Article: When political embeddedness shapes ESG practice corporate governance Journal: International Journal of Managerial and Financial Accounting (IJMFA) 2026 Vol.18 No.9 pp.1 - 20 Abstract: This study examines how corporate governance mechanisms relate to ESG practice in Indonesian listed firms and asks a narrower question: why do governance tools that should strengthen ESG oversight appear to lose force once firms are politically embedded. Drawing on agency theory, the study focuses on five governance dimensions: audit committee characteristics, external audit quality, board size, board independence, and board gender diversity. Using a balanced panel of 42 firms listed on the Indonesia Stock Exchange from 2017 to 2022, the analysis covers 210 firm year observations and uses Bloomberg ESG scores as the outcome measure. The evidence shows that board size, board independence, and board gender diversity are positively associated with ESG practice, whereas audit committee characteristics are negatively associated with it and external audit quality is not consistently significant. Political embeddedness is positively associated with ESG practice and conditions selected governance relationships, most clearly by weakening the effect of board independence and, more cautiously, board gender diversity. These findings are best read as conditional evidence from a small pooled panel setting rather than as universal governance effects. Inderscience Publishers - linking academia, business and industry through research

Title: When political embeddedness shapes ESG practice corporate governance

Authors: Fajar Kholillulloh; Nandya Octanti Pusparini; Bella Ananda Chairunnisa; Santi Putriani; Charbel Salloum

Addresses: Department of Accounting, Faculty of Economics and Business, Universitas Muhammadiyah Surakarta, Indonesia ' Department of Accounting, Faculty of Economics and Business, Universitas Muhammadiyah Surakarta, Indonesia ' Department of Management, Faculty of Economics and Business, Universitas Muhammadiyah Surakarta, Indonesia ' Department of Accounting, Faculty of Economics and Business, Universitas Muhammadiyah Surakarta, Indonesia ' Métis Lab, EM Normandie Business School. 30-32 Rue Henri Barbusse, 92110 Clichy, France

Abstract: This study examines how corporate governance mechanisms relate to ESG practice in Indonesian listed firms and asks a narrower question: why do governance tools that should strengthen ESG oversight appear to lose force once firms are politically embedded. Drawing on agency theory, the study focuses on five governance dimensions: audit committee characteristics, external audit quality, board size, board independence, and board gender diversity. Using a balanced panel of 42 firms listed on the Indonesia Stock Exchange from 2017 to 2022, the analysis covers 210 firm year observations and uses Bloomberg ESG scores as the outcome measure. The evidence shows that board size, board independence, and board gender diversity are positively associated with ESG practice, whereas audit committee characteristics are negatively associated with it and external audit quality is not consistently significant. Political embeddedness is positively associated with ESG practice and conditions selected governance relationships, most clearly by weakening the effect of board independence and, more cautiously, board gender diversity. These findings are best read as conditional evidence from a small pooled panel setting rather than as universal governance effects.

Keywords: ESG practice; corporate governance; political embeddedness.

DOI: 10.1504/IJMFA.2026.154809

International Journal of Managerial and Financial Accounting, 2026 Vol.18 No.9, pp.1 - 20

Received: 11 Mar 2026
Accepted: 05 May 2026
Published online: 14 Jul 2026 *

Title: When political embeddedness shapes ESG practice corporate governance

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