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Previous research has examined the relationship between ESG disclosure and firm value, but it has yet to fully explain how the former can increase the latter. Thus, the current study aims to fill the research gap by analyzing the relationship between ESG disclosure and firm value with competitive advantage as a mediating variable. This research was conducted in Indonesia on the ground that Indonesia is a developing country with a great potential for an increased economy even though its ESG implementation is still less optimal. This study employed the purposive sampling method with the criteria that the companies to be included as the sample were non-financial companies listed on the IDX and were consistent in disclosing ESG and publishing their financial reports. The sample of this study comprised 42 non-financial companies in Indonesia within the 2015–2021 period, with a total of 252 observations were conducted. The data were analysed using PLS-SEM with WarpPLS 7.0 to test hypotheses and draw conclusions. The findings showed that ESG disclosure did not affect firm value. However, when competitive advantage was included as a mediating variable in the relationship between the two variables, the results showed a significant positive direction toward firm value. This research contributes to the practical implications and development of signal theory and resource theory, especially in accounting and sustainability disciplines in the context of non-financial companies.
Rohendi et al. (Wed,) studied this question.