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Climate change

Climate Change Research Reveals Negative Correlation Between Environmental Performance and Firm Value

Strategic Insights

— 1 min read

A recent study by Sebelas Maret University has investigated the effect of carbon emission reporting and environmental performance on mining companies' market value listed on the Indonesian Stock Market. The research analyzed 235 data samples from 47 companies over a 5-year period (2018-2022) and employed the panel data regression method to process the data using Eviews software. The study found a negative correlation between environmental performance and firm value, indicating that environmental performance does not enhance company value. However, voluntary carbon emissions were found to have a positive influence on firm valuation.

Key Takeaways:

  • The study analyzed 235 data samples from 47 mining companies listed on the Indonesian Stock Market over a 5-year period (2018-2022).
  • The research employed the panel data regression method using Eviews software to process the data.
  • The study found a negative correlation between environmental performance and firm value, indicating that environmental performance does not enhance company value.
  • Voluntary carbon emissions were found to have a positive influence on firm valuation.
  • The research contributes to the literature on corporate environmental responsibilities and their impact on various stakeholders.
  • The study found that environmental performance does not have a positive impact on firm valuation, which contradicts previous research that suggests environmental performance can enhance firm value.

Statistics:

  • 235 data samples were analyzed from 47 mining companies over a 5-year period (2018-2022).
  • The study employed the panel data regression method using Eviews software to process the data.
  • The research found a negative correlation coefficient of -0.23 between environmental performance and firm value.
  • 47 companies were selected for the study based on sample criteria.
  • The study analyzed data from 2018 to 2022.
  • The fixed effect model was chosen as the best fit based on a model selection test.

Sources:

  • Value Relevance of Carbon Emission Disclosure And Environmental Performance For Investor: Evidence From Mining Industry in Indonesia. Jurnal Ekonomi Bisnis dan Kewirausahaan (JEBIK), 2024, 13(2): 263-273.
  • https://doi-org.sdpl.idm.oclc.org/10.26418/jebik.v13i2.80360
  • Rasyid Ridha Kurniawan, Sebelas Maret University

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