Mediation Analysis of Financial Performance in the Influence of Green Accounting on Company Value

Abstract

This study aims to determine and analyze the effect of inexperienced Green accounting on company value, with financial performance as a mediating variable. Increased environmental awareness has encouraged companies to integrate green accounting practices that reflect environmental costs and benefits in their financial statements. Although green accounting requires initial investment, this practice is believed to enhance a company's image and reputation, which ultimately affects its value. The research sample consisted of manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the period 2020-2024. with Financial Performance (ROA) as a mediating variable, shows that the application of green accounting, measured based on the level of GRI disclosure coverage, has no significant effect either directly on Company Value (measured by Tobin's Q) or indirectly through Financial Performance. These findings, supported by Partial Least Squares – Structural Equation Modeling (PLS–SEM) analysis, confirm that Financial Performance (ROA) does not play a significant role as a mediating variable. The implications of these results indicate that companies need to shift from merely complying with formal disclosure (based on GRI) to improving substantive quality and more in-depth reporting of inexperienced accounting, so that their sustainability efforts can truly increase profitability and positive perceptions in the eyes of investors or the capital market. This study suggests exploring other mediating or moderating variables in the future to enrich the understanding of the factors that link sustainability practices with Company Value.