Abstract
This study aims to determine the impact of environmental performance proxied by eco-efficiency on the financial performance of manufacturing companies in Indonesia. İn this study, the multiple linear regression test was used to analyse the data. The sample of this study is manufacturing companies that listed at the Indonesia Stock Exchange from 2012 until 2016 with the total observation is 80 firm-years.The results of this study indicated that the average level of eco-efficiency of the manufacturing companies is still relatively low (0.38). The environmental performance as measured by the eco-efficiency has a positive significant effect on the financial performance of the companies. Therefore, this study suggests that companies can improve their financial performance by enhancing their eco-efficiency level.This study aims to determine the impact of environmental performance proxied by eco-efficiency on the financial performance of manufacturing companies in Indonesia. İn this study, the multiple linear regression test was used to analyse the data. The sample of this study is manufacturing companies that listed at the Indonesia Stock Exchange from 2012 until 2016 with the total observation is 80 firm-years.The results of this study indicated that the average level of eco-efficiency of the manufacturing companies is still relatively low (0.38). The environmental performance as measured by the eco-efficiency has a positive significant effect on the financial performance of the companies. Therefore, this study suggests that companies can improve their financial performance by enhancing their eco-efficiency level.
Highlights
This study aims to determine the impact of environmental performance proxied by eco-efficiency on the financial performance of manufacturing companies in Indonesia
Our paper builds on literature that investigates the link between environmental performance and financial performance
We extend this work in ways by using eco-efficiency as a measurement for environment performance
Summary
This study aims to determine the impact of environmental performance proxied by eco-efficiency on the financial performance of manufacturing companies in Indonesia. Penelitian ini bertujuan untuk menguji pengaruh kinerja lingkungan yang diproksikan dengan eco-efficiency terhadap kinerja keuangan perusahaan manufaktur di Indonesia. Penelitian ini juga menemukan bahwa kinerja lingkungan memiliki pengaruh positif yang signifikan terhadap kinerja keuangan perusahaan. Businesses are encouraged to be more competitive and innovative while at the same time being required to assume greater responsibility for the environment and society To respond to these expectations, companies are start taking initiatives and strengthening their business procedures (Al-Najjar & Anfimiadou, 2012). Reducing environmental impacts or restoring ecosystems creates substantial demands on corporate resources. This demand is a cost that needs to be accounted for which leads to the recognition of the concept of eco-efficiency. Extensive support for ecoefficiency is found in many research literature Grady (1999), Huppes & Ishikawa (2009), Sun & Pratt (2014), Caiado, de Freitas Dias, Mattos, Quelhas, Leal Filho (2017), Yook, Song, Patten, & Il-Woon, (2017) and Fieldman (2014) highlighting that, when companies effectively signal that they are adopting eco-efficiency, they are perceived to have created shareholder value by reducing their risk profile
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