Influence of Environmental, Social, and Governance on Investment Risk
Corresponding Author(s) : Olivia Rahmala Ihwan
Prosiding International Conference on Sustainable Innovation (ICoSI),
Vol. 3 No. 2 (2023)
Abstract
Introduction – In the implementation of investment, there are 2 things that investors face, profit or loss. To minimize investment risk, investors will conduct research by monitoring published company reports (financial and non-financial aspects). This study describes efforts to minimize investment risk from a non-financial perspective (in this study: ESG) by adding CEO Power as a moderating variable. Purpose – The purpose of this research is to find out that CEO Power's moderated ESG practices can reduce investment risk so as to increase investor confidence to invest in the company. Methodology/Approach – The object of research is Oil and Gas Sector Companies because this sector has a high level of sensitivity to natural resources and its operational activities can affect environmental conditions in the long term so that it becomes a public spotlight compared to companies in other sectors. This research is a quantitative study using the SPSS test tool. The samples used were 15 companies with no missing data criteria and has positive equity. The data used is the IDX's annual report publication data. Findings – This study provides new findings. CEO Power has influence but doesn't significantly, as long as ESG is implemented properly, the company is still able to reduce risk investment so investors are confident to invest. Originality/Value Implication – The results of the analysis show that social and ESG performance practices can reduce investment risk. Likewise CEO Power who moderates ESG can reduce investment risk. Social performance does not affect investment risk. The thing that the same goes for the governance and social performance moderated by CEO Power.
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