco.2009.09.001.

Bruno, E., Pistolesi, F., & Teti, E. (2025). Cybersecurity policy, ESG and operational risk: A virtuous relationship to improve banks’ performance. International Review of Economics & Finance, 89, 104053. https://doi.org/10.1016/j.iref.2025.104053.

Buallay, A. (2019). Sustainability reporting and firm’s performance: Comparative study between manufacturing and banking sectors. International Journal of Productivity and Performance Management (2020) 69 (3): 431–445. https://doi.org/10.1108/IJPPM-10-2018-0371.

Chen, J., & Rojniruttikul, N. (2025). Influence of a green environmental orientation on corporate sustainable performance in the manufacturing sector. Sustainability, 17(6), Article 2430. https://doi.org/10.3390/su17062430.

Clark, G. L., Feiner, A., & Viehs, M. (2014). From the stockholder to the stakeholder: How sustainability can drive financial outperformance. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2508281.

Correia, M. S. (2019). Sustainability: An overview of the triple bottom line and sustainability implementation. International Journal of Strategic Engineering, 2(1), 29–38. https://doi.org/10.4018/IJoSE.2019010103.

Danso, A., Adomako, S., Lartey, T., Amankwah-Amoah, J. and Owusu-Yirenkyi, D. (2019) Stakeholder Integration, Environmental Sustainability Orientation and Financial Performance. Journal of Business Research, 119, 652-662. https://doi.org/10.1016/j.jbusres.2019.02.038.

Dewi, H. R. ., & Muhyarsyah, M. (2025). ESG disclosure, capital structure, and profitability in explaining firm value of Indonesia’s IDX ESG Leaders: Some notes from Islamic finance perspectives‎. Journal of Islamic Economics Lariba, 12(1), 1–30. https://doi.org/10.20885/jielariba.vol12.iss1.art1.

Dharmayanti, N., Ismail, T., Hanifah, I. A., & Taqi, M. (2023). Exploring sustainability management control system and eco-innovation matter sustainable financial performance: The role of supply chain management and digital adaptability in Indonesian context. Journal of Open Innovation: Technology, Market, and Complexity, 9, 100119. https://doi.org/10.1016/j.joitmc.2023.100119.

Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91.

Dwijayanti, N. M. A., Hudaya, R., Dewi, T. K., & Surya, L. P. L. S. (2025). The relevance of ESG implementation for companies: A systematic literature review. Owner: Research & Journal of Accounting, 9(2), 1049–1058. https://doi.org/10.33395/owner.v9i2.2618.

Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management Science, 60(11), 2835–2857. https://doi.org/10.1287/mnsc.2014.1984.

Fang, Z., Nie, X., & Shen, H. (2023). Can enterprise digitization improve ESG performance? Economic Modelling. https://doi.org/10.1016/j.econmod.2022.106101.

Fatemi, A., M. Glaum, S. Kaiser (2018). ESG performance and firm value: The moderating role of disclosure. Global Finance Journal, 38, pp. 45-64. https://doi.org/10.1016/j.gfj.2017.03.001.

Fitriana, S. and Wardhani, R. (2020) ‘The effect of enterprise risk management andsustainability reporting quality on performance: evidence from Southeast Asiacountries’, Int. J. Economic Policy in Emerging Economies, Vol. 13, No. 4,pp.344–355. http://dx.doi.org/10.1504/IJEPEE.2020.109588.

Florio, C., & Leoni, G. (2017). Enterprise risk management and firm performance: The Italian case. The British Accounting Review, 49(1), 56–74. https://doi.org/10.1016/j.bar.2016.08.003.

Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston, MA: Pitman.

Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B. L., & De Colle, S. (2020). The stakeholder theory: Concepts and evidence. Cambridge: Cambridge University Press.

Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: Aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210–233. https://doi.org/10.1080/20430795.2015.1118917.

Gray, R., Kouhy, R., & Lavers, S. (1995). Corporate social and environmental reporting: A review of the literature and a longitudinal study of UK disclosure. Accounting, Auditing & Accountability Journal, 8(2), 47–77. https://doi.org/10.1108/09513579510146996.

Haniffa, R., & Hudaib, M. (2007). Exploring the ethical identity of Islamic financial institutions via Communication in Annual Reports . Journal of Business Ethics, 76(1), 97–116. https://doi.org/10.1007/s10551-006-9272-5.

Hu, V., & Scholtens, B. (2014). Corporate Social Responsibility Policies of Commercial Banks in Developing Countries. Sustainable Developments, 22, 276-288. https://doi.org/10.1002/sd.1551.

Hutauruk, J. R., Rahmiati, R., & Mentari, T. (2025). Analysis of ESG Disclosure on the Firm Value in Banking Sector IDX 2020-2023. INVOICE: JURNAL ILMU AKUNTANSI, 7(1), 100-110.

Ikpe, V., & Shamsuddoha, M. (2024). Functional model of supply chain waste reduction and control strategies for retailers—The USA retail industry. Logistics, 8(1), 22. https://doi.org/10.3390/logistics8010022.

Istianah, Z. A., & Akbar, M. F. (2024). Integrating Sharia Principles with Environmental Sustainability: A DSN-MUI Fatwa Analysis in Islamic Capital Markets. E3S Web of Conferences, 594, 04007. https://doi.org/10.1051/e3sconf/202459404007.

Karomah, U., & Latifah, E. (2023). Konsep nilai tambah pada akuntansi syariah. JIAR: Journal of International Accounting Research, 2(1). http://dx.doi.org/10.62668/jiar.v2i01.1141.

Kettaneh, N., Berglund, A., & Wold, S. (2005). PCA and PLS with very large data sets. Computational Statistics & Data Analysis, 48(1), 69–85. https://doi.org/10.1016/j.csda.2003.11.027.

Khan, M.A. (2022). ESG disclosure and Firm performance: A bibliometric and meta analysis. Research in International Business and Finance, 61. https://doi.org/10.1016/j.ribaf.2022.101668.

Klettner, A., Clarke, T., & Boersma, M. (2014). The governance of corporate sustainability: Empirical insights into the development, leadership and implementation of responsible business strategy. Journal of Business Ethics, 122(1), 145–165. https://doi.org/10.1007/s10551-013-1750-y.

Landi, G., Iandolo, F., Renzi, A., & Rey, A. (2025). Embedding sustainability in risk management: The impact of environmental, social, and governance ratings on corporate financial risk. Corporate Social Responsibility and Environmental Management. Advance online publication. https://doi.org/10.1002/csr.2256.

Landi, G., & Sciarelli, M. (2019). Towards a more ethical market: The impact of ESG rating on corporate financial performance. Social Responsibility Journal, 15(1), 11-27. https://doi.org/10.1108/SRJ-11-2017-0254.

Ma, A., Gao, Y., & Xing, L. (2025). The Impact of ESG Performance on Corporate Investment Efficiency: Evidence from Chinese Agribusiness Companies. Sustainability, 17(16), 7362. https://doi.org/10.3390/su17167362.

Maysari, M., & Endri, E. (2025). ESG disclosure, intellectual capital, and firm value in the energy sector in Indonesia: The moderating role of firm size. International Journal of Energy Economics and Policy, 15(6), 512–522. https://doi.org/10.32479/ijeep.21243.

Msomi, T. S. (2025). The nexus of ESG performance and equity financing: Evidence from JSE-listed non-financial firms in South Africa. Investment Management and Financial Innovations, 22(3). https://doi.org/10.21511/imfi.22(3).2025.07.

Naseer, M. M., Khan, M. A., Bagh, T., Guo, Y., & Zhu, X. (2024). Firm climate change risk and financial flexibility: Drivers of ESG performance and firm value. Borsa Istanbul Review, 24(1). https://doi.org/10.1016/j.bir.2023.11.003.

Negara, N. G. P., Ishak, G., & Priambodo, R. E. A. (2024). Impact of ESG disclosure score on firm value: Empirical evidence from ESG listed firm in Indonesia Stock Exchange. European Journal of Business and Management Research, 9(2), 114–118. https://doi.org/10.24018/ejbmr.2024.9.2.2064.

Pantea, M. F., Cilan, T. F., Cuc, L. D., Rad, D., Bâtcă-Dumitru, G. C., Șendroiu, C., Almași, R. C., Feher, A., & Gomoi, B. C. (2024). Optimizing Romanian managerial accounting practices through digital technologies: A resource-based and technology-deterministic approach to sustainable accounting. Electronics, 13(16), 3206. https://doi.org/10.3390/electronics13163206.

Perkasa, R.S., & Simatupang, F.S. (2025). Mendorong Nilai Perusahaan melalui ESG: Peran Kinerja Keuangan sebagai Variabel Moderasi pada Emiten Indeks SRI-KEHATI. Paradoks : Jurnal Ilmu Ekonomi. https://doi.org/10.57178/paradoks.v8i3.1482.

Sabrina, D. A., Sriyono, S., & Yulianti, R. (2025). The Effect of Environmental, Social, and Governance (ESG) Disclosure on Basic Material Company Financial Performance. JURNAL ILMU MANAJEMEN, 22(1), 98-114. https://doi.org/10.21831/jim.v22i1.81565.

Saragih, H. H., Saifi, M., Nuzula, N. F., & Worokinasih, S. (2024). The role of corporate agility in advancing sustainable strategy: Examining the influence of shareholder activism and board commitment. Sustainability, 16(24), Article 10861. https://doi.org/10.3390/su162410861.

Satriyo, F. B., & Taufiqurahman, E. (2021). Enterprise risk management analysis for construction company: A review based on investor and planning consultant. Journal of Infrastructure & Facilities Asset Management, 5(3), 243–256. http://dx.doi.org/10.12962/j26151847.v5i3.15361.

Singh, K. (2024). Evaluating post-consumer metal packaging recovery systems in South Africa (Master's thesis). Durban University of Technology. https://doi.org/10.51415/10321/5914.

Subhani, B. H., Zunhuan, S., & Khan, M. A. (2025). Finance for a greener future: Evolving the financial sector for ESG and sustainable corporate debt management. Borsa Istanbul Review, 25(1). https://doi.org/10.1016/j.bir.2025.01.011.

Suprapto, Y., Agustin, I. N., & Putri, A. A. (2025). Does Profitability Matter? The Dual Role of ROA and ROE in the ESG–Firm Value Relationship. Journal of Enterprise and Development (JED), 7(2), 358-369. https://doi.org/10.20414/jed.v7i2.13447.

Stout, L. A. (2012). The shareholder value myth: How putting shareholders first harms investors, corporations, and the public. Berrett-Koehler Publishers.

Tarjo, T., Anggono, A., Said, J., Halim, A., & Sakti, E. (2024). Sustainable Strategy, Risk Management, and Financial Performance of Tourism Operators. Jurnal Kepariwisataan Indonesia: Jurnal Penelitian dan Pengembangan Kepariwisataan Indonesia, 18(1), 77–94. https://doi.org/10.47608/jki.v18i12024.77–94.

Velte, P. (2022). Which institutional investors drive corporate sustainability? A systematic literature review. Business Strategy and the Environment, 31(5), 2042–2059. https://doi.org/10.1002/bse.3117.

Windasari, W., & Khasanah, N. (2021). Panel data approach for Sumatra economic growth modeling. Economics and Business, 8(1), 122–141. https://doi.org/10.35590/jeb.v8i1.2123.

Xue, A., Yang, G., & Wang, H. (2025). The Impact of Environmental, Social, and Governance (ESG) on the Green Development of Listed Companies in China’s Agricultural and Forestry Industries. Sustainability, 17(10), 4648. https://doi.org/10.3390/su17104648.

Yilmaz, M. K., Aksoy, M., Tatoglu, E., & Bayraktar, E. (2025). Digital maturity and corporate sustainability: Evaluating efficiency dynamics in an emerging market context. Sustainable Futures, 7, 100843. https://doi.org/10.1016/j.sftr.2025.100843.

Zeng, L., & Jiang, X. (2023). ESG and corporate performance: Evidence from agriculture and forestry listed companies. Sustainability, 15(8), 6723. https://doi.org/10.3390/su15086723.

Zhao, X., & Murrell, A. J. (2016). Revisiting the Corporate Social Performance‐Financial Performance Link: A Replication of Waddock and Graves. Strategic Management Journal, 37, 2378-2388. https://doi.org/10.1002/smj.2579.

Zulianto, A., & Aisjah, S. (2025). Sustainability and profitability: Does ESG disclosure influence firm value? Evidence from Indonesia. Jurnal Management Risiko dan Keuangan, 4(1). https://jmrk.ub.ac.id/index.php/jmrk/article/view/162.

Downloads

Published

2025-11-30

How to Cite

Sulistiyo, A. B., Widiyanti, N. W., Putri, I. L., & Miqdad, M. (2025). From Strategy and ESG to Shareholder Value: The Mediating Role of Sustainable Financial Performance and The Moderating Effect of Shariah Value Added in Indonesia. Jurnal Kajian Akuntansi, 9(2), 20–44. https://doi.org/10.33603/jka.v9i2.11005

Issue

Vol. 9 No. 2 (2025): DECEMBER 2025: Article in Progress

Section

Artikel

License

Copyright (c) 2025 Jurnal Kajian Akuntansi

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish in this journal agree to the following terms:
  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike (CC-BY-SA 4.0) that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.