Firm Value Dynamics: The Role of Capital Intensity and Environmental Costs with Profitability to Control

Abstract

This study aims to explore the effect of capital intensity and environmental costs on firm value, with profitability as a control variable. Utilizing panel data of companies from the energy, industry, and transportation sectors listed on the Indonesia Stock Exchange (IDX) for the 2021-2023 period, 186 observation data were obtained from 62 companies that had been determined using the purposive sampling method. The results of the analysis prove that capital intensity does not have a significant effect on firm value. Meanwhile, environmental costs show a significant positive effect, and profitability as a control variable also contributes significantly to strengthening this relationship. Overall, these findings emphasize the importance of the right environmental investment strategy to increase firm value, especially amidst global demands for sustainability. The implications of this study provide strategic insights for companies in creating balanced long-term value.