Do Environmental Disclosures Enhance Firm Value? The Moderating Role of Corporate Governance in Indonesia’s Plantation Sector
Abstract
Background: Environmental sustainability has become increasingly important in corporate valuation, particularly in Indonesia’s plantation sector, which faces substantial ecological challenges. Environmental disclosures are expected to enhance transparency and investor confidence, although their financial implications remain uncertain.
Research Gap: Previous studies report inconsistent relationships between environmental disclosure and firm value. Limited research has examined the moderating role of Good Corporate Governance (GCG) across distinct environmental disclosure dimensions, particularly within Indonesia’s plantation industry.
Novelty: This study distinguishes green accounting, Corporate Social Responsibility (CSR) disclosure, and carbon emission disclosure while examining GCG as a moderator. It also incorporates Islamic principles of environmental stewardship, accountability, and Maqasid al-Shariah into the interpretation of empirical findings.
Method: A quantitative explanatory approach was employed using 96 firm-year observations from plantation companies listed on the Indonesia Stock Exchange during 2019–2023. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) through WarpPLS 7.0, incorporating a one-year lag structure.
Results: Green accounting negatively affects firm value (β = −0.444; p = 0.002), whereas CSR disclosure demonstrates a significant positive effect (β = 0.726; p < 0.001). Carbon emission disclosure shows no significant effect (p = 0.122). GCG does not significantly moderate any examined relationship, although its interaction with carbon disclosure is positive (p = 0.084).
Conclusion: CSR disclosure enhances firm value, while environmental performance receives less favorable market recognition. These findings emphasize the importance of credible sustainability reporting, stronger governance oversight, and improved environmental disclosure standards.
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