Year 2019, Volume 2 , Issue 2, Pages 237 - 244 2020-04-03

The value relevance of the environmental performance and reporting

Ayu Dwiny OCTARY [1]


Abstract

An information will be useful for decision making if the information is relevant and reliable.  Investors not only consider the financial performance but also consider the company's relation with their environment and society because the sustainability of the company is not considered by their financial performance alone. The company’s environmental performance information will enable investors or other related parties to assess the efficiency and sustainability of the company. The purpose of this study is to determine (1) whether environmental performance is value relevant and (2) whether sustainability report is value relevant. Environmental performance showed by rating PROPER Kementerian Lingkungan Hidup award. To minimize the asymmetric information about environmental performance in this study use environmental reporting in the sustainability report. The sample research obtained based on purposive sampling method in which the sampling is based on certain criteria.  Criteria of the sample is based on  (1) company that registered on Indonesia stock exchange (BEI), (2) company that publishes financial statements during 2014-2018, (3) manufacturing company that publishes sustainability report in 2014-2017, (4) manufacturing company that registered in PROPER Kementerian Lingkungan Hidup in 2015-2018. The analysis method in this study is using multiple regressions. The result of the research shows that environmental performance is value relevant. The result of the research shows that the sustainability report is value relevant. The result of the research indicates that simultaneously shows that environmental performance and sustainability report is value relevant.

environmental performance, PROPER, sustainability report
  • Barth, M. E., Beaver, W. H., Landsman, W. R. (2001). The relevance of the value relevance literature for financial accounting standard setting. Another view. Journal of Accounting and Economics,31, 77-104.
  • Cardamone P., Carnevale C., Giunta F. 2012. The value relevance of social reporting: evidence from listed Italian companies. Journal of Applied Accounting, 13(2), 255-269.
  • Clarkson, P. M., Li, Y., Richardson, G. D. 2004. The Market Valuation of Environmental Capital Expenditures by Pulp and Paper Companies. The Accounting Review, 79(2), 329-353.
  • Gumanti, Tatang A. (2009). Teori Sinyal Manajemen Keuangan. Usahawan No.06.Edition 38.page.4.
  • Hartono, Jogiyanto. 2014.” Metode Penelitian Bisnis”. 6 edition. Yogyakarta. Gadjah Mada University.
  • Nuryana, Mu’man. 2005. Corporate Social Responsibility dan Kontribusibagi Pembangunan Berkelanjutan. Makalah yang disampaikan pada Diklat Pekerjaan Sosial Industri, Balai Besar Pendidikan dan Pelatihan Kesejahteraan Sosial (BBPPKS). Bandung.
  • Ohlson, J. A. (1995). Earning, book values and dividends in equity valuation.
  • Sarumpaet, Susi. 2012. Earnings Management by firms with poor environmental performance ratings: An empirical investigation in Indonesia. Simposium Nasional Akuntansi XV. Banjarmasin.Sarumpaet S., Nelwan M. L., Dewi D. N. 2017. The Value Relevance of environmental performance: evidence from Indonesia. Social Responsibility Journal, DOI: 10.1108/srj
  • Schadewitz H., Niskala M. 2010. Communication via responsibility reporting and its effect on firm value in Finland. Corporate Social Responsibility and Environmental Management, 17, 96-106.
Primary Language en
Journal Section Articles
Authors

Author: Ayu Dwiny OCTARY
Country: Indonesia


Dates

Publication Date : April 3, 2020

APA Octary, A . (2020). The value relevance of the environmental performance and reporting . InTraders International Trade Academic Journal , 2 (2) , 237-244 . Retrieved from https://dergipark.org.tr/en/pub/intraders/issue/53571/623678