Carbon Emission Disclosure, Good Corporate Governance, Financial Performance, and Firm Value

Abstract

This research aims to examine (1) the effect of carbon emission disclosure on firm value, (2) the effect of good corporate governance on firm value, (3) the mediating role of financial performance between carbon emission disclosure and firm value, and (4) the mediating role of financial performance between good corporate governance and firm value. The research sample includes 43 mining, agro, and manufacturing firms listed in the Indonesian Stock Exchange over the 2015-2017 period. Carbon emission disclosure is measured by an indicator of the Global Reporting Initiative Series of Environmental Aspect. Good corporate governance is measured by the corporate governance score of shareholder rights, boards of directors, outside directors, audit committee and internal auditor, and disclosure to investors. Financial performance is measured by return on assets, while firm value is measured by Tobin's Q. Data analysis uses the structural equation modeling. The result shows carbon emission disclosure and good corporate governance have no direct effect on firm value. On the other hand, financial performance mediates the effect of carbon emission disclosure and good corporate governance on firm value. It shows that higher carbon emission disclosure and good corporate governance are meaningless for the investor if they do not give any financial performance improvement.