Incremental value relevance of ESG disclosure: heterogeneous effects across ESG dimensions under crisis conditions in Indonesian mining firms

This study examines whether Environmental, Social, and Governance (ESG) disclosure provides incremental value-relevant information to equity markets and whether its relevance varies across ESG dimensions and crisis conditions. Drawing on competing theoretical mechanisms, the study argues that ESG disclosure does not generate a universally positive valuation effect because informational, stakeholder, legitimacy, institutional, and cost-related mechanisms may operate simultaneously. Using a balanced panel of 30 mining firms listed on the Indonesia Stock Exchange over 2018–2023, the study applies an Ohlson-based price regression to assess the incremental value relevance of ESG disclosure beyond conventional accounting information and firm-level controls. The analysis further disaggregates ESG into environmental, social, and governance dimensions and examines crisis-related changes in their valuation relevance. The findings show that aggregate ESG disclosure does not provide significant incremental value relevance. However, substantial heterogeneity emerges across dimensions: environmental disclosure shows positive incremental value relevance, social disclosure shows negative incremental value relevance, and governance disclosure shows positive incremental value relevance. Moreover, crisis conditions significantly weaken the incremental value relevance of ESG disclosure. These findings demonstrate that ESG value relevance is heterogeneous and crisis-sensitive, with aggregate measures potentially obscuring offsetting effects across ESG dimensions.