The Effect of Environmental, Social, and Governance (ESG) Performance, Green Investment, and Capital Structure on Company Value, with Profitability as a Mediating Variable, Among Listed Companies in the Agricultural Sector

Abstract

This research aims to examine the effect of Environmental, Social and Governance (ESG) performance, green investment, and capital structure on firm value, with profitability serving as a mediating variable, among agricultural companies listed on the Indonesia Stock Exchange during the 2022–2024 period. This research employed a quantitative approach using secondary data obtained from annual reports, sustainability reports, and financial statements. The sample consisted of 34 companies selected through purposive sampling. Panel data regression analysis and the Sobel test were employed to examine both the direct and indirect effects among the variables. The findings indicate that green investment has no direct effect on firm value, whereas ESG performance, capital structure, and profitability have significant direct effects on firm value. The mediation analysis reveals that profitability mediates the relationship between ESG performance and firm value as well as the relationship between green investment and firm value. In contrast, profitability mediates the relationship between capital structure and firm value with a negative indirect effect. These findings suggest that improvements in firm value within the agricultural sector are primarily driven by firms' ability to enhance profitability through ESG implementation and green investment, while capital structure continues to exert direct influence on firm value despite its negative indirect effect through profitability.