Preliminary Study Preliminary Study of IFRS S1 Sustainability Disclosure on Firm Value: The Role of ESG Risk
DOI:
https://doi.org/10.30651/stb.v6i1.30580Keywords:
IFRS S1, Firm Value, Sustainability Reporting, ESGAbstract
This study investigates the impact of IFRS S1–based sustainability disclosure on firm value and examines the role of ESG risk during the pre-implementation period in Indonesia. A quantitative research design is employed using cross-sectional data from 40 companies included in the SRI-KEHATI 45 Index in 2024. The data are analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM). The findings reveal that, during the pre-implementation phase, sustainability disclosures based on IFRS S1 do not exert a significant positive effect on firm value. In contrast, ESG risk shows a partial and significant positive influence on firm value. Nevertheless, ESG risk does not function as a moderating variable in the relationship between IFRS S1–based sustainability disclosure and firm value. This study contributes to the existing literature by offering empirical insights into the effects of IFRS S1 pre-implementation and the role of ESG risk on firm value. Furthermore, the findings provide practical implications for regulators and practitioners, highlighting the need to strengthen implementation guidelines, enhance disclosure quality monitoring, and improve formal compliance with IFRS S1.
References
Aboud, A., & Diab, A. (2018). The impact of social, environmental and corporate governance disclosures on firm value: Evidence from Egypt. Journal of Accounting in Emerging Economies, 8(4), 442–458. https://doi.org/10.1108/JAEE-08-2017-0079
Adhariani, D., & du Toit, E. (2020). Readability of sustainability reports: evidence from Indonesia. Journal of Accounting in Emerging Economies, 10(4), 621–636. https://doi.org/10.1108/JAEE-10-2019-0194
Albuquerque, R., Koskinen, Y., Yang, S., & Zhang, C. (2020). Resiliency of Environmental and Social Stocks : An Analysis of the Exogenous COVID-19 Market Crash. 9, 593–621. https://doi.org/10.1093/rcfs/cfaa011
Alsahali, K. F. (2025). ESG compensation policy and assurance over sustainability reports : December. https://doi.org/10.1108/MF-03-2025-0201
Amaya, N., López-Santamaría, M., Acosta, Y. A. C., & Hinestroza, M. P. G. (2021). A step-by-step method to classify corporate sustainability practices based on the Signaling Theory. MethodsX, 8. https://doi.org/10.1016/j.mex.2021.101538
Ammer, M. A., Aliedan, M. M., & Alyahya, M. A. (2020). Do Corporate Environmental Sustainability Practices Influence Firm Value ? The Role of Independent Directors : Evidence from Saudi Arabia.
Aydoğmuş, M., Gülay, G., & Ergun, K. (2022). Impact of ESG performance on firm value and profitability. Borsa Istanbul Review, 22, S119–S127. https://doi.org/https://doi.org/10.1016/j.bir.2022.11.006
Badar, M., Munir, U., & Ishfaq, M. (2025). Impact of environmental award and financial performance on environmental disclosure quality : a case study of listed companies in Pakistan. Discover Sustainability. https://doi.org/10.1007/s43621-025-00846-1
Baig, M., & Khan, S. A. (2016). Impact of IFRS on Earnings Management: Comparison of Pre-Post IFRS Era in Pakistan. Procedia - Social and Behavioral Sciences, 230(May), 343–350. https://doi.org/10.1016/j.sbspro.2016.09.043
Berg, F., Kölbel, J. F., & Rigobon, R. (2022). Aggregate Confusion: The Divergence of ESG Ratings*. Review of Finance, 26(6), 1315–1344. https://doi.org/10.1093/rof/rfac033
Bolton, P., & Kacperczyk, M. (2021). Do investors care about carbon risk? Journal of Financial Economics, 142(2), 517–549. https://doi.org/https://doi.org/10.1016/j.jfineco.2021.05.008
Broadstock, D. C., Chan, K., Cheng, L. T. W., & Wang, X. (2021). The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China. Finance Research Letters, 38, 101716. https://doi.org/https://doi.org/10.1016/j.frl.2020.101716
Carungu, J., Dimes, R., & Molinari, M. (2025). The influence of global sustainability reporting standards on the discourse within the EU. Sustainability Accounting, Management and Policy Journal. https://doi.org/10.1108/SAMPJ-12-2024-1378
Ching, H. Y., & Gerab, F. (2017). Sustainability reports in Brazil through the lens of signaling , legitimacy and stakeholder theories. 13(1), 95–110. https://doi.org/10.1108/SRJ-10-2015-0147
Cho, C. H., Laine, M., Roberts, R. W., & Rodrigue, M. (2015). Organized hypocrisy, organizational façades, and sustainability reporting. Accounting, Organizations and Society, 40, 78–94. https://doi.org/https://doi.org/10.1016/j.aos.2014.12.003
Cho, C. H., Michelon, G., Patten, D. M., & Roberts, R. W. (2015). CSR disclosure: the more things change…? Accounting, Auditing & Accountability Journal, 28(1), 14–35. https://doi.org/10.1108/AAAJ-12-2013-1549
Christensen, H. B., & Hail, L. (2021). Mandatory CSR and sustainability reporting : economic analysis and literature review. 1176–1248.
Christensen, H. B., Hail, L., & Leuz, C. (2013). Mandatory IFRS reporting and changes in enforcement. Journal of Accounting and Economics, 56(2, Supplement 1), 147–177. https://doi.org/https://doi.org/10.1016/j.jacceco.2013.10.007
Dhaliwal, D., Li, O. Z., Tsang, A., & Yang, Y. G. (2014). Corporate social responsibility disclosure and the cost of equity capital: The roles of stakeholder orientation and financial transparency. Journal of Accounting and Public Policy, 33(4), 328–355. https://doi.org/https://doi.org/10.1016/j.jaccpubpol.2014.04.006
Fianko, S. K., Amoah, N., Addo, A., Agyemang, K., Gbadago, F. Y., Adjaye-Gyamfi, O., Agbemava, E., Agropah, F., Zaglago, L., Atiase, D. D., & Nooni, I. K. (2025). IFRS S1 and S2 implementation readiness in emerging markets: a multi-dimensional assessment framework and market readiness index. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-12-2024-0921
Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210–233. https://doi.org/10.1080/20430795.2015.1118917
Friske, W., Hoelscher, S. A., & Nikolov, A. N. (2023). The impact of voluntary sustainability reporting on firm value: Insights from signaling theory. Journal of the Academy of Marketing Science, 51(2), 372–392. https://doi.org/10.1007/s11747-022-00879-2
Helfaya, A., Aboud, A., & Amin, E. (2023). An examination of corporate environmental goals disclosure, sustainability performance and firm value – An Egyptian evidence. Journal of International Accounting, Auditing and Taxation, 52(June), 100561. https://doi.org/10.1016/j.intaccaudtax.2023.100561
Hummel, K., & Jobst, D. (2024). An Overview of Corporate Sustainability Reporting Legislation in the European Union An Overview of Corporate Sustainability Reporting Legislation in the European Union. 9480. https://doi.org/10.1080/17449480.2024.2312145
IAI. (2025). Indonesia Launches Sustainability Disclosure Standards based on IFRS S1 and S2. https://web.iaiglobal.or.id/Berita-IAI/detail/indonesia_launches_sustainability_disclosure_standards_based_on_ifrs_s1_and_s2#gsc.tab=0
ISSB. (2023). Ifrs S1. IFRS® Sustainability Disclosure Standard, June, 1–48. https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/
Krüger, P. (2015). Corporate goodness and shareholder wealth. Journal of Financial Economics, 115(2), 304–329. https://doi.org/https://doi.org/10.1016/j.jfineco.2014.09.008
Kuzey, C., & Uyar, A. (2017). Determinants of sustainability reporting and its impact on firm value: Evidence from the emerging market of Turkey. Journal of Cleaner Production, 143, 27–39. https://doi.org/10.1016/j.jclepro.2016.12.153
Laskar, N., & Gopal Maji, S. (2018). Disclosure of corporate sustainability performance and firm performance in Asia. Asian Review of Accounting, 26(4), 414–443. https://doi.org/10.1108/ARA-02-2017-0029
Li, Z., Liao, G., & Albitar, K. (2020). Does corporate environmental responsibility engagement affect firm value? The mediating role of corporate innovation. Business Strategy and the Environment, 29(3), 1045–1055. https://doi.org/https://doi.org/10.1002/bse.2416
Loh, L., & Tan, S. (2020). Impact of sustainability reporting on brand value: An examination of 100 leading brands in Singapore. Sustainability (Switzerland), 12(18), 1–17. https://doi.org/10.3390/SU12187392
Loh, L., Thomas, T., & Wang, Y. (2017). Sustainability Reporting and Firm Value : Evidence from Singapore-Listed Companies. 1–12. https://doi.org/10.3390/su9112112
Loprevite, S., Ricca, B., & Rupo, D. (2018). Performance sustainability and integrated reporting: Empirical evidence from mandatory and voluntary adoption contexts. Sustainability (Switzerland), 10(5), 6–9. https://doi.org/10.3390/su10051351
Lulu Khansa Komala, & Murtanto. (2024). Analysis Of Sustainability Report Standards And Adjustment Of IFRS S1 & IFRS S2 Standards Implementation. International Journal of Accounting, Management, Economics and Social Sciences (IJAMESC), 2(5 SE-Articles), 1643–1657. https://doi.org/10.61990/ijamesc.v2i5.291
Made, N., Rukmiyati, S., Bagus, I., Purbawangsa, A., Kajeng, I. G., & Rika, I. (2023). Uncertain Supply Chain Management The role of investor recognition mediates the effect of sustainability reporting quality on firm value. 11, 1561–1568. https://doi.org/10.5267/j.uscm.2023.7.013
Ni, K., Zhang, R., Tan, L., & Lai, X. (2024). How ESG enhances corporate competitiveness: Mechanisms and Evidence. Finance Research Letters, 69, 106249. https://doi.org/https://doi.org/10.1016/j.frl.2024.106249
Pamungkas, N. B., Meini, Z., Nasional, U., & Indonesia, J. (2023). The Effects Of Sustainability Reporting And Intellectual Capital Disclosure On Firm Value , With Profitability As A. 12(01), 327–334.
Permatasari, I. (2022). Sustainability reporting or integrated reporting : which one is valuable for investors ? 666–684. https://doi.org/10.1108/JAOC-12-2020-0204
Pratama, A., Dewi, N., Sofia, P., Muhammad, K., & Rizky, L. (2024). Sustainability Reporting Ecosystem and IFRS S1 and S2 : How Accounting Research Can Assist its Implementation. 6798. https://doi.org/10.62754/joe.v3i4.3830
Pratama, A., Jaenudin, E., & Anas, S. (2022). Environmental, Social, Governance-Sustainability Disclosure Using International Financial Reporting Sustainability Standards S1 in Southeast Asian Companies: A Preliminary Assessment. International Journal of Energy Economics and Policy, 12(6), 456–472. https://doi.org/10.32479/ijeep.13581
Rui, C., Hyeongjun, K., & Doojin, R. (2024). ESG performance and firm value in the Chinese market. Investment Analysts Journal, 53(1), 1–15. https://doi.org/10.1080/10293523.2023.2218124
Rusu, T. M., Odagiu, A., Pop, H., & Paulette, L. (2024). Sustainability Performance Reporting. https://doi.org/10.3390/su16198538
Sustainalytics. (2024). ESG Risk Around the World (Issue March).
Thuc, T., & Nguyen, D. (2020). An Empirical Study On The Impact Of Sustainability Reporting On Firm Value. 12, 119–135.
Vluggen, R., Gelderman, C. J., Semeijn, J., & Pelt, M. Van. (2019). Sustainable Public Procurement — External Forces and Accountability. 9–17. https://doi.org/10.3390/su11205696
Wu, S., Li, X., Du, X., & Li, Z. (2022). The Impact of ESG Performance on Firm Value : The Moderating Role of Ownership Structure. 1–22.
Younis, M. (2023). Sustainability reports and their impact on firm value : Evidence from Saudi Arabia Keyword s. 12(2), 70–83. https://doi.org/10.18488/11.v12i2.3275
Downloads
Published
Issue
Section
License
Copyright (c) 2026 SUSTAINABLE
This work is licensed under a Creative Commons Attribution 4.0 International License.
Copyright
Copyright for articles published in Sustainable: Accounting Journal.
Authors must submit copyright to the journal by signing and sending the copyright assignment form (template) via email sustainable@um-surabaya.ac.id
Authors can disseminate their articles through any media.
Licence
Every work written by the author is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
