ESG Performance, Financial Ratios, Stock Prices, and Dividend Payments: Manufacturing and Energy Companies

Article Sidebar

PDF
Published: May 31, 2026
DOI: https://doi.org/10.58812/esmb.v4i03.996
Keywords:
Dividend Policy; ESG; ROA; ROE; Stock Price

Main Article Content

Siti Nur Aisyah
Management Study Program, Nusa Putra University
Ana Yuliana Jasuni
Management Study Program, Nusa Putra University
Febri Wulandari Ansori
Management Study Program, Nusa Putra University
Agung Maulana
Sunway Business School, Sunway University

Abstract

Industrialization has led to an increase in environmental problems, resulting in higher demands for companies to adopt Environmental, Social, and Governance (ESG) principles. ESG practices involve a trade-off for companies between ESG performance, which requires large investments and has the potential to sacrifice shareholder profitability in the short term. This study aims to examine the influence of ESG performance, profitability ratios Return on Assets (ROA) and Return on Equity (ROE), and closing stock price on the Dividend Payout Ratio (DPR) for manufacturing and energy companies with high emissions in Indonesia from 2018 to 2023. The model used is panel data regression with a random effects approach. The results show that only ROE and the Governance (G) pillar have a significant positive effect on DPR, while the other variables are not significant. These findings indicate that dividend policy is still profit-based and that governance influences dividend policy considerations.

Article Details

How to Cite
Aisyah, S. N., Yuliana Jasuni, A., Ansori, F. W., & Maulana, A. (2026). ESG Performance, Financial Ratios, Stock Prices, and Dividend Payments: Manufacturing and Energy Companies. The Eastasouth Management and Business, 4(03), 690 – 713. https://doi.org/10.58812/esmb.v4i03.996
Issue
Vol. 4 No. 03 (2026): The Eastasouth Management and Business (ESMB)
Section
Articles
Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

References

[1] L. Ningrum, R. Nooraeni, S. M. Berliana, and L. K. Sari, “Association of SDG Indicators of the Social Development Pillar in Indonesia using the Apriori Algorithm,” in Procedia Computer Science, 2024, vol. 245, no. C, pp. 450–459, doi: 10.1016/j.procs.2024.10.271.

[2] T. T. Li, K. Wang, T. Sueyoshi, and D. D. Wang, “Esg: Research progress and future prospects,” Sustainability (Switzerland), vol. 13, no. 21. MDPI, Nov. 01, 2021, doi: 10.3390/su132111663.

[3] Y. Li, M. Liao, and Y. Liu, “How does green credit policy affect polluting firms’ dividend policy? The China experience,” 2023. [Online]. Available: https://ssrn.com/abstract=4327022.

[4] BPS, “Pertumbuhan Ekonomi Indonesia Triwulan IV-2023,” Indonesia, Feb. 2024.

[5] E. I. Wiloso et al., “Indonesia’s contribution to global carbon flows: Which sectors are most responsible for the emissions embodied in trade?,” Sustain. Prod. Consum., vol. 48, pp. 157–168, Jul. 2024, doi: 10.1016/j.spc.2024.05.005.

[6] Y. I. Siregar, “Pathways towards net-zero emissions in Indonesia’s energy sector,” Energy, vol. 308, Nov. 2024, doi: 10.1016/j.energy.2024.133014.

[7] S. B. Erdogan, G. O. Danisman, and E. Demir, “ESG performance and dividend payout: A channel analysis,” Financ. Res. Lett., vol. 55, Jul. 2023, doi: 10.1016/j.frl.2023.103827.

[8] P. V. Matos, V. Barros, and J. M. Sarmento, “Does ESG affect the stability of dividend policies in Europe?,” Sustain., vol. 12, no. 21, pp. 1–15, Nov. 2020, doi: 10.3390/su12218804.

[9] N. Nareswari, M. Tarczynska-Luniewska, and R. U. Al Hashfi, “Analysis of Environmental, Social, and Governance Performance in Indonesia: Role of ESG on Corporate Performance,” in Procedia Computer Science, 2023, vol. 225, pp. 1748–1756, doi: 10.1016/j.procs.2023.10.164.

[10] H. A. Boshnak, “The impact of board composition and ownership structure on dividend payout policy: evidence from Saudi Arabia,” Int. J. Emerg. Mark., vol. 18, no. 9, pp. 3178–3200, Nov. 2023, doi: 10.1108/IJOEM-05-2021-0791.

[11] Y. Baninla, C. Wang, J. Pu, X. Gao, and Q. Zhang, “Evaluating the progress and identifying future improvement areas of mining’s contribution to the sustainable development goals (SDGs),” Extractive Industries and Society, vol. 23. Elsevier Ltd, Sep. 01, 2025, doi: 10.1016/j.exis.2025.101637.

[12] T. T. Chuang, K. Nakatani, and D. Zhou, “An exploratory study of the extent of information technology adoption in SMEs: An application of upper echelon theory,” J. Enterp. Inf. Manag., vol. 22, no. 1–2, pp. 183–196, Feb. 2009, doi: 10.1108/17410390910932821.

[13] D. C. Hambrick and P. A. Mason, “Upper Echelons: The Organization as a Reflection of Its Top Managers^,” 1984.

[14] A. Dhir, S. J. Khan, N. Islam, P. Ractham, and N. Meenakshi, “Drivers of sustainable business model innovations. An upper echelon theory perspective,” Technol. Forecast. Soc. Change, vol. 191, Jun. 2023, doi: 10.1016/j.techfore.2023.122409.

[15] R. K. Ullah, A. Saqib, M. A. Abbasi, A. Mikhaylov, and G. Pinter, “Green Leadership, environmental knowledge Sharing, and sustainable performance in manufacturing Industry: Application from upper echelon theory,” Sustain. Energy Technol. Assessments, vol. 60, Dec. 2023, doi: 10.1016/j.seta.2023.103540.

[16] W. He, L. Ng, N. Zaiats, and B. Zhang, “Dividend policy and earnings management across countries,” J. Corp. Financ., vol. 42, pp. 267–286, Feb. 2017, doi: 10.1016/j.jcorpfin.2016.11.014.

[17] T. Lotfi, “Dividend Policy, Signaling Theory: A Literature Review,” 2019. [Online]. Available: https://ssrn.com/abstract=3359144.

[18] M. S. Hernández, “Beliefs and attitudes of canarians towards the chilean linguistic variety,” Lenguas Mod., no. 62, pp. 183–209, 2023, doi: 10.13039/501100011033.

[19] C. Xuan and C. J. Kim, “Structural breaks in the mean of dividend-price ratios: Implications of learning on stock return predictability,” Japan World Econ., vol. 55, Sep. 2020, doi: 10.1016/j.japwor.2020.101027.

[20] O. A. Esqueda, “Signaling, corporate governance, and the equilibrium dividend policy,” Q. Rev. Econ. Financ., vol. 59, pp. 186–199, Feb. 2016, doi: 10.1016/j.qref.2015.06.005.

[21] EBA, “Eba Report On Management And Supervision Of Esg Risks For Credit Institutions And Investment Firms EBA/REP/2021/18,” 2021.

[22] B. Buchetti, F. R. Arduino, and S. Perdichizzi, “A literature review on corporate governance and ESG research: Emerging trends and future directions,” Int. Rev. Financ. Anal., vol. 97, Jan. 2025, doi: 10.1016/j.irfa.2024.103759.

[23] G. Wan, A. Y. Dawod, S. Chanaim, and S. S. Ramasamy, “Hotspots and trends of environmental, social and governance (ESG) research: a bibliometric analysis,” Data Sci. Manag., vol. 6, no. 2, pp. 65–75, Jun. 2023, doi: 10.1016/j.dsm.2023.03.001.

[24] Ľ. Pástor, R. F. Stambaugh, and L. A. Taylor, “Sustainable investing in equilibrium,” J. financ. econ., vol. 142, no. 2, pp. 550–571, Nov. 2021, doi: 10.1016/j.jfineco.2020.12.011.

[25] Bloomberg, “Bloomberg ESG Scores Overview & FAQ,” Nov. 2023.

[26] Z. Yu, U. Farooq, M. M. Alam, and J. Dai, “How does environmental, social, and governance (ESG) performance determine investment mix? New empirical evidence from BRICS,” Borsa Istanbul Rev., vol. 24, no. 3, pp. 520–529, May 2024, doi: 10.1016/j.bir.2024.02.007.

[27] J. Shi, C. Zhang, J. Wen, Z. Zhang, and T. Wu, “Research on improving the key indicators of enterprise ESG rating,” in Procedia Computer Science, 2024, vol. 242, pp. 912–919, doi: 10.1016/j.procs.2024.08.272.

[28] E. Alexandra, L. Svetlana, and K. Alexander, “The Impact of ESG Indicators on the Financial Stability of Companies,” in Procedia Computer Science, 2024, vol. 242, pp. 1226–1234, doi: 10.1016/j.procs.2024.08.151.

[29] D. T. Caterina and M. Mazzuca, “The stock price of European insurance companies: What is the role of ESG factors?,” Financ. Res. Lett., vol. 56, Sep. 2023, doi: 10.1016/j.frl.2023.104071.

[30] S.-L. Chen, D. Wang, and H.-W. Chen, “The Impact of ESG Factors on Credit Ratings: An Empirical Study of European Banks,” Int. Rev. Econ. Financ., p. 104056, Mar. 2025, doi: 10.1016/j.iref.2025.104056.

[31] D. Duan, R. Wei, C. Wang, and B. Xia, “Opportunity or obstacle? Climate risk disclosure and corporate ESG performance,” Int. Rev. Econ. Financ., p. 104101, Apr. 2025, doi: 10.1016/j.iref.2025.104101.

[32] P. Candio, “The effect of ESG and CSR attitude on financial performance in Europe: A quantitative re-examination,” J. Environ. Manage., vol. 354, Mar. 2024, doi: 10.1016/j.jenvman.2024.120390.

[33] S. Theiri, S. Ben Hamad, and M. Ben Amor, “Dividend policy and crisis: Exploring the interplay between performance and financial constraints in the French context,” Heliyon, vol. 9, no. 10, Oct. 2023, doi: 10.1016/j.heliyon.2023.e20586.

[34] R. M. A. Zahid, M. K. Khan, W. Anwar, and U. S. Maqsood, “The role of audit quality in the ESG-corporate financial performance nexus: Empirical evidence from Western European companies,” Borsa Istanbul Rev., vol. 22, pp. S200–S212, Dec. 2022, doi: 10.1016/j.bir.2022.08.011.

[35] E. F. Brigham and M. C. Enrhardt, “Financial Management Theory & Practice 16e,” 2020. [Online]. Available: www.cengage.com/highered.

[36] R. A. Brealey, S. C. Myers, and F. Allen, Principles of Corporate Finance, 30th ed. 2020.

[37] D. J. Cumming, D. Javakhadze, and T. Rajkovic, “Unlocking Dividends: The impact of managerial social capital on international corporate payouts,” J. Int. Financ. Mark. Institutions Money, vol. 95, Sep. 2024, doi: 10.1016/j.intfin.2024.102025.

[38] J. Berk and P. Demarzo, Corporate Fianance, 4th ed. Pearson Education Limited, 2017.

[39] V. Esteve, M. Navarro-Ibáñez, and M. A. Prats, “Stock prices, dividends, and structural changes in the long-term: The case of U.S.,” North Am. J. Econ. Financ., vol. 52, Apr. 2020, doi: 10.1016/j.najef.2019.101126.

[40] L. Yin and J. Nie, “Adjusted dividend-price ratios and stock return predictability: Evidence from China,” Int. Rev. Financ. Anal., vol. 73, Jan. 2021, doi: 10.1016/j.irfa.2020.101618.

[41] R. Mahajan, W. M. Lim, M. Sareen, S. Kumar, and R. Panwar, “Stakeholder theory,” J. Bus. Res., vol. 166, Nov. 2023, doi: 10.1016/j.jbusres.2023.114104.

[42] R. La Porta, F. Lopez De Silanes, A. Shleifer, and R. W. Vishny, “Agency Problems and Dividend Policies around the World,” 2000.

[43] K. Gugler, “Corporate governance, dividend payout policy, and the interrelation between dividends, R&D, and capital investment,” J. Bank. Financ., vol. 27, no. 7, pp. 1297–1321, Jul. 2003, doi: 10.1016/S0378-4266(02)00258-3.

[44] M. Benlemlih, “Corporate social responsibility and dividend policy,” Res. Int. Bus. Financ., vol. 47, pp. 114–138, Jan. 2019, doi: 10.1016/j.ribaf.2018.07.005.

[45] N. O. D. Ellili, “Environmental, social, and governance disclosure, ownership structure and cost of capital: Evidence from the UAE,” Sustain., vol. 12, no. 18, Sep. 2020, doi: 10.3390/su12187706.

[46] O. Ben Salah and A. Ben Amar, “Does corporate social responsibility affect dividend policy? Empirical evidence in the French context,” J. Glob. Responsib., vol. 13, no. 3, pp. 268–289, Jul. 2022, doi: 10.1108/JGR-10-2021-0082.

[47] Y. Zhou, B. M. Lucey, and F. He, “Dividend payouts and biodiversity risk — Chinese evidence,” Res. Int. Bus. Financ., vol. 76, Apr. 2025, doi: 10.1016/j.ribaf.2025.102792.

[48] N. Niccolo, E. Battisti, A. Papa, and N. Miglietta, “Shareholder value and dividend policy: The role of ESG strategies,” Nov. 2020, doi: 10.1109/ICTMOD49425.2020.9380585.

[49] R. Fairchild, “Dividend policy, signalling and free cash flow: an integrated approach,” Manag. Financ., vol. 36, no. 5, pp. 394–413, Apr. 2010, doi: 10.1108/03074351011039427.

[50] D. N. Gujarati, Basic Econometrics Fourth Edition. 2003.

[51] J. M. Wooldridge, Introductory Econometrics, 6th ed. Cengage Learning, 2016.

[52] I. Fadah, N. Hasanah, T. Endhiarto, and A. Juniar, “Determinants of the Dividend Payout Policy of Public Companies in Indonesia, Based on Financial Ratio Analysis,” Int. J. Innov. Creat. Chang., vol. 13, no. 4, p. 2020, 2020, [Online]. Available: www.ijicc.net.

[53] E. Wahjudi, “Factors affecting dividend policy in manufacturing companies in Indonesia Stock Exchange,” J. Manag. Dev., vol. 39, no. 1, pp. 4–17, Feb. 2020, doi: 10.1108/JMD-07-2018-0211.

[54] M. Sierpinska, “Dividend Policy of Listed Energy Companies in Poland,” 2022, doi: 10.29227/IM-2022-01-04.

[55] A. Itemgenova and M. Sikveland, “The determinants of the price-earnings ratio in the Norwegian aquaculture industry,” J. Commod. Mark., vol. 17, Mar. 2020, doi: 10.1016/j.jcomm.2019.04.001.

[56] J. Badruzaman, A. R. Fadilah, and F. Abdurrahman, “Determining the Effect of Return on Equity (ROE) on Price Earnings Ratio (PER) and Price to Book Value (PBV) in LQ45 companies, Indonesia,” WSEAS Trans. Bus. Econ., vol. 19, pp. 1564–1575, 2022, doi: 10.37394/23207.2022.19.141.

[57] X. Zhang, C. Cui, and D. Xie, “Are Dividends All for Rewarding Investors? Evidence from Payouts Induced by Return on Equity Targets,” China J. Account. Stud., vol. 8, no. 3, pp. 470–494, 2020, doi: 10.1080/21697213.2021.1926412.

[58] C. C. Aranda and F. L. Iturriaga, “CEO characteristics and corporate risk-taking: evidence from emerging markets,” Econ. Res. Ekon. Istraz. , vol. 36, no. 2, 2023, doi: 10.1080/1331677X.2023.2175008.

[59] T. M. M. Liana, G. J. M. Sianipar, S. A. Sitorus, H. Setiawan, and N. Sibuea, “Indonesia’s Power Shift: Business Strategies for Renewable Energy and Social Justice,” Int. J. Energy Econ. Policy, vol. 14, no. 4, pp. 150–159, Jul. 2024, doi: 10.32479/ijeep.15841.

[60] E. Saraswati, A. Ghofar, S. Atmini, and A. A. Dewi, “Clustering of Companies Based on Sustainability Performance using ESG Materiality Approach: Evidence from Indonesia,” Int. J. Energy Econ. Policy, vol. 14, no. 2, pp. 112–125, Mar. 2024, doi: 10.32479/ijeep.15393.

[61] H. Yanto, A. Hajawiyah, and N. Baroroh, “The reciprocal effect of environmental, social, and governance (ESG) practices and tax aggressiveness in Indonesian and Malaysian companies,” Probl. Perspect. Manag., vol. 23, no. 1, pp. 339–351, 2025, doi: 10.21511/ppm.23(1).2025.25.

[62] N. Kusumaningrum and W. Hidayat, “Indonesia Stock Exchange: What Affects the Dividend Policy on Mining Companies?,” Año, vol. 36, pp. 917–933, 2020.

[63] D. I. Nurdin et al., Manajemen Sumber Daya Manusia Mengelola Talenta Untuk Kinerja Optimal. 2024.

[64] M. Laokulrach, “The Influence Of Sustainable Development On Stock Risk And Volatility In Thailand’s Stock Exchange During The Covid-19 Pandemic,” Asian Econ. Financ. Rev., vol. 12, no. 9, pp. 751–765, 2022, doi: 10.55493/5002.v12i9.4592.

[65] C. Dong, Y. Zhang, and S. Ao, “How to Engage Employees in Corporate Social Responsibility? Exploring Corporate Social Responsibility Communication Effects Through the Reasoned Action Approach,” Manag. Commun. Q., vol. 38, no. 1, pp. 27–59, Feb. 2024, doi: 10.1177/08933189231161621.

[66] Y. Ye and K. Li, “Internal and external social responsibilities in new ventures: evidence from Chinese private firms,” Manag. Decis., vol. 59, no. 6, pp. 1462–1476, 2020, doi: 10.1108/MD-02-2020-0239.

[67] J.-M. Sahut and F. Teulon, “What are the determinants of dividend policies? A new perspective in Emerging Markets,” Econ. Bull., vol. 37, no. 3, 2017.

[68] J. Sawicki, “Corporate governance and dividend policy in Southeast Asia pre- and post-crisis,” Eur. J. Financ., vol. 15, no. 2, pp. 211–230, Feb. 2009, doi: 10.1080/13518470802604440.

[69] R. Herron, “Payout policy and the interaction of firm-level and country-level governance,” Rev. Quant. Financ. Account., vol. 58, no. 1, Jan. 2022, doi: 10.1007/s11156-021-00986-1.

[70] A. A. Almulhim, A. A. Aljughaiman, T. Al Barrak, K. Chebbi, and N. Amin, “The power of ESG in shaping dividend policy: Illuminating the role of financial sustainability in an emerging market,” PLoS One, vol. 19, no. 12 December, Dec. 2024, doi: 10.1371/journal.pone.0312290.

[71] T. Akhtar, “Market multiples and stock returns among emerging and developed financial markets,” Borsa Istanbul Rev., vol. 21, no. 1, pp. 44–56, Mar. 2021, doi: 10.1016/j.bir.2020.07.001.

[72] V. R. Kuntamalla and K. J. Maguluri, “Impact of Financial Ratios on Stock Prices of Manufacturing companies: Evidence from India Impact Of Financial Ratios On Stock Prices Of Manufacturing Companies: Evidence From India 3,” vol. 32, no. 6, 2023, [Online]. Available: https://www.researchgate.net/publication/382799543.