ESG Disclosure, Political Connections, and Financial Risk: The Moderating Role of Accounting Information Systems in Indonesian SOEs

Background: Financial risk remains a critical governance concern for Indonesian state-owned enterprises (SOEs), particularly regarding sustainability disclosure, political connections, and accounting information systems (AIS). Objective: This study examines the effects of Environmental, Social, and Governance (ESG) disclosure and political connections on financial risk and evaluates the moderating role of AIS. Methods: A quantitative explanatory approach was applied to 34 SOEs listed on the Indonesia Stock Exchange during 2020–2024, comprising 170 firm-year observations. Secondary data were obtained from annual reports, sustainability reports, and financial statements. Financial risk was assessed using the Altman Z-score proxy, ESG disclosure through GRI indicators, political connections through board affiliation proportions, and AIS through ERP implementation. Data were analyzed using PLS-SEM with SmartPLS. Results: ESG disclosure had no significant effect on financial risk (β = 0.099; p = 0.234), whereas political connections showed a positive and significant association (β = 0.521; p < 0.001). AIS did not significantly moderate the ESG disclosure–financial risk relationship (β = 0.071; p = 0.280) or the political connections–financial risk relationship (β = −0.097; p = 0.296). Including moderation terms increased R² marginally from 0.260 to 0.275. Conclusion: Political connections are significantly associated with financial risk, whereas ESG disclosure and AIS moderation show no significant effects. These findings highlight the importance of strengthening SOE governance alongside accounting information system development.