Arthatama

Journal of Business Management and Accounting

ISSN: 2655-786x (p), 2774-5678 (e)

Vol. 9, No. 1 (2025), pp. 83-92

The Impact of ESG Disclosure on Firm Value:

Systematic Literature Review Approach

Lulu Islami Nur Afifah1*, Sekar Ayu Cahyaningtyas1, Wisnu Mawardi1

1
Universitas Diponegoro, Semarang, Indonesia
luluislami10@[Link]

Abstract
This study investigates the impact of Environmental, Social, and Governance
(ESG) disclosure on firm value using a Systematic Literature Review (SLR)
approach. The growing global emphasis on sustainable business practices has
made ESG disclosure a key instrument in signaling corporate responsibility and
long-term value creation. However, empirical findings across sectors and regions
remain inconsistent. This paper synthesizes 30 reputable international articles
(indexed as Q1/Q2) from 2020 to 2025 to identify prevailing patterns and gaps.
The results show that many studies report a significant positive relationship
between ESG disclosure and firm value. Nevertheless, only a minority of studies
explore profitability as a moderating variable, and its moderating effect appears
statistically insignificant. The review highlights that organizational characteristics
such as firm size may play a more decisive role in enhancing the value effects of
ESG disclosure. The paper contributes to sustainability literature by offering an
integrated conceptual framework and suggesting future empirical directions,
particularly concerning moderating variables in different institutional and
industrial contexts.

Keywords
ESG Disclosure, Firm Size, Firm Value, ROA

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The Impact of ESG Disclosure on Firm Value: Systematic Literature Review Approach

1. Introduction
Sustainability issues in the business world have become a global concern that
can no longer be ignored. Companies today are expected not only to pursue
profitability but also to act responsibly in terms of environmental, social, and
governance (ESG) aspects. In this context, ESG disclosure has emerged as a crucial
instrument through which companies can demonstrate their commitment to
sustainable business practices (Hardiningsih et al., 2024; Hutauruk, 2024; Jafar &
Setiawan, 2025). ESG disclosure is believed to enhance investor trust, strengthen
corporate reputation, and create long-term value for stakeholders. Therefore,
examining the relationship between ESG disclosure and firm value becomes both
relevant and urgent, especially in the post-pandemic era, where public expectations
of corporate responsibility have intensified (Fuadah et al., 2022; Fayyaz et al., 2023;
Cai et al., 2024; Abdi et al., 2024).
Numerous studies have explored the link between ESG disclosure and firm
value. Recent research has yielded diverse and context-dependent results. For
example, Chung, Bayne, and Birt (2023) found that ESG disclosure has a positive
effect on corporate financial performance in Hong Kong, particularly in the social
dimension. Conversely, ESG’s impact on financial performance in the energy sector
tends to be insignificant, indicating that the effect may vary across different industrial
sectors. Other studies, such as those conducted by Ali et al. (2025) and Hussain et
al. (2024), support the argument that ESG disclosure contributes to profitability and
market value, particularly in developing countries. Nevertheless, differences in
methodological approaches, geographical contexts, and firm characteristics have led
to inconclusive findings, underscoring the need for a more comprehensive synthesis
of literature (Zhang et al., 2020; Yordudom & Suttipun, 2020).
In response to this situation, the present study aims to contribute academically
through a Systematic Literature Review (SLR) approach. This method allows for the
structured and critical identification of patterns, inconsistencies, and trends within
the existing body of research. Unlike individual studies that focus on specific samples
or contexts, an SLR enables a broader and more objective analysis of the relationship
between ESG disclosure and firm value, by examining how the environmental, social,
and governance dimensions are reported and how they influence investor perception
and market performance.
The objective of this article is to explore and synthesize empirical findings on
the impact of ESG disclosure on firm value, as published in recent academic
literature. Employing a Systematic Literature Review approach, this article filters,
classifies, and analyzes reputable academic publications to construct a more
comprehensive and in-depth understanding. The study is grounded in a central
issue—namely, the lack of strong consensus regarding the impact of ESG disclosure
on firm value across different industries and geographical settings. Through this
review, the author aims to contribute conceptually to the development of

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sustainability theory while also offering practical recommendations for policymakers,

investors, and corporate management.
2. Literature Review
This literature review aims to serve as the theoretical core of the article and
provide a comprehensive understanding of the relationship between Environmental,
Social, and Governance (ESG) disclosure, profitability, and firm size to firm value.
Rather than merely summarizing previous research findings, this section synthesizes
published academic work and critically evaluates the contributions and limitations
of each study within a broader conceptual framework. The literature review supports
the development of theoretical arguments and offers an empirical foundation for the
present study (Khanchel et al., 2023; Schrank & Kijkasiwat, 2024).

2.1. ESG Disclosure: Concept and Strategic Role

ESG disclosure refers to the communication of a company’s policies, practices,
and impacts related to environmental, social, and governance dimensions to its
stakeholders. ESG functions not only as a tool for non-financial accountability but
also as a signal of managerial quality that can enhance the firm’s market value (Chung
et al., 2023). According to Hussain et al. (2024), the higher the quality and quantity
of ESG disclosure, the greater the investor confidence in the company’s long-term
sustainability. As such, ESG disclosure has become a corporate strategy aimed at
strengthening legitimacy and improving access to financial resources (Aydoğmuş et
al., 2022).
Several studies emphasize that ESG disclosure can enhance corporate
reputation, improve stakeholder relationships, and reduce both operational and
regulatory risks (Ali et al., 2025; Dorothy & Endri, 2024). Furthermore, sectoral and
geographical characteristics are crucial factors that determine the extent to which
ESG disclosure contributes to firm value. In developing countries such as Saudi
Arabia, ESG disclosure has been found to have a significant impact on profitability
and market value (Hussain et al., 2024). However, in the energy sector in Turkey,
findings indicate an insignificant relationship, highlighting the contextual nature of
ESG’s effectiveness (Rizki & Nugroho, 2024).

2.2. Firm Value and Measurement Indicators

Firm value generally reflects investors’ perceptions of a company's future
prospects and is commonly measured using indicators such as Tobin’s Q, Price to
Book Value (PBV), or market capitalization. ESG disclosure is hypothesized to have
a positive correlation with firm value, as it is perceived as an indicator of long-term
performance sustainability. A study by Chung et al. (2023) demonstrates that high-
quality ESG disclosure significantly enhances firm value, particularly in markets with
stringent disclosure regulations, such as Hong Kong. Similarly, Binh and Lee (2024)
reinforce this argument by stating that the impact of ESG on firm value can be

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The Impact of ESG Disclosure on Firm Value: Systematic Literature Review Approach

influenced by firm-specific characteristics, including company size and carbon

emission intensity.
Nevertheless, not all studies report consistent findings. Some research indicates
that only specific components of ESG contribute to firm value. For instance, the
study by Dorothy and Endri (2024) finds that governance and social components
have a more significant influence compared to the environmental component. These
findings highlight the need for a more nuanced approach in evaluating each
dimension of ESG separately, rather than generalizing their overall effect on firm
value (Abdi et al., 2022).

2.3. Inconsistencies in Findings and the Importance of Systematic Literature

Review (SLR)
Although a substantial body of literature supports a positive relationship
between ESG disclosure and firm value, the findings remain far from consistent.
These inconsistencies stem from variations in industry contexts, differences in
national regulations, firm size, and the methods used to measure both ESG
disclosure and firm value (Alias et al., 2016; Husna et al., 2023; Alodat & Hao,
2025). Some studies, such as the one conducted by Rohendi et al. (2024), even argue
that ESG disclosure does not exert a direct influence on firm value but rather
operates through mediating factors such as competitive advantage.
In this context, the application of a Systematic Literature Review (SLR) becomes
highly relevant. SLR not only systematically collects and organizes prior research
findings, but also critically evaluates the methodologies, contexts, and theoretical
contributions of each study. As a result, SLR can provide a comprehensive
conceptual map and offer recommendations grounded in a wide and current body
of empirical evidence.
3. Methods
This study employs a Systematic Literature Review (SLR) approach to examine
the impact of Environmental, Social, and Governance (ESG) disclosure on firm
value. The SLR method was chosen for its ability to collect and evaluate previous
research findings in a comprehensive, structured, and evidence-based manner. This
approach allows the researcher to identify patterns, inconsistencies in results, and
gaps in the existing academic literature. Each stage in this study is designed to ensure
that the processes of literature selection, analysis, and synthesis are scientifically
replicable and accountable. Through this systematic review, the researcher aims to
explore more deeply the analysis of the impact of ESG disclosure on firm value.
The target population in this study consists of all scholarly articles that
investigate the relationship between ESG disclosure and firm value, both directly and
indirectly, and are published in reputable international journals. The unit of analysis
includes both quantitative and qualitative research articles examining the influence
of ESG on firm value, without restriction to any industry sector. The literature search

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focused on articles published between 2020 and 2025 to capture the latest
developments and emerging trends in the literature related to ESG disclosure and
firm value. Data was collected through a literature search and selection process
following the PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-
Analyses) protocol. This process consists of four main stages: identification,
screening, eligibility assessment, and inclusion.
In the identification stage, literature searches were conducted using specific
keywords such as “ESG disclosure,” “firm value,” “corporate size,” and “ROA” across
major academic databases, primarily Scopus. In the screening and eligibility
assessment stages, the selection process was supported by the use of the Watase Uake
platform, a web-based tool designed to facilitate systematic filtering and classification
of articles based on titles, abstracts, keywords, and publication years. With the aid of
this technology, the screening process became more efficient and targeted, ensuring
that only articles meeting the inclusion criteria were selected for further analysis. The
inclusion criteria applied in this study were as follows: (1) articles published between
2020 and 2025; (2) peer-reviewed publications; and (3) studies explicitly discussing
the relationship between ESG disclosure, profitability (ROA), firm size, and firm
value.
4. Results
Figure 1 presents the data from the systematic literature review in the form of
a PRISMA (Preferred Reporting Items for Systematic Reviews and Meta- Analyses)
flow diagram, which aims to enhance the quality and consistency of systematic
literature reviews. The data was retrieved from the Watase Uake platform, with
sources drawn from the Scopus database, using the keywords environmental, social,
and governance disclosure, firm value in Indonesia, corporate size, and ROA. The
selected articles are Scopus-indexed publications ranked Q1–Q2, published between
2020 and 2025. Out of an initial 598 articles, 384 were excluded for not meeting the
preliminary selection criteria, leaving 214 articles for further screening. Following
the screening process, only 33 studies were deemed eligible for data extraction;
however, 9 of these could not be accessed. In the end, 30 articles met all criteria and
were included in this systematic review to analyze the impact of ESG disclosure on
firm value.

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Figure 1: PRISMA

This study examines 30 relevant scholarly articles published in reputable

international journals between 2020 and 2025. Based on a systematic analysis, the
review explores the impact of Environmental, Social, and Governance (ESG)
disclosure on firm value, while considering supporting variables such as firm size and
Return on Assets (ROA). In general, many studies indicate that ESG disclosure has
a positive effect on firm value. This impact is particularly evident in companies with
strong board structures, high financial transparency, and active stakeholder
engagement. Several studies also highlight the moderating role of firm size and audit
committees in either strengthening or weakening the relationship between ESG
disclosure and firm value.
However, the findings are not entirely consistent. For instance, one study
conducted in China reported a negative correlation between ESG disclosure
integration and firm value, attributed to cultural factors and the relatively low
sophistication of investors. Firm size plays a significant role in enhancing the
influence of ESG, with larger firms typically showing a stronger relationship between
ESG disclosure and firm performance or value compared to smaller firms.
Meanwhile, ROA, as a measure of profitability, is often used to assess the indirect
relationship between ESG and firm value and has also been found to have a positive
correlation in the context of ESG disclosure. Additionally, several articles emphasize

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that ESG disclosure affects the cost of capital, corporate reputation, and market
reaction—all of which serve as indirect channels through which firm value can be
improved.
Therefore, the findings of this review reinforce the argument that ESG
disclosure is not merely a matter of regulatory compliance, but a strategic initiative
that contributes to enhancing corporate value and competitiveness in the market.
The findings of this review indicate that ESG disclosure generally has a positive
impact on firm value and performance. These results align with previous literature
that highlight ESG as a positive signal to investors as well as a strategic tool to
enhance corporate transparency and reputation. However, profitability is more
frequently used as a dependent variable rather than as a moderator. Only a few
studies have examined its role as a reinforcing variable in the relationship between
ESG and firm value, and the results tend to be insignificant. This suggests that
profitability likely exerts a direct influence on firm value, rather than acting as a
mediator or moderator.
In contrast, internal factors such as firm size, board diversity, and the presence
of a sustainability committee consistently moderate the ESG–firm value relationship
positively. This underscores the importance of governance quality and organizational
capacity in effectively managing ESG practices. Geographical context also plays a
significant role. Countries with stringent ESG regulations, such as Saudi Arabia and
Hong Kong, exhibit a stronger linkage between ESG disclosure and firm value,
whereas different outcomes are observed in regions with less developed institutional
frameworks. The effectiveness of ESG disclosure depends heavily on a combination
of internal and external factors. Further research is necessary to explore additional
interactive variables to develop a more comprehensive understanding of the
mechanisms through which ESG creates firm value.
5. Conclusion
This study concludes that Environmental, Social, and Governance (ESG)
disclosure plays a significant role in influencing overall firm value and performance.
The majority of studies reviewed demonstrate a positive and significant relationship
between ESG disclosure and firm value, affirming that companies which actively and
transparently report their sustainability practices tend to receive favorable responses
from the market and stakeholders. These findings reinforce the position of ESG as
a value-creating strategy rather than merely a reporting obligation. Nevertheless, this
review also identifies limitations in the literature regarding the role of profitability—
such as Return on Assets (ROA)as a moderating variable. ROA is more commonly
employed as a dependent variable, and only a few studies explicitly assess its role in
strengthening the relationship between ESG and firm value. For example, studies
examining profitability’s moderating effect, such as Dorothy and Endri (2024), report
insignificant results. This suggests that internal financial indicators may be
insufficient to fully explain the variations in ESG’s impact, whereas variables like

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The Impact of ESG Disclosure on Firm Value: Systematic Literature Review Approach

firm size, board diversity, and the presence of sustainability committees exhibit more
stable and consistent moderating effects.
A primary limitation of this study lies in its reliance on a Systematic Literature
Review (SLR) approach. Although SLR provides a broad overview of existing
literature, the heterogeneity in contexts, methodologies, and variables across
individual studies constrains the consistency of result interpretations. Furthermore,
the absence of quantitative methods such as meta-analysis limits the ability to
statistically determine the strength of effects. Therefore, it is recommended that
future research explore the moderating role of profitability more deeply using robust
quantitative approaches, such as interaction regression models or meta-analytical
frameworks. Studies could also focus on cross-country or cross-industry comparisons
to better understand the influence of institutional contexts on the effectiveness of
ESG disclosure. Such findings would enrich theoretical understanding and offer
sharper practical insights for companies and policymakers in formulating long-term
sustainability strategies.

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