The Influence of ESG Score and Company Size on Market Investment with Real Earning Management as Moderator

DOI

10.2991/978-94-6239-622-7_15How to use a DOI?

Keywords

ESG; Company Size; Earnings Management; Market Investment; Cumulative Abnormal Return

Abstract

ESG performance has become the focus of many parties due to its correlation with financial performance and expected to increase public trust, which will ultimately affect the company investment performance. The objective of this research is to investigate the impact of ESG factors and firm size on market investment, while also evaluating the moderating influence of earnings management on this relationship. This study uses a sample of 117 secondary data from 39 companies listed on the Indonesia Stock Exchange (IDX) during the period 2021-2023, analyzed using Moderated Regression Analysis (MRA) using SPSS software. The findings indicate that ESG has no significant impact on market investment, whereas firm size demonstrates a substantial positive influence. Additionally, earnings management does not effectively moderate the relationships between ESG and firm size on market investment. These findings indicate that investors still focus on conventional indicators such as company size and do not yet consider ESG disclosure and earnings management practices in their investment decisions. Large companies tend to signal their financial strength and governance, so investors tend to choose to invest in these companies. Investors still have low sensitivity to earnings management and have not considered sustainability because they focus on conventional indicators such as company size. This study recommends strengthening regulations on ESG reporting practices and oversight of earnings management.

Research purpose: The objective of this research is to investigate the impact of ESG factors and firm size on market investment, while also evaluating the moderating influence of earnings management on this relationship.

Research motivation: This study focuses on discussing future ESG growth, which is likely to decline due to issues of earnings management practices. The study also reexamines investors’ perceptions of company size. Therefore, this study offers a new perspective on market investment reactions while there is earning management practice.

Research design, approach, and method: This study uses sample of 117 secondary data from 39 companies listed on the Indonesia Stock Exchange (IDX) during the period 2021-2023, analyzed using Moderated Regression Analysis (MRA) and SPSS software. The variables of earnings management, company size, and stock data were obtained from the Indonesia Stock Exchange (IDX) website, while the ESG Scores from Refinitiv website the Thomson Reuters Database.

Main findings: The findings indicate that ESG has no significant impact on market investment, whereas firm size demonstrates a substantial positive influence. Additionally, earnings management does not effectively moderate the relationships between ESG and firm size on market investment.

Practical/managerial implications: This study is expected investors to be more critical when assessing companies with potential earnings management practices. It also provides, insights for regulators to strengthen accounting policies and enforce transparent governance in sustainability-oriented companies.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Download article (PDF)

TY  - CONF
AU  - Elfirah Putri Syawal
AU  - Martdian Ratna Sari
PY  - 2026
DA  - 2026/04/21
TI  - The Influence of ESG Score and Company Size on Market Investment with Real Earning Management as Moderator
BT  - Proceedings of the International Conference on Emerging Challenges: Business Dynamics in Disruptive Economy (ICECH 2025)
PB  - Atlantis Press
SP  - 237
EP  - 247
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-622-7_15
DO  - 10.2991/978-94-6239-622-7_15
ID  - Syawal2026
ER  -