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CSR and Profitability Drive Energy Company Value, Indonesian Study Finds
Researchers from Universitas Jambi have found that corporate social responsibility, profitability, and leverage significantly influence the market value of energy sector companies listed on the Indonesia Stock Exchange between 2022 and 2024. The study, published in 2026 in the Jurnal Multidisiplin Madani (MUDIMA), also revealed that audit quality, including whether companies were audited by Big Four accounting firms, did not strengthen investor perceptions of company value. The research was conducted by Anisa Zultia Nasution, Wiralestari, and Eko Prasetyo from Universitas Jambi.
The findings arrive at a critical moment for Indonesia’s energy industry, which is facing growing pressure from global commodity price fluctuations, environmental scrutiny, sustainability expectations, and investor demand for transparent business practices. Companies in the coal, oil, and gas sectors are increasingly evaluated not only on financial performance but also on their environmental and social responsibility.
Energy Companies Under Financial and Environmental Pressure
The study highlighted how falling coal prices in 2023 placed significant financial pressure on Indonesia’s energy companies. Coal prices reportedly dropped by 64.85% to USD 136.95 per ton by the end of 2023, while major coal firms such as ITMG, PTBA, and ADRO experienced profit declines ranging from 34% to nearly 59%. Their stock prices also fell sharply during the same period.
At the same time, environmental and social controversies have increased public attention on corporate accountability. The researchers cited the case of PT RMK Energy Tbk in South Sumatra, where alleged air pollution from coal stockpile operations resulted in government sanctions and temporary operational suspension. The incident illustrated how environmental failures can damage corporate reputation and reduce investor confidence.
Against this backdrop, the research examined whether corporate social responsibility disclosures, profitability levels, leverage ratios, and audit quality affected firm value in Indonesia’s energy sector.
How the Study Was Conducted
The research used a quantitative approach based on annual reports and sustainability reports from energy sector companies listed on the Indonesia Stock Exchange. The researchers analyzed company data from 2022 to 2024.
Initially, the study involved 71 companies, but after applying selection criteria and removing statistical outliers, the final sample included 115 observations from 43 companies.
The researchers measured:
- Firm value using Price-to-Book Value (PBV)
- Corporate Social Responsibility (CSR) using Global Reporting Initiative (GRI) standards
- Profitability using Return on Assets (ROA)
- Leverage using Debt-to-Asset Ratio (DAR)
- Audit quality through a dummy variable distinguishing Big Four and non-Big Four accounting firms
The statistical analysis used Moderated Regression Analysis (MRA) with SPSS software to evaluate relationships between variables.
Key Findings From the Research
The study found that three major factors significantly influenced firm value in Indonesia’s energy sector:
- Corporate Social Responsibility had a significant effect on firm value with a significance level of 0.013
- Profitability strongly influenced firm value with a significance level of 0.001
- Leverage also affected firm value with a significance level of 0.004
The findings suggest that investors pay close attention to sustainability practices, financial performance, and debt management when assessing the long-term prospects of energy companies.
Among the variables studied, profitability emerged as the strongest predictor of firm value. Companies with higher Return on Assets were viewed more positively by investors, particularly during periods of commodity market volatility.
The researchers explained that strong profitability signals resilience and operational efficiency, which can increase investor confidence and stock prices.
Leverage also showed a meaningful relationship with company value. According to the study, investors in the energy sector appear willing to tolerate higher debt levels when debt is used strategically to finance large-scale projects with long-term growth potential.
Meanwhile, CSR disclosure based on Global Reporting Initiative standards was viewed as an important non-financial signal that strengthened corporate reputation and reduced information asymmetry between companies and investors.
Audit Quality Did Not Change Investor Perceptions
One of the study’s most notable findings involved audit quality. The researchers expected that companies audited by Big Four accounting firms such as Deloitte, KPMG, EY, and PwC would receive stronger investor trust. However, the data showed otherwise.
The moderation analysis found that audit quality did not significantly strengthen or weaken the relationship between:
- CSR and firm value
- Profitability and firm value
- Leverage and firm value
The significance levels for these moderating effects were all above the 0.05 threshold, indicating statistically insignificant results.
According to the researchers, investors in the energy sector may already trust publicly available financial and sustainability information without relying heavily on the reputation of external auditors. In the case of CSR, the study suggested that sustainability disclosures are often viewed separately from conventional financial audits, limiting the influence of auditor reputation on investor perceptions.
The authors from Universitas Jambi noted that “investors in the energy sector tend to place direct trust in a company’s financial performance without depending on the auditor’s reputation.”
Implications for Companies and Investors
The research carries important implications for Indonesian corporations, investors, and policymakers. Energy companies are increasingly expected to balance profitability with sustainability and responsible governance practices.
The study recommends that companies improve transparency in CSR reporting while maintaining healthy profitability and prudent leverage management. Clear sustainability reporting aligned with international standards such as the Global Reporting Initiative may help companies strengthen market value and investor confidence.
For investors, the findings indicate that evaluating energy companies requires attention not only to profits and debt ratios but also to environmental and social performance indicators.
The researchers also encouraged future studies to explore broader measures of audit quality, corporate governance, and sustainability performance to better understand how investors evaluate firm value in emerging markets.
Author Profiles
Anisa Zultia Nasution is an accounting researcher at Universitas Jambi specializing in corporate finance, sustainability reporting, and firm value analysis.
Wiralestari is an academic at Universitas Jambi whose research focuses on accounting transparency, corporate governance, and financial reporting quality.
Eko Prasetyo is a finance and accounting researcher affiliated with Universitas Jambi with expertise in investment analysis, leverage management, and corporate performance evaluation.
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