Strengthening Firm Value through ESG Assurance, Internal Audit, and Enterprise Risk Management: Asessing Audit Quality as  Potential Boundary Condition

Icih; Sulis Setiawati; Norhanizah Johari; Sri Mulyati

doi:10.61255/jeemba.v4i4.1072

Authors

Icih Sekolah Tinggi Ilmu Ekonomi Sutaatmadja
Sulis Setiawati Sekolah Tinggi Ilmu Ekonomi Sutaatmadja
Norhanizah Johari Universiti Islam Selangor
Sri Mulyati Sekolah Tinggi Ilmu Ekonomi Sutaatmadja

DOI:

https://doi.org/10.61255/jeemba.v4i4.1072

Keywords:

Audit Quality, Basic Materials, ESG Assurance, Firm Value, Implementation of Internal Audit

Abstract

Purpose – This study examined the influence of ESG assurance, internal audit and enterprise risk management on firm value and analyzed the role of audit quality as a moderating variable. The study was conducted on basic materials companies listed on the Indonesia Stock Exchange (IDX) for the 2022-2024 period, using agency theory and signaling theory.

Design/methodology/approach – The research employed a quantitative method. The sample was selected using purposive sampling within the basic materials sector. Firm value was measured using Tobin's Q, ESG assurance was measured using the existence of external assurance, internal audit implementation was proxied by its implementation indicators, ERM was measured using a strategy-based and operations-based index, and audit quality was measured using the reputation of the Public Accounting Firm. Data were analyzed using moderated regression analysis (MRA).

Finding/Results – The F-test results demonstrate that the regression model is overall statistically significant in explaining firm value. Individually, however, only internal audit implementation exerts a significant positive effect on firm value, whereas ESG assurance and ERM do not exhibit partial significance. This indicates that the simultaneous significance of the model is primarily driven by the robust individual contribution of internal audit practices.

Originality/Value – This study contributes to the governance and sustainability literature by providing evidence from the basic materials sector, a high-risk and capital-intensive industry. The findings highlight the importance of internal audit implementation as a governance mechanism that is directly valued by investors, while ESG assurance and ERM appear to have limited individual relevance in market valuation. The results also suggest that governance mechanisms may be more effective when implemented collectively rather than separately. Practical implications emphasize the need for stronger integration between internal audit, risk management, and sustainability practices, while regulators may consider enhancing ESG reporting standards to improve transparency and comparability.

Abstract views: 14 ,

PDF downloads: 2

Downloads

Download data is not yet available.

References

Arens, A. A., Elder, R. J., Beasley, M. S., & Hogan, C. E. (2017). Auditing and assurance services: An integrated approach (Sixteenth edition, global edition). Pearson.

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/10.1016/j.bir.2022.11.006

Azahra, A., & Hasnawati, H. (2024). The Effect of ESG Disclosure, Audit Quality, Internal Audit, on Company Value. Jurnal Indonesia Sosial Sains, 5(02), 150–164. https://doi.org/10.59141/jiss.v5i02.992

Azmiyah, N., & Subardjo, A. (2024). Pengaruh ESG dan Kebijakan Deviden Terhadap Nilai Perusahaan yang Dimoderasi Kualitas Audit. JIRA, 13.

BEI. (2024a). IDX Yearly Statistics 2024 Bond Market [Yearly Statistics 2024]. https://idx.co.id/id/data-pasar/laporan-statistik/digital-statistic/

BEI. (2024b). IDX Yearly Statistics 2024 Equity Market [Yearly Statistics 2024]. https://idx.co.id/id/data-pasar/laporan-statistik/digital-statistic/

Butar-Butar, D. T. M., Ainaya, N. A., & Ramadana, M. (2025). Peran Kualitas Audit Dalam Memoderasi Pengaruh Pengungkapan ESG Terhadap Nilai Perusahaan.

COSO. (2020). Compliance Risk Management: Applying the COSO ERM Framework. Committee of Sponsoring Organizations of the Treadway Commission.

DeAngelo, L. E. (1981). Auditor size and audit quality. Journal of Accounting and Economics, 3(3), 183–199.https://doi.org/10.1016/0165-4101(81)90002-1

Fauzi, M. I., & Mukhibad, H. (2024). Determinan Return Saham dengan Kualitas Pengungkapan Laporan Keuangan sebagai Variabel Moderasi. Journal of Accounting, Economics and Business Education, 2(2). https://doi.org/10.62794/jaebe.v2i2.3395

Ghozali, I. (2018). Aplikasi analisis multivariate dengan program IBM SPSS 25 (9th ed.). Badan Penerbit Universitas Diponegoro.

Heng, O. P., Yen, Y. Y., & Teck, L. C. (2023). Effect of Enterprise Risk Management Adoption on the Firm Value in Malaysia’s Annual Reports. In S. K. Bhar & H. Rahmat (Eds.), Proceedings of the International Conference on Communication, Language, Education and Social Sciences (CLESS 2022) (pp. 194–204). Atlantis Press SARL. https://doi.org/10.2991/978-2-494069-61-9_19

Ikhsan, A., Mikrad, Rosari, D., Pambudi, J. E., Lubis, P. K. D., & Fadillah, T. S. (2024). The Effect Of Audit Committee, Internal Auditor And Audit Quality On Firm Value On Hotel Industry In Indonesia. 16(01). https://doi.org/10.34109/ijefs.202416115

Indyanti, J. A., & Zulaikha, Z. (2017). Assurance Laporan Keberlanjutan: Determinan Dan Konsekuensinya Terhadap Nilai Perusahaan. Diponegoro Journal of Accounting, 6(3), 1–14. https://ejournal3.undip.ac.id/index.php/accounting/article/view/18246

Investing.com. (2025). Indonesia SE Basic Materials (JKBASIC). Investing.com. https://id.investing.com/indices/indonesia-se-basic materials

Kurniawan, D., Machdar, N. M., Manurung, A. H., & Sangapan, L. H. (2025). Pengaruh enterprise risk management disclosure terhadap nilai perusahaan dengan profitabilitas sebagai variabel mediasi. Journal of Capital Markets and Banking, 13(2), 1–20. https://doi.org/10.63607/jcmb.v13i2

Li, W., Li, T., & Zhu, H. (2025). Annual report audit, ESG report assurance and audit quality: Evidence from the same accounting firm. China Journal of Accounting Research, 18(3), 100434. https://doi.org/10.1016/j.cjar.2025.100434

McShane, M. K., Nair, A., & Rustambekov, E. (2011). Does Enterprise Risk Management Increase Firm Value? Journal of Accounting, Auditing & Finance, 26(4), 641–658. https://doi.org/10.1177/0148558X11409160

Naeem, M., Ullah, H., & Jan, S. (2021). The Impact of ESG Practices on Firm Performance: Evidence From Emerging Countries. Indian Journal of Economics and Business, 20(1), 731–746. http://www.ashwinanokha.com/IJEB.php

Naibaho, E. A. B., & Raudhotuzanah, D. (2025). The Role of ESG and External Assurance in Firm Performance: External Assurance as a Moderator. Journal of Accounting and Strategic Finance, 8(1), 110–132. https://doi.org/10.33005/jasf.v8i1.572

Nguyen, T. A., & Nguyen, T. L. (2026). Enterprise risk management, ESG disclosure and firm performance: Evidence from the manufacturing sector in Vietnam. Journal of International Economics and Management, 1–15. https://doi.org/10.1108/JIEM-05-2025-0034

OJK. (2015). Peraturan Otoritas Jasa Keuangan Nomor 56/POJK.04/2015 Tentang Pembentukan dan Pedoman Penyusunan Piagam Unit Audit Internal. Otoritas Jasa Keuangan.

Oktaviani, H. F. (2019). Analisis Pengaruh Internal Audit, Komisaris Independen Dan Struktur Kepemilikan Terhadap Nilai Perusahaan Dengan Kinerja Keuangan Sebagai Variabel Moderasi. Jurnal Akuntansi dan Keuangan Methodist, 2(2), 141–153. https://doi.org/10.46880/jsika.v2i2.29

Rahman, Md. J., Kennedyd, S. I., & Chen, Z. (2022). Enterprise Risk Management and Company’s Performance. Journal of Accounting, Business and Management (JABM), 29(1), 107. https://doi.org/10.31966/jabminternational.v29i1.575

Sari, N. P. H. W., Kresnandra, A. A. N. A., & Sujana, I. K. (2025). Institutional Ownership as a Moderator in the Relationship Between Enterprise Risk Management, Profitability, and Firm Value. E-Jurnal Akuntansi, 35(7). https://doi.org/10.24843/EJA.2025.v35.i07.p05

Shalsabilla, S. (2023). Pengaruh Kualitas Audit, Dewan Komisaris Independen, Dewan Direksi, Komite Audit dan Media Exposure Terhadap Nilai Perusahaan. E-Collection.

Situmorang, D., & Bimo, I. D. (2023). Pengaruh Sustainability Reporting Terhadap Nilai Perusahaan Dengan Kualitas Audit Sebagai Variabel Moderasi. Jurnal Manajemen, 20(1). https://doi.org/10.25170/jm.v20i1.3281

Sugiyono. (2020). Metode Penelitian Kuantitatif, Kualitatif dan R&D. Alfabeta.

Vaihekoski, M., & Yahya, H. (2025). Environmental, Social, and Governance (ESG) and Firm Valuation: The Moderating Role of Audit Quality. Journal of Risk and Financial Management, 18(3), 148. https://doi.org/10.3390/jrfm18030148

Zahrani, K., Mappadang, A., & Mappadang, J. L. (2023). The Effect of Capital Structure, Profitability and Audit Quality on Company Value with Company Size as a Moderation Variable. International Journal of Asian Business and Management, 2(6), 1039–1060. https://doi.org/10.55927/ijabm.v2i6.6480