Sustainability Reporting as Mediation of Factors Affecting Financial Performance: Case in the Mining Sector in Indonesia

Septiana Jumita (), Taufiq Taufiq and Yusnaini Yusnaini
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Septiana Jumita: Sriwijaya University, Palembang, Indonesia
Taufiq Taufiq: Sriwijaya University, Palembang, Indonesia
Yusnaini Yusnaini: Sriwijaya University, Palembang, Indonesia

Oblik i finansi, 2020, issue 4, 30-37

Abstract: The problem of global warming due to environmental pollution has made it necessary for companies to be widely accountable to society about their performance. Therefore, today companies must not only report on the financial performance, but also report on all non-financial aspects of their activities, such as social and environmental. Sustainability reporting enables companies to report on environmental and social performance. It is not just report generation from collected data; instead it is a method to internalize and improve an company's commitment to sustainable development in a way that can be demonstrated to both internal and external stakeholders. The study examines the factors influencing the company's financial performance through sustainability reporting in mining sector companies in Indonesia. The object of the study is a sample of 6 mining companies listed on the Indonesia Stock Exchange in 2014-2018. In this study, the authors use the Path Analysis – a form of multiple regression statistical analysis that is used to evaluate causal models by examining the relationships between a dependent variable and two or more independent variables. The study results show that sustainability reporting has a positive and significant impact on the financial performance of mining companies.In particular, the results of the analysis show that the company size and its liquidity have a positive and significant effect on the sustainability reporting. Leverage has a negative and significant effect on sustainability reporting. At the same time, the factors disclosed in the sustainability reporting have a significant impact on the financial performance of the companies. The results of this study can be useful for management personnel in the process of preparing a sustainability report by companies that want to attract the attention of investors.

Keywords: company size; leverage; liquidity; sustainability reporting; financial performance (search for similar items in EconPapers)
JEL-codes: M41 Q01 (search for similar items in EconPapers)
Date: 2020
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