THE EFFECT OF SUSTAINABILITY REPORTING ON FIRM VALUE WITH FINANCIAL PROFITABILITY AS A MEDIATING VARIABLE: A CASE STUDY OF MANUFACTURING COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE DURING THE 2020–2024 PERIOD
Keywords:
Sustainability reporting, firm value, profitability, PLS-SEMAbstract
This study aims to examine the effect of sustainability reporting on firm value with profitability as a mediating variable in manufacturing companies listed on the Indonesia Stock Exchange during the 2020-2024 period. The study adopts a quantitative approach with an explanatory design and panel data obtained through purposive sampling. Firm value is measured using Tobin’s Q, sustainability reporting is measured through an ESG disclosure index, and profitability is proxied by return on assets (ROA). Data analysis is conducted using Partial Least Squares-Structural Equation Modeling (PLS-SEM). The results indicate that sustainability reporting has no significant effect on firm value. In addition, sustainability reporting has a positive but insignificant effect on firm profitability. Profitability is found to have a negative and significant effect on firm value and does not mediate the relationship between sustainability reporting and firm value. These findings suggest that during the study period, sustainability reporting primarily functions as a compliance instrument rather than as a driver of firm value. This study highlights the importance of strategically integrating sustainability practices to generate long-term economic benefits and sustainable firm value.
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