BEYOND REPORTING: HOW ENVIRONMENTAL RATINGS STRENGTHEN THE IMPACT OF SUSTAINABILITY DISCLOSURES ON FIRM VALUE
Sri Ruwanti (a,b), Alfa Rahmiyati (a)

(a) Fakultas Ekonomi dan Bisnis, Universitas Airlangga, Indonesia
sri.ruwanti-2021[at]feb.unair.ac.id
(b) Fakultas Ekonomi dan Bisnis Maritim, Universitas Maritim Raja Ali Haji, Indonesia

Abstract

This study aims to examine the effect of sustainability reports on firm value and the moderating role of the PROPER program in this relationship. Using data from non-financial companies listed on the Indonesia Stock Exchange (IDX) during the period 2016-2023, this study adopts a quantitative approach with a regression model and uses Tobin^s Q as a proxy for firm value. The results show that sustainability report disclosure has a significantly negative effect on firm value, indicating that sustainability reporting is not always positively appreciated by the market. However, the presence of the PROPER rating as a representation of the company^s environmental commitment is able to significantly strengthen this relationship. These findings provide important implications for managers and regulators to not only focus on sustainability reporting but also on the quality and external validation such as PROPER in enhancing market perception of the company.

Keywords: Firm Value, PROPER, Sustainability Report

Topic: Sustainability accounting