Market reaction is closely associated with the information or news communicated to investors, as such information influences investment decision-making. Therefore, companies must manage the flow of information received by investors to reduce information asymmetry. One approach to achieving this is through the disclosure of non-financial information—specifically environmental, social, and governance (ESG) information—typically presented in sustainability reports. In accordance with signalling theory, ESG disclosure functions as a signal to investors that may be interpreted positively or negatively and, consequently, may influence market reaction.

The purpose of this study was to examine the effect of each ESG disclosure component (environmental, social, and governance) on market reaction, while profitability and leverage were included as control variables. The study also assessed whether firm size moderates the relationship between ESG disclosure and market reaction. The sample consisted of companies listed on the Indonesia Stock Exchange during 2022–2023, resulting in 230 firm-year observations obtained through purposive sampling. Data were analysed using moderated regression analysis. The findings indicate that environmental, social, and governance disclosures do not significantly influence market reaction. Furthermore, firm size did not demonstrate a significant moderating effect on the relationship between ESG disclosure and market reaction.