Purwokerto, Indonesia — Profitability plays a significant role in increasing company value among energy-sector companies listed on the Indonesia Stock Exchange (IDX), while green accounting and environmental performance show no statistically significant effects. These findings come from research by Ai Rintan Indriyani, Edi Joko Setyadi, Suryo Budi Santoso, and Rezky Pramurindra of Universitas Muhammadiyah Purwokerto, examining energy companies over the 2020–2024 period.
The study highlights an important issue for the energy industry: how companies can maintain their economic value while responding to growing expectations for environmental responsibility. Energy companies, particularly those involved in oil, gas, and coal, face pressure to remain financially competitive while managing the environmental consequences of their operations.
Examining Profitability and Environmental Responsibility
Investors often evaluate a company's value based on its financial performance and future prospects. At the same time, environmental considerations have become increasingly relevant as businesses face expectations to disclose environmental costs, improve environmental performance, and manage the impacts of their operations.
Green accounting provides a way to account for environmental costs within a company's financial activities. Environmental performance reflects how well a company manages its environmental responsibilities, while profitability indicates its ability to generate earnings from its assets.
The researchers examined whether these three factors—green accounting, environmental performance, and profitability—were associated with the value of energy-sector companies listed on the IDX.
How the Research Was Conducted
The study used a quantitative approach and analyzed 17 energy-sector companies operating in the oil, gas, and coal industries. The companies were observed over five years, from 2020 to 2024, producing a total of 85 firm-year observations.
The researchers applied panel-data regression analysis using EViews 12. The analysis employed a Random Effect Model with cluster-robust standard errors to examine the relationships between the variables.
Green accounting was measured using environmental costs relative to net income after tax. Environmental performance was assessed through the PROPER rating, while profitability was measured using return on assets (ROA). Company value was evaluated using Tobin's Q.
Profitability Emerges as a Significant Factor
The findings showed that profitability had a positive and statistically significant relationship with company value. The profitability coefficient was 1.665076, with a p-value of 0.0020.
This result suggests that companies with stronger profitability tend to have higher market valuations. Their ability to generate earnings from their assets may strengthen investor confidence and improve perceptions of their financial prospects.
In contrast, green accounting had a positive coefficient of 0.004468, but its effect was not statistically significant, with a p-value of 0.4331. Environmental performance also had a positive coefficient of 0.119229, but the relationship was not statistically significant, with a p-value of 0.5737.
These results indicate that, within the sample and period examined, the researchers did not find sufficient statistical evidence that green accounting and environmental performance independently influenced company value.
However, the findings should not be interpreted as evidence that environmental responsibility is unimportant. Rather, they suggest that the financial benefits of environmental practices may not be directly reflected in company valuations through the specific measures and period analyzed in this study.
The statistical model also had an R-squared value of approximately 2.47 percent. This means that the three variables together explained only a small proportion of the variation in company value, indicating that other factors beyond those examined may play an important role.
What the Findings Mean for Energy Companies
The results offer several practical considerations for businesses, investors, and policymakers.
First, energy companies need to strengthen profitability through effective asset utilization, operational efficiency, and cost management. Improving financial performance may help support company value, provided that these efforts do not compromise environmental obligations.
Second, companies should communicate their environmental spending and performance more clearly. Instead of reporting environmental costs alone, they can provide information about measurable outcomes, such as reductions in emissions and waste, improvements in energy efficiency, and the prevention of environmental risks.
Third, investors may benefit from evaluating profitability alongside environmental liabilities, regulatory exposure, and long-term sustainability risks. A company's current financial performance is important, but it does not necessarily capture all the risks that could affect its future value.
Finally, regulators and other stakeholders can encourage more consistent and transparent environmental disclosures. Clearer reporting may help investors assess the relationship between environmental responsibility, operational performance, and long-term business prospects.
Balancing Financial Performance and Environmental Responsibility
The study underscores the importance of profitability in explaining company value among the energy-sector firms examined. At the same time, the lack of statistically significant results for green accounting and environmental performance highlights the need for further investigation into how environmental practices translate into financial outcomes.
Future research could examine additional factors that may influence company value, extend the observation period, or explore whether environmental investments have delayed effects on financial performance. Such approaches could provide a broader understanding of how energy companies balance economic objectives with environmental responsibilities.
For energy-sector businesses, the central message is that strong financial performance matters, but environmental accountability remains an essential part of responsible and sustainable business management.
About the Authors
- Ai Rintan Indriyani — Universitas Muhammadiyah Purwokerto
- Edi Joko Setyadi — Universitas Muhammadiyah Purwokerto
- Suryo Budi Santoso — Universitas Muhammadiyah Purwokerto
- Rezky Pramurindra —Universitas Muhammadiyah Purwokerto
Source
Indriyani, A. R., Setyadi, E. J., Santoso, S. B., & Pramurindra, R. (2026). “The Influence of Green Accounting, Environmental Performance and Profitability to Company Value: A Study on Companies Energy Sectors Listed on the Indonesia Stock Exchange in 2020–2024.” Indonesian Journal of Business Analytics (IJBA), 6(5), 1187–1206.
DOI: https://doi.org/10.55927/ijba.v6i5.17137
Journal website listed in the article: https://journal.yp3a.org/index.php/ijba
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