Environmental Accounting and its Impact to Firm Value: Study of Environmentally Sensitive Companies in Indonesia

Abstract

Purpose: This research aims to explore more about the escalating investor interest in environmental risks and their recognition of a company's environmental performance as pivotal to its long-term viability.

Design/Methodology/Approach: Utilizing multiple regression analysis, we investigate the influence of environmental cost, eco-efficiency, corporate social responsibility (CSR), and environmental performance on a company's value.

Originality: The originality and value of this research lie in its exploration of the increasing investor interest in environmental considerations and their recognition of a company's environmental performance as a key determinant of its long-term viability.

Findings: Our findings reveal a positive impact of these factors on overall company value, suggesting that improvements in environmental performance, eco-efficiency, and transparent reporting of environmental expenses and CSR contribute significantly to a firm's market valuation.

Practical Implication: This underscores the critical role of open and honest communication about environmental practices in attracting investors and enhancing a company's market standing. The company should highlight the importance of integrating environmentally responsible practices into business strategies for sustained success and investor appeal.  

Limitation and suggestion: Notably, the study is limited to environmentally conscious businesses, signaling the necessity for future research to broaden its scope for a more comprehensive evaluation of these relationships across diverse industries.

Paper Type: Research Paper