Corporate Governance and Environmental Performance: How They Affect Firm Value

Wahidahwati, Wahidahwati and ARDINI, LILIS (2023) Corporate Governance and Environmental Performance: How They Affect Firm Value. Journal of Asian Finance, Economics and Business, 8 (2). pp. 953-962. ISSN 2288-4645

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Abstract

This study aims to examine the effect of environmental performance and good corporate governance (GCG) on the firm values mediated by corporate social responsibility (CSR). The sample in this study was obtained using a purposive sampling method and collected from 205 companies. The analytical method used is moderating regression analysis. The results of this study indicate, first, that corporate social responsibility affects the value of the company. The results of this study indicate that the better corporate governance will increase the value of the firm and vice versa. Second, corporate social responsibility has a direct effect on the firm value, but the effect is still smaller when compared with the internal mechanisms of good corporate governance. This study also found that corporate social responsibility cannot mediate the effect of good corporate governance on firm value. Third, the company’s environmental performance influences the company’s value. Finally, the effect of environmental performance on company value will be better if mediated by corporate social responsibility. This result shows that environmental performance is a proof that the company’s environmental and social concern, which is manifested in corporate social responsibility, will be responded positively by the market so that it will increase share prices (firm value). Keywords: Corporate Social Responsibility, Good Corporate Governance, Firm Value, Environmental Performance

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