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Do environmental and financial performances affect environmental disclosures? Evidence from listed companies in Indonesia

Author

Listed:
  • Indah Fajarini Sri Wahyuningrum

    (Semarang State University, Indonesia)

  • Mochamad Arief Budihardjo

    (Diponegoro University, Indonesia)

  • Fadel Iqbal Muhammad

    (Wageningen University & Research, Netherlands)

  • Hadrian Geri Djajadikerta

    (Edith Cowan University, Australia)

  • Terri Trireksani

    (Murdoch University, Australia)

Abstract

The number of companies in Indonesia that have participated in environmental-related activities continues to grow. Some of these companies have also engaged and implemented an assessment program called Program for Pollution Control, Evaluation, and Rating (PROPER). This assessment program was initially launched by the Indonesian Ministry of Environment in 1995 to measure and rate the environmental performance of companies in Indonesia. They have also administered an environmental management system as part of their environmental protection initiatives. However, the level of environmental disclosure by these companies is still low. This may occur due to the current situation in which the companies are not obliged to incorporate environmental disclosures on their annual reports. For those companies that disclose their environmental performance, there is also no apparent reason on why they have done that. This research aims to examine the effect of environmental performance, company financial performance, and company characteristics on environmental disclosure. The population used in this research comprised of all registered non-financial companies in the Indonesia Stock Exchange in 2014–2016. The sample was selected using a purposive sampling method to obtain 36 sample companies and analyzed through multiple regression analysis. Results show that the environmental performance variable, which is described by PROPER ratings and environmental management systems, and company size variable, both affect the extent of environmental disclosures. However, the financial performance variable, which is described by companies’ profitability and leverage, and the number of board commissioners variable, both do not significantly affect the extent of environmental disclosures.

Suggested Citation

  • Indah Fajarini Sri Wahyuningrum & Mochamad Arief Budihardjo & Fadel Iqbal Muhammad & Hadrian Geri Djajadikerta & Terri Trireksani, 2020. "Do environmental and financial performances affect environmental disclosures? Evidence from listed companies in Indonesia," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(2), pages 1047-1061, December.
    • Handle: RePEc:ssi:jouesi:v:8:y:2020:i:2:p:1047-1061
    DOI: 10.9770/jesi.2020.8.2(63)
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    Citations

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    Cited by:

    1. Hafizah Abd-Mutalib & Che Zuriana Muhammad Jamil & Rapiah Mohamed & Nor Atikah Shafai & Saidatul Nurul Hidayah Jannatun Naim Nor-Ahmad, 2021. "Firm and Board Characteristics, and E-Waste Disclosure: A Study in the Era of Digitalisation," Sustainability, MDPI, vol. 13(18), pages 1-14, September.
    2. Aye Aye Khin, 2022. "Company Values of Malaysian Listed Companies' Sustainability for Palm Oil Industry: Financial Panel Data Model Approach," GATR Journals afr208, Global Academy of Training and Research (GATR) Enterprise.
    3. Liping Wang & Yuqi Shang & Shuqin Li & Chuang Li, 2023. "Environmental Information Disclosure-Environmental Costs Nexus: Evidence from Heavy Pollution Industry in China," Sustainability, MDPI, vol. 15(3), pages 1-21, February.
    4. Indah Fajarini Sri Wahyuningrum & Amin Chegenizadeh & Ain Hajawiyah & Sriningsih Sriningsih & Sri Utami & Mochamad Arief Budihardjo & Hamid Nikraz, 2023. "Determinants of Corporate Water Disclosure in Indonesia," Sustainability, MDPI, vol. 15(14), pages 1-17, July.

    More about this item

    Keywords

    environmental disclosure; environmental performance; financial performance; company characteristics; PROPER; Indonesia; listed companies;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • E16 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Social Accounting Matrix

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