Committee audit characteristics, external audit quality and ESG performance

Purpose: This study aims to analyze the effect of audit committee characteristics and external audits quality on the environmental, Social, and Governance performance of companies listed on the Indonesia Stock Exchange. Methodology/approach: Multiple linear regression analysis was applied to 34 companies listed on the IDX from 2020 to 2022. The audit committee characteristics index and external audit index. The dependent variable in this study is ESG performance, which will be assessed based on ESG scores. This study will take ESG score data from the Thompson Reuters database. Findings: Based on hypothesis testing, it is found that the audit committee characteristics variable does not contribute significantly to the ESG score partially. In contrast, the external audit quality variable has a significant influence on ESG scores partially. These results indicate that external audit quality has a greater role than audit committee characteristics in explaining variations in ESG scores in companies listed on the Indonesia Stock Exchange. Practical and Theoretical contribution/Originality: This research broadly impacts society. With improved ESG performance, companies can contribute to environmental preservation, improve social welfare, and create more transparent business governance. This ultimately supports the creation of a sustainable economy. Through this research, the business and academic worlds can work together to encourage sustainability practices that benefit the company, society, and the environment as a whole. Research Limitation: The research has limitations on accuracy and objectivity when data collection is carried out on the annual reports of the sampled companies. The dependent variable data in the form of ESG scores is also only available until 2022. It is hoped that future research can explore the indicators of ESG performance assessment and other variables related to the quality of ESG in each company more widely.