HOW DOES FINANCIAL PERFORMANCE MEDIATE THE RELATIONSHIP BETWEEN SUSTAINABILITY REPORTING AND FIRM VALUE? (A Study of Energy Sector Companies Listed on the Indonesia Stock Exchange, 2020–2024)
Keywords:
Sustainability Report, Financial Performance, Firm ValueAbstract
This study examines the effect of sustainability reporting on firm value, with financial performance as a mediating variable, in energy sector companies listed on the Indonesia Stock Exchange during the 2020–2024 period. The research employs a quantitative design using secondary data obtained from annual and sustainability reports. The sample consists of 14 energy sector firms selected through purposive sampling. Data are analysed using the Partial Least Squares–Structural Equation Modelling (PLS-SEM) technique with SmartPLS 4 software. The results reveal that financial performance has a positive and significant effect on firm value. Sustainability reporting is found to have a negative and significant effect on financial performance, while its direct effect on firm value is insignificant. Moreover, financial performance does not mediate the relationship between sustainability reporting and firm value. These findings suggest that despite the relatively high level of sustainability disclosure in the energy sector, capital market participants continue to prioritise financial performance as the primary determinant of firm value. Accordingly, the study underscores the importance of integrating sustainability initiatives with financial performance improvements to support long-term value creation.
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