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

Indah Fajarini Sri Wahyuningrum (), Mochamad Arief Budihardjo (), Fadel Iqbal Muhammad (), Hadrian Geri Djajadikerta () and Terri Trireksani ()
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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

Entrepreneurship and Sustainability Issues, 2020, vol. 8, issue 2, 1047-1061

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.

Keywords: environmental disclosure; environmental performance; financial performance; company characteristics; PROPER; Indonesia; listed companies (search for similar items in EconPapers)
JEL-codes: E16 M14 Q56 (search for similar items in EconPapers)
Date: 2020
References: View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ssi:jouesi:v:8:y:2020:i:2:p:1047-1061

DOI: 10.9770/jesi.2020.8.2(63)

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