The Central Statistics Agency (BPS) revealed that Indonesia’s economic growth from 2013 to 2017 has increased from 4.79 in 2013 to 5.07 in 2017. This figure is the highest increase since 2017 with the processing industry sector / manufacturing as the biggest contributor (Setiawan, 2018). The economic growth is supported by business development. In a business activity, interactions exist between firm, community, stakeholders, and environment. Human are responsible for the sustainability of environment as it is an important aspect of life. Environmental issues currently become the concern in business practice.
Application of the concept of eco-efficiency can be one of the strategies that can minimize waste and can reduce production costs so that it will improve efficiency, product quality, and good relations with the community, and improve environmental quality.The application of eco-efficiency is highly recommended for developing countries, especially Indonesia. This concept is expected can reduce the use of resources and environmental impacts, therefore improve economic development.
Most firms in Indonesia have begun applying ISO 14001 certification. ISO 14001 certification indicates that a firm already implements the concept of eco-efficiency in their policies. ISO 14001 certification is given to companies that have an effort to improve the efficiency of their operational activities, which contain international standard regulations in the field of environmental management (World Business Council for Sustainable Development, 2006). the firm has tried to protect the environment well. With this assumption, the company has created a good image in the society as well as increasing firm value. The added value makes investors increasingly interested in investing in the company (Guenster et al. 2006).
In addition to several studies on eco-efficiency and its impact on companies, most of the studies provide support for a positive relationship between eco-efficiency and corporate value (Al-Najjar & Anfimiadou 2012; Sinkin et al. 2008). Firm value can be influenced by various factors, one of which is firm size. A large firm will get much pressure from the community. The demand to preserve the environment will be taken into consideration because it is directly related to the firm’s image. Sembiring (2005) finds that firm size has a positive effect on the adoption of corporate eco-efficiency. The higher the size of a firm, the better the financial condition, and the more comfortable to obtain capital compared to smaller companies. The application of eco-efficiency will be more optimal because of the power to develop this program and will have an impact on the value of the firm to support the going concern process of the firm.
This research uses a sample of 466 manufacturing firms listed on the Indonesia Stock Exchange from 2013-2017.
Hypothesis:
H1: Eco-efficiency has a positive effect on company value.
H2: Firm size moderates the relationship between eco-efficiency and firm value
The dependent variable in this research is firm value. Firm value explains manager ability in managing the business. In this study, firm value is measured using Price Book Value (PBV) (Brigham & Houston, 2006). Eco-efficiency as an independent variable. Eco-efficiency is known through measurements using ISO 1400.
Firm size is measured by the size of the assets and describes the firm’s resources. The size of the firm also moderates the business and operational performance of the firm (Nasih et al., 2019; Wahyudhi, C.A et al., 2019; and Sukri, 2019). Control Variable is Earnings per Share (EPS) is part of the profitability ratio measured by dividing net income by the number of shares outstanding.
The data analysis uses multiple regression analysis with a classic assumption test, consisting of a normality test, a heteroskedastic test and a multicollinearity test. This study aims to examine the effect of eco-efficiency on firm value with firm size as a moderating variable. Based on the results of the analysis, hypothesis testing, the following are the conclusions of this study: (1) Eco-efficiency has a significant effect on firm value in manufacturing companies listed on the Stock Exchange in the 2013-2017 period; (2) Company size moderates the effect of eco-efficiency on firm value in manufacturing companies listed on the Indonesia Stock Exchange in the 2013-2017 periode;
Penulis: Brian Kurnianta, Wiwiek Dianawati
Link jurnal: https://www.bibliomed.org/?mno=44023
