Beyond Profitability: Examining the Market Valuation of Corporate Social Responsibility and Environmental Investments in Indonesia

Trisha Audi Maharani; Nina Febriana Dosinta; Syarif Muhammad Helmi; Muhammad Fahmi

doi:10.59890/ijfbm.v3i6.121

Authors

Trisha Audi Maharani Universitas Tanjungpura
Nina Febriana Dosinta Universitas Tanjungpura
Syarif Muhammad Helmi Universitas Tanjungpura
Muhammad Fahmi Universitas Tanjungpura

DOI:

https://doi.org/10.59890/ijfbm.v3i6.121

Keywords:

Corporate Social Responsibility (CSR), Sustainability Disclosure, Environmental Costs, Profitability, Firm Value

Abstract

This study examines whether corporate social responsibility (CSR) disclosure, environmental cost, and profitability are value-relevant in Indonesian manufacturing and industrial firms. Using panel data from 14 listed companies across cement, steel, plastics, and food/feed subsectors during 2019–2023 (56 firm-year observations), we test the effects of the CSR disclosure index (GRI-G4 based), environmental cost ratio, and profitability (ROA) on firm value measured by Tobin’s Q. Multiple regression is employed after classical assumption checks. The findings show that profitability has a strong positive and significant effect on firm value (β = 7.662, p < 0.001), indicating that investors in Indonesia continue to price firms primarily on financial performance. In contrast, CSR disclosure (β = 0.112, p = 0.387) and environmental cost (β = –0.100, p = 0.919) do not significantly influence Tobin’s Q. The model is jointly significant (F = 4.926, p = 0.004) with moderate explanatory power (R² = 0.221). These results suggest that, within the current Indonesian market setting, sustainability signals through disclosure and environmental spending have not yet translated into clear market premiums, while profitability remains the dominant valuation driver. The study highlights the need for better strategic integration and communication of sustainability initiatives so that CSR and environmental investments can be recognized as economic value creators in emerging markets.

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