The effect of environmental performance and disclosure on financial performance

Abstract

The research objective is to obtain empirical evidence that environmental performance and environmental disclosure affect the financial performance. The distinctive point of this study with previous research is the use of different variables and measurement method. Previous researchers examined the relationship between variables used while the researchers wanted to test the effect of independent variables on the dependent variable and to use control variables of the firm size and company growth. The hypothesis of this study is based on stakeholder theory, legitimacy theory, signalling theory and political economic theory. Purposive sampling method is used to gather the data of the manufacturing companies listed on the Indonesia Stock Exchange and PROPER program 2010–2014. Multiple linear regressions are used as the analysis method, and type of the data is secondary by using the documentation method. The study result shows that environmental performance and environmental disclosure positively significantly affect financial performance.