Improving firm value with corporate environmental responsibility: Evidence from the consumer non-cyclical sector in Indonesia
DOI:
https://doi.org/10.24914/jeb.v29i1.7424Keywords:
Environmental costs, environmental information disclosure, environmental performance, firm valueAbstract
This research aims to analyze the effects of corporate environmental responsibility practices, including the disclosure of environmental information, environmental performance, and environmental costs, on firm value. This quantitative study uses data on 100 consumer non-cyclical firms listed on the Indonesian Stock Exchange from 2016 to 2020, selected through purposive sampling. We use panel data regression utilizing Eviews 10 software. Overall, our findings empirically support the hypotheses and are consistent with stakeholder theory, legitimacy theory, the natural resource-based view, and trade-off theory. More specifically, environmental disclosure practices and environmental performance positively affect firm value, consistent with stakeholder and legitimacy theory as well as the natural resource-based view, whereas environmental costs negatively affect firm value, consistent with trade-off theory. Thus, the current PROPER (Program Penilaian Peringkat Kinerja Perusahaan/Company Performance Rating Assessment Program) rating system helps the Indonesian government evaluate firms’ environmental management. Additionally, firms can preserve their sustainability by balancing the allocation of environmental costs and profit-seeking motives.
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