The Effect Of Green Accounting, Environmental Costs, Profitability, and Leverage On Firm Value

Abstract

Purpose – This study aims to provide empirical evidence on the effects of Green Accounting, Environmental Costs, Profitability, and Leverage on Firm Value in the Basic Materials Sector.

Design/methodology/approach – This study employs a quantitative research design using secondary data from 44 basic materials companies listed on the Indonesia Stock Exchange during the 2022–2024 period, resulting in 132 firm-year observations selected through purposive sampling. Panel data regression analysis is applied using the Fixed Effect Model (FEM), as determined by the Chow and Hausman tests, with data processed using EViews 9.

Findings – The results indicate that Green Accounting has a negative but statistically insignificant effect on firm value, while Environmental Costs, Profitability, and Leverage exhibit positive but statistically insignificant effects. These findings suggest that the Indonesian capital market, particularly in the basic materials sector, has not yet fully incorporated sustainability-related disclosures and financial structure indicators into firm valuation. The results imply that investors continue to prioritize short-term financial stability over long-term environmental and sustainability signal.

Originality/value - This study contributes to the literature by providing sector-specific empirical evidence from the Indonesian basic materials industry during a period of intensified industrial expansion and sustainability pressure. The findings highlight the current market perception of environmental accountability as a cost burden rather than a value-enhancing signal, offering important insights for managers and policymakers regarding the strategic communication of sustainability practices.