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

Diajeng Fitri Wulan (), Reni Oktavia (), Usep Syaipudin () and Adilah Sabrina Muti’ah ()
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Diajeng Fitri Wulan: Accounting Department, University of Lampung, Indonesia
Reni Oktavia: Accounting Department, University of Lampung, Indonesia
Usep Syaipudin: Accounting Department, University of Lampung, Indonesia
Adilah Sabrina Muti’ah: Accounting Department, University of Lampung, Indonesia

Finance, Accounting and Business Analysis, 2023, vol. 5, issue 2, 113-126

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.

Keywords: Firm Value; Environmental Cost; Eco-efficiency; CSR; Environmental Performance (search for similar items in EconPapers)
JEL-codes: G32 M41 Q56 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:aan:journl:v:5:y:2023:i:2:p:113-126

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