An Analysis of Enterprise Value Determinants in Public Companies with Asia Sustainability Report Rating (ASRRAT) in Indonesia

Abstract

Abstract 

This study investigates the determinants of enterprise value in Indonesian public companies recognized by the Asia Sustainability Reporting Rating (ASRRAT). It examines the effect of corporate governance as measured through Managerial Compensation, Board Size, and Good Corporate Governance (GCG) Index, also Internal Control, Enterprise Risk Management (ERM), and the Environmental, Social, and Governance (ESG) aspects of Sustainability Reporting. This study uses purposive sampling with 31 ASRRAT‐recognised companies listed on the Indonesia Stock Exchange from 2019 to 2023 were selected. The analysis uses multiple linear regression using SPSS 29.

Results show that Managerial Compensation has a significant negative effect on enterprise value, whereas Board Size, ERM, Social disclosure, and Governance disclosure shows significant positive effects, indicating that broader board capacity, integrated risk management, and transparent sustainability reporting particularly for social and governance aspects are valued by the market. In contrast, GCG Index, Internal Control, and Environmental disclosure show no significant effect on enterprise value possibly due to limitations in measurement scope, investor perception, or disclosure quality. Simultaneously all independent variables influence enterprise value.

The study contributes by showing that effective corporate governance, risk management practices, and credible sustainability disclosures are important to enhance enterprise value, while also highlighting the limited market relevance of compliance-based disclosures and governance practices thus providing implications for regulators, investors, and corporation in strengthening their internal practices and sustainability practices in Indonesia’s capital market.

Keywords: Enterprise Value, Enterprise Risk Management, Corporate Governance, Internal Control, Sustainability Reporting.