The Role of Carbon Emissions Disclosure in Moderating Firm Size, Profitability, Liquidity, and Firm Value in Southeast Asian Nations

Research purpose: The paper examines the value relevance of carbon emission disclosure in moderating the effect of firm size, profitability, and liquidity on the firm value. Research motivation: The disclosure of carbon emissions becomes an interesting issue that needs to be studied because business activities cannot be separated from environmental issues. Although emissions disclosure research, up to now, is quite popular with a variety of research trends, it seems to be most limited to developed countries and be infant in developing countries. Therefore, it is necessary to do more extensive research on carbon emissions-firm value relationships in emerging markets like Vietnam and other southeast Asian countries. Moreover, it is vital to combine many internal factors into one study which are identified based on signalling theory as well as agency theory in order to explore their relationships with each other. Research design, approach, and method: This study using a panel dataset extracted from listed firms in 6 Southeast Asian countries from 2018 to 2022 based on the Thompson Reuter database. The model of Ohlson (1995) is adjusted to operationalize value relevance as the ability of factors to explain the market value. This study also compares countries applying environmental protection policies or not. Main findings: The results of the study prove that the carbon emissions score can moderate the effect of firm size, liquidity on a company’s market value. Furthermore, there are differences in the market value of firm sectors, and of groups of nations classified based on level of emissions trading Scheme implementation. Practical/managerial implications: Companies are expected to pay more attention to the climate change caused by their business activities. Furthermore, preparers of financial statements and investors can have better understandings of the market valuation implications of the carbon emissions disclosure or state agencies can enact more stringent regulations on companies that are likely to generate large carbon emissions and pollute the environment.