Bandung — Capital expenditures (CAPEX) and tax planning have significant relationships with the value of mineral and coal mining companies in Indonesia, while the breadth of Environmental, Social, and Governance (ESG) disclosure does not show a statistically significant partial effect. The finding was reported by Arimas Yudiantoro and Astrie Krisnawati from the Master of Management in the Distance Learning Graduate Program at Telkom University, Bandung, through a study of mineral and coal mining companies listed on the Indonesia Stock Exchange between 2019 and 2025.
Indonesia’s mineral and coal mining sector remains strategically important because it supplies energy and industrial inputs, generates export earnings, and supports economic activity in producing regions. However, mining companies face characteristics that distinguish them from many other industries. Mining projects require substantial capital, often involve long development periods, face commodity-price fluctuations, and generate significant environmental and social impacts. These conditions make investment decisions, tax management, and sustainability disclosure increasingly relevant to investors.
The study measures firm value using Tobin’s Q, a market-based indicator that compares a company’s market valuation with the resources committed to the business on a book-value basis. A higher Tobin’s Q generally indicates stronger market valuation relative to the company’s underlying assets.
Yudiantoro and Krisnawati examined three factors that can provide signals to the market: CAPEX, tax planning measured through the Effective Tax Rate (ETR), and ESG disclosure. CAPEX represents changes in fixed assets, ETR reflects effective tax burden relative to profit before tax, while ESG disclosure is measured based on the number of sustainability indicators reported by companies using GRI-based criteria.
The researchers used a quantitative panel-data approach. From a population of 28 mineral and coal mining companies listed on the Indonesia Stock Exchange, 13 companies met the data-completeness criteria for the seven-year observation period. The final dataset therefore consisted of 91 firm-year observations. The data were collected from annual reports, financial statements, sustainability reports, and market-price information.
Several panel regression models were compared to determine the most appropriate specification. Initial testing identified problems with residual distribution and variance stability. The researchers therefore applied a Box–Cox transformation to Tobin’s Q. After the model was re-estimated and diagnostic tests were repeated, the Random Effect Model was selected as the final specification, with the resulting model satisfying the diagnostic criteria applied in the study.
The findings show that CAPEX, ETR, and ESG disclosure jointly have a significant effect on firm value. The F-test produced a probability of 0.001445. However, the individual effects of the three variables showed different patterns.
CAPEX had a coefficient of -1.124264 with a significance level of 0.0148. This means that higher CAPEX was associated with lower firm value in the transformed Tobin’s Q scale used in the analysis. The result does not mean companies should stop investing. Instead, it highlights the importance of ensuring that fixed-asset investments have clear expected returns, sound financing plans, and measurable productivity or cash-flow benefits.
Tax planning, represented by ETR, also had a negative and significant effect, with a coefficient of -0.764349 and a significance level of 0.0101. The finding indicates that a higher effective tax burden was associated with lower firm value in the research model. The researchers emphasize that tax efficiency should remain within legal and regulatory boundaries, supported by transparency and sound governance so that tax strategies are not perceived as compliance risks.
ESG disclosure produced a coefficient of -0.111901, but the relationship was not statistically significant, with a p-value of 0.5366. The study therefore found no sufficient evidence that broader ESG disclosure automatically increases or decreases firm value in the short term.
This result is particularly notable because the companies in the sample disclosed an average of approximately 69.15 percent of the 84 ESG indicators used in the study. The researchers explain that the amount of information reported does not necessarily reflect the quality, effectiveness, or real-world impact of ESG programs. Investors may require more concrete evidence of environmental, social, and governance outcomes before incorporating them into company valuations.
The model explained 16.22 percent of the variation in firm value. This indicates that CAPEX, ETR, and ESG disclosure provide relevant information, but most changes in firm value are still associated with other factors, including profitability, leverage, firm size, growth, commodity prices, exchange rates, project risks, and broader macroeconomic conditions.
For mining companies, the findings highlight the importance of stronger discipline in investment decisions. Large projects should be supported by feasibility assessments, expected-return calculations, financing plans, implementation milestones, and evidence of productivity improvements. Tax strategies should focus on sustainable efficiency within regulatory boundaries. ESG strategies, meanwhile, should move beyond simply increasing the number of reported indicators and focus on material, measurable, and verifiable outcomes.
For investors, the three indicators should not be evaluated in isolation. High CAPEX is not necessarily positive if an investment is unlikely to generate adequate returns. A low ETR should also be assessed alongside tax compliance and governance quality. Likewise, a high ESG disclosure score should be considered together with the quality and materiality of the sustainability programs actually implemented.
Arimas Yudiantoro and Astrie Krisnawati concluded that CAPEX, tax planning, and ESG disclosure jointly have a significant effect on firm value. Individually, however, CAPEX and ETR show significant negative effects, while ESG disclosure has no statistically significant partial effect. The findings emphasize the importance of viewing investment decisions, tax management, and sustainability as interconnected sources of information rather than relying on a single corporate indicator.
Authors
Arimas Yudiantoro — Telkom University, Bandung
Astrie Krisnawati — Telkom University, Bandung
Research Source
Title: The Effect of Capital Expenditures (CAPEX), Tax Planning, and ESG Disclosure on Firm Value
Journal: East Asian Journal of Multidisciplinary Research (EAJMR), Vol. 5 No. 8, 2026, pages 3247–3262.
DOI: https://doi.org/10.55927/eajmr.v5i8.278
Journal Link: https://journaleajmr.my.id/index.php/eajmr
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