The Role of Financial Performance in Mediating ESG and Institutional Ownership Structure on Firm Value in Indonesia

<p class="bdabstract">The decline in Initial Public Offering (IPO) value in terms of fundraising quality, the decline in the number of daily active investors, and the weak Composite Stock Price Index (IDX Composite) in 2022 are year-end notes that need to be highlighted. The main objective of this study is to examine how ESG practices and institutional ownership structure affect firm valuation, specifically exploring whether financial performance acts as a mediator. This study focuses on companies in various sectors listed on the Indonesia Stock Exchange in 2022 that have implemented the Environmental, Social, and Governmental (ESG) framework. This study involves 79 companies on the Indonesia Stock Exchange (IDX) implementing the ESG framework. Data analysis uses multiple linear regression and path analysis methods. The results of hypothesis testing, including the t-test and Sobel test, show that ESG practices and institutional ownership structure significantly affect financial performance. However, these variables do not show a significant impact on company valuation. Furthermore, the study concluded that financial performance does not mediate the relationship between ESG practices, institutional ownership structure, and firm value.</p>