The Role of Sustainability Reporting in Enhancing Corporate Transparency and Firm Value in the ESG Era
This study aims to analyze the role of sustainability reporting in enhancing corporate transparency and firm value in the Environmental, Social, and Governance (ESG) era. ESG issues have become increasingly important in business practice and capital markets because investors no longer evaluate firms solely based on financial performance, but also consider how companies manage environmental risks, social responsibility, and governance quality. This study employs a quantitative approach with an explanatory research design. The sample consists of 120 non-financial companies listed on the Indonesia Stock Exchange during the 2020–2024 period, resulting in 600 firm-year observations. The data were obtained from annual reports, sustainability reports, financial statements, and capital market data. Sustainability reporting is measured using a sustainability disclosure index based on ESG indicators, corporate transparency is measured using an information transparency index, and firm value is measured using Tobin’s Q. The data analysis technique is panel data regression with mediation testing. The results show that sustainability reporting has a positive effect on corporate transparency and firm value. Corporate transparency is also found to have a positive effect on firm value and to mediate the relationship between sustainability reporting and firm value. These findings confirm that sustainability reports do not merely serve as compliance instruments, but also function as strategic mechanisms for strengthening information openness, reducing information asymmetry, and increasing investor confidence. This study implies that companies should prepare sustainability reports in a material, consistent, credible, and business-integrated manner in order to create sustainable firm value.