The Influence of Corporate Governance Mechanisms and ESG Reporting on Underpricing Moderated by Underwriter Reputation (Pendas Jurnal Ilmiah Pendidikan Dasar)

Summary

• The research analyses a sample of 275 non-bank companies with positive initial returns after conducting initial public offerings on the Indonesia Stock Exchange during the period 2019–2024.p.1
• The average level of underpricing across the 275 sample companies stood at 31,5589%, while the average ESG disclosure score was 0,0844 (around 8,44%).p.5
• ESG reporting demonstrated a statistically significant negative association with underpricing in Model 2 with a coefficient of −15,8998 (p = 0,016).p.6
• The interaction between ESG reporting and underwriter reputation was negative and significant in Model 3 with a coefficient of −37,7402 (p = 0,002).p.6
• Internal corporate governance mechanisms, including female directorship (p = 0,946), independent commissioners (p = 0,128), managerial ownership (p = 0,871), and institutional ownership (p = 0,385), showed no statistically significant direct effect on underpricing.p.6

Key insights

1. ESG disclosure provides a signaling mechanism that reduces information asymmetry and is linked to lower IPO underpricing.p.7
2. Underwriter reputation acts as a significant certifying moderator that strengthens the negative relationship between ESG reporting and IPO underpricing.p.6
3. Underwriter reputation does not significantly moderate the relationship between internal governance mechanisms and IPO underpricing.p.6
4. The average ESG disclosure score of 8,44% indicates that non-financial ESG transparency remains relatively low among newly listed Indonesian firms.p.7
5. Internal governance structures such as board gender diversity and commissioner independence do not directly translate into IPO pricing discounts.p.7
6. A vast majority (93,30%) of underpricing variation in Model 3 remains explained by unmodeled factors such as firm size, age, market demand, and investor behavior.p.5