The Effect of Debt Financing and Equity Financing Decisions on Green Accounting: Profitability as a Moderating Variable
Abstract
Environmental management has become increasingly urgent and a global concern, leading governments to mandate all companies implement environmentally friendly practices known as green accounting. The study aims to analyze the impact of debt financing and equity financing decisions on green accounting and to test the moderating effect of profitability. Secondary data was collected from manufacturing firms in the basic industry and chemical sectors listed on the Indonesia Stock Exchange (IDX) from 2021 to 2023. Panel data moderated regression analysis was employed, preceded by a test to determine the most suitable model among the Fixed Effect Model (FEM), Common Effect Model (CEM), or Random Effect Model (REM). The results indicate that debt financing inversly on green accounting while equity financing have a positive significant effect on green accounting. Profitability was not proven to be a moderator of the effect of debt financing and equity financing on green accounting.
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References
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Gerged, A. M. (2021). Factors affecting corporate environmental disclosure in emerging markets: The role of corporate governance structures. Business Strategy and the Environment, 30(1), 609–629. https://doi.org/10.1002/bse.2642
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Herny, H., & Herawaty, V. (2024). The Effect of Green Accounting Implementation, Environmental Performance, and Sustainability Growth on Financial Reporting Quality with Profitability as A Moderating Variable. Golden Ratio of Finance Management, 4(2), 151–160. https://doi.org/10.52970/grfm.v4i2.479
Hutabarat, F. (2024). Effect of Green Accounting, Leverage, Firm Size on Firm Value With Profitability as Intervening Variable. International Journal of Professional Business Review, 9(4), e04612. https://doi.org/10.26668/businessreview/2024.v9i4.4612
Jianghon, Liu. (2010). On the Environmental Inspection for Refinancing, Environmental Disclosure and the Cost of Equity Capital. Journal of Financial Research
Junjunan, M. I., Jannah, B. S., Lating, A. I. S., & Nawangsari, A. T. (2023). Moderasi Kinerja Lingkungan Pada Hubungan Green Accounting Dan Kinerja Ekonomi. Equilibrium: Jurnal Ekonomi-Manajemen-Akuntansi, 19(2), 119. https://doi.org/10.30742/equilibrium.v19i2.2790
Kurniawati, A. D., & Purwaningsih, A. (2024). The Impact of Financial Stability and Audit Firm Affiliation on the Level of Disclosure of Sustainable Green Banking. Media Ekonomi Dan Manajemen, 39(2), 419. https://doi.org/10.56444/mem.v39i2.4957
Meilan, R., Ekmarinda, E. Y., & Hakim, I. (2023). Profitability as a Moderator in the Implementation of Environmental Management Accounting for Corporate Sustainability. Wiga : Jurnal Penelitian Ilmu Ekonomi, 13(2), 307–315. https://doi.org/10.30741/wiga.v13i2.1113
Miles, S. (2019). Stakeholder Theory and Accounting. In J. S. Harrison, J. B. Barney, R. E. Freeman, & R. A. Phillips (Eds.), The Cambridge Handbook of Stakeholder Theory (1st ed., pp. 173–188). Cambridge University Press. https://doi.org/10.1017/9781108123495.011
Nandy, M., & Lodh, S. (2012). Do banks value the eco-friendliness of firms in their corporate lending decision? Some empirical evidence. International Review of Financial Analysis, 25, 83–93. https://doi.org/10.1016/j.irfa.2012.06.008
Ng, A. C., & Rezaee, Z. (2012). Sustainability Disclosures and Cost of Capital. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2038654
Rahman, Md. M., & Islam, M. E. (2023). The Impact of Green Accounting on Environmental Performance: Mediating Effects of Energy Efficiency. https://doi.org/10.21203/rs.3.rs-2604713/v1
Riyadh, H. A., Al-Shmam, M. A., Huang, H. H., Gunawan, B., & Alfaiza, S. A. (2020). The Analysis of Green Accounting Cost Impact on Corporations Financial Performance. International Journal of Energy Economics and Policy, 10(6), 421–426. https://doi.org/10.32479/ijeep.9238
Sadiku, M. N. O., Ashaolu, T. J., Adekunte, S. S., & Musa, S. M. (2021). Green Accounting: A Primer. International Journal Of Scientific Advances, 2(1). https://doi.org/10.51542/ijscia.v2i1.10
Shahwan, Y., & Esra’a B, A. (2021). The Impact of Earning Management and Social and Environmental Costs Disclosure on Financial Performance: An Empirical Study in Jordan. https://www.researchgate.net/publication/355909725
Shireesha, Ms. S., Lakshmi, Dr. T. V., & Anusha, S. (2024). Balancing Profitability and Environmental Responsibility: Financial Strategies at Renew Power Limited. International Research Journal on Advanced Engineering and Management (IRJAEM), 2(05), 1677–1679. https://doi.org/10.47392/IRJAEM.2024.0240
Stolka, O. S.-, & Szarek, J. L.-. (2016). Barriers to The Adoption of Proactive Environmental Strategies in Polish Companies. Proceedings of the 22nd International Academic Conference. 22nd International Academic Conference, Lisbon. https://doi.org/10.20472/IAC.2016.022.050
Subhani, B. H., Zunhuan, S., Roni, N. N., Farooq, U., & Asif Khan, M. (2023). How environmental regulation imperatives introduce innovation in firm financing choice among selected asian economies. Journal of Cleaner Production, 427, 139194. https://doi.org/10.1016/j.jclepro.2023.139194
Vinayagamoorthi, V., Murugesan, S., & Kasilingam, L. (2015). Impact of Firms’ Profitability on Environmental Performance: Evidence from Companies in India. Mediterranean Journal of Social Sciences. https://doi.org/10.5901/mjss.2015.v6n1p109
Wang, S., Wang, H., Wang, J., & Yang, F. (2020). Does environmental information disclosure contribute to improve firm financial performance? An examination of the underlying mechanism. Science of The Total Environment, 714, 136855. https://doi.org/10.1016/j.scitotenv.2020.136855
Wiredu, I., Osei Agyemang, A., & Agbadzidah, S. Y. (2023). Does green accounting influences ecological sustainability? Evidence from a developing economy. Cogent Business & Management, 10(2), 2240559. https://doi.org/10.1080/23311975.2023.2240559
Yang, Y., & Zhang, Y. (2022). The Impact of the Green Credit Policy on the Short-Term and Long-Term Debt Financing of Heavily Polluting Enterprises: Based on PSM-DID Method. International Journal of Environmental Research and Public Health, 19(18), 11287. https://doi.org/10.3390/ijerph191811287
Yuliani, E., & Prijanto, B. (2022). Pengaruh Penerapan Green Accounting Terhadap Nilai Perusahaan dengan Profitabilitas Sebagai Variabel Moderating pada Perusahaan Sub Sektor Tambang Batubara yang Terdaftar di Bursa Efek Indonesia Periode 2019-2021. Fair Value: Jurnal Ilmiah Akuntansi Dan Keuangan, 5(5), 2275–2284. https://doi.org/10.32670/fairvalue.v5i5.2347
Zeng, L., Zhang, L., & Jing, Q. (2023). The impact of green credit policies on debt financing for heavily polluting enterprises. SHS Web of Conferences, 165, 02013. https://doi.org/10.1051/shsconf/202316502013
Brooks, C., & Schopohl, L. (2020). Green accounting and finance: Advancing research on environmental disclosure, value impacts and management control systems. British Accounting Review, Forthcoming. http://dx.doi.org/10.2139/ssrn.3741193
Cerciello, M., Busato, F., & Taddeo, S. (2023). The effect of sustainable business practices on profitability. Accounting for strategic disclosure. Corporate Social Responsibility and Environmental Management, 30(2), 802–819. https://doi.org/10.1002/csr.2389
Chang, G., Osei Agyemang, A., Faruk Saeed, U., & Adam, I. (2024). Assessing the impact of financing decisions and ownership structure on green accounting disclosure: Evidence from developing economies. Heliyon, 10(5), e26672. https://doi.org/10.1016/j.heliyon.2024.e26672
Chen, S., Wang, Y., Albitar, K., & Huang, Z. (2021). Does ownership concentration affect corporate environmental responsibility engagement? The mediating role of corporate leverage. Borsa Istanbul Review, 21, S13–S24. https://doi.org/10.1016/j.bir.2021.02.001
Corvino, A., Doni, F., & Bianchi Martini, S. (2020). Corporate Governance, Integrated Reporting and Environmental Disclosure: Evidence from the South African Context. Sustainability, 12(12), 4820. https://doi.org/10.3390/su12124820
Endiana, I. D. M., Dicriyani, N. L. G. M., Adiyadnya, M. S. P., & Putra, I. P. M. J. S. (2020). The Effect of Green Accounting on Corporate Sustainability and Financial Performance. The Journal of Asian Finance, Economics and Business, 7(12), 731–738. https://doi.org/10.13106/JAFEB.2020.VOL7.NO12.731
Feng, X. (2024). Green Accounting in China: Challenges, Opportunities, and the Path Forward. Advances in Economics, Management and Political Sciences, 86(1), 1–7. https://doi.org/10.54254/2754-1169/86/20240929
Ganda, F., Ngwakwe, C. C., & Ambe, C. M. (2015). Profitability as a Factor That Spurs Corporate Green Investment Practices in Johannesburg Stock Exchange (JSE) Listed Firms. Managing Global Transitions: International Research Journal, 13(3). https://www.fm-kp.si/zalozba/ISSN/1581-6311/13-3.pdf#page=23
Gao, Y., & Hoepner, A. G. F. (2024). Virtues of impact financing: Do financial institutions benefit from considering the environmental impact on financing decisions? Journal of Environmental Management, 354, 120259. https://doi.org/10.1016/j.jenvman.2024.120259
Gerged, A. M. (2021). Factors affecting corporate environmental disclosure in emerging markets: The role of corporate governance structures. Business Strategy and the Environment, 30(1), 609–629. https://doi.org/10.1002/bse.2642
Halim, A. B., Yantiana, N., & Muhsin, M. (2024). Enchancing Sustainability: The Impact Of Green Accounting Using Green Restaurant Indicators. International Journal of Environmental, Sustainability, and Social Science, 5(4), 744–752. https://doi.org/10.38142/ijesss.v5i4.1103
Handoko, J., & Santoso, V. (2023). Pengaruh Akuntansi Hijau dan Kinerja Lingkungan terhadap Kinerja Keuangan dengan Tanggung Jawab Sosial sebagai Pemediasi. Nominal Barometer Riset Akuntansi Dan Manajemen, 12(1), 84–101. https://doi.org/10.21831/nominal.v12i1.56571
Herny, H., & Herawaty, V. (2024). The Effect of Green Accounting Implementation, Environmental Performance, and Sustainability Growth on Financial Reporting Quality with Profitability as A Moderating Variable. Golden Ratio of Finance Management, 4(2), 151–160. https://doi.org/10.52970/grfm.v4i2.479
Hutabarat, F. (2024). Effect of Green Accounting, Leverage, Firm Size on Firm Value With Profitability as Intervening Variable. International Journal of Professional Business Review, 9(4), e04612. https://doi.org/10.26668/businessreview/2024.v9i4.4612
Jianghon, Liu. (2010). On the Environmental Inspection for Refinancing, Environmental Disclosure and the Cost of Equity Capital. Journal of Financial Research
Junjunan, M. I., Jannah, B. S., Lating, A. I. S., & Nawangsari, A. T. (2023). Moderasi Kinerja Lingkungan Pada Hubungan Green Accounting Dan Kinerja Ekonomi. Equilibrium: Jurnal Ekonomi-Manajemen-Akuntansi, 19(2), 119. https://doi.org/10.30742/equilibrium.v19i2.2790
Kurniawati, A. D., & Purwaningsih, A. (2024). The Impact of Financial Stability and Audit Firm Affiliation on the Level of Disclosure of Sustainable Green Banking. Media Ekonomi Dan Manajemen, 39(2), 419. https://doi.org/10.56444/mem.v39i2.4957
Meilan, R., Ekmarinda, E. Y., & Hakim, I. (2023). Profitability as a Moderator in the Implementation of Environmental Management Accounting for Corporate Sustainability. Wiga : Jurnal Penelitian Ilmu Ekonomi, 13(2), 307–315. https://doi.org/10.30741/wiga.v13i2.1113
Miles, S. (2019). Stakeholder Theory and Accounting. In J. S. Harrison, J. B. Barney, R. E. Freeman, & R. A. Phillips (Eds.), The Cambridge Handbook of Stakeholder Theory (1st ed., pp. 173–188). Cambridge University Press. https://doi.org/10.1017/9781108123495.011
Nandy, M., & Lodh, S. (2012). Do banks value the eco-friendliness of firms in their corporate lending decision? Some empirical evidence. International Review of Financial Analysis, 25, 83–93. https://doi.org/10.1016/j.irfa.2012.06.008
Ng, A. C., & Rezaee, Z. (2012). Sustainability Disclosures and Cost of Capital. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2038654
Rahman, Md. M., & Islam, M. E. (2023). The Impact of Green Accounting on Environmental Performance: Mediating Effects of Energy Efficiency. https://doi.org/10.21203/rs.3.rs-2604713/v1
Riyadh, H. A., Al-Shmam, M. A., Huang, H. H., Gunawan, B., & Alfaiza, S. A. (2020). The Analysis of Green Accounting Cost Impact on Corporations Financial Performance. International Journal of Energy Economics and Policy, 10(6), 421–426. https://doi.org/10.32479/ijeep.9238
Sadiku, M. N. O., Ashaolu, T. J., Adekunte, S. S., & Musa, S. M. (2021). Green Accounting: A Primer. International Journal Of Scientific Advances, 2(1). https://doi.org/10.51542/ijscia.v2i1.10
Shahwan, Y., & Esra’a B, A. (2021). The Impact of Earning Management and Social and Environmental Costs Disclosure on Financial Performance: An Empirical Study in Jordan. https://www.researchgate.net/publication/355909725
Shireesha, Ms. S., Lakshmi, Dr. T. V., & Anusha, S. (2024). Balancing Profitability and Environmental Responsibility: Financial Strategies at Renew Power Limited. International Research Journal on Advanced Engineering and Management (IRJAEM), 2(05), 1677–1679. https://doi.org/10.47392/IRJAEM.2024.0240
Stolka, O. S.-, & Szarek, J. L.-. (2016). Barriers to The Adoption of Proactive Environmental Strategies in Polish Companies. Proceedings of the 22nd International Academic Conference. 22nd International Academic Conference, Lisbon. https://doi.org/10.20472/IAC.2016.022.050
Subhani, B. H., Zunhuan, S., Roni, N. N., Farooq, U., & Asif Khan, M. (2023). How environmental regulation imperatives introduce innovation in firm financing choice among selected asian economies. Journal of Cleaner Production, 427, 139194. https://doi.org/10.1016/j.jclepro.2023.139194
Vinayagamoorthi, V., Murugesan, S., & Kasilingam, L. (2015). Impact of Firms’ Profitability on Environmental Performance: Evidence from Companies in India. Mediterranean Journal of Social Sciences. https://doi.org/10.5901/mjss.2015.v6n1p109
Wang, S., Wang, H., Wang, J., & Yang, F. (2020). Does environmental information disclosure contribute to improve firm financial performance? An examination of the underlying mechanism. Science of The Total Environment, 714, 136855. https://doi.org/10.1016/j.scitotenv.2020.136855
Wiredu, I., Osei Agyemang, A., & Agbadzidah, S. Y. (2023). Does green accounting influences ecological sustainability? Evidence from a developing economy. Cogent Business & Management, 10(2), 2240559. https://doi.org/10.1080/23311975.2023.2240559
Yang, Y., & Zhang, Y. (2022). The Impact of the Green Credit Policy on the Short-Term and Long-Term Debt Financing of Heavily Polluting Enterprises: Based on PSM-DID Method. International Journal of Environmental Research and Public Health, 19(18), 11287. https://doi.org/10.3390/ijerph191811287
Yuliani, E., & Prijanto, B. (2022). Pengaruh Penerapan Green Accounting Terhadap Nilai Perusahaan dengan Profitabilitas Sebagai Variabel Moderating pada Perusahaan Sub Sektor Tambang Batubara yang Terdaftar di Bursa Efek Indonesia Periode 2019-2021. Fair Value: Jurnal Ilmiah Akuntansi Dan Keuangan, 5(5), 2275–2284. https://doi.org/10.32670/fairvalue.v5i5.2347
Zeng, L., Zhang, L., & Jing, Q. (2023). The impact of green credit policies on debt financing for heavily polluting enterprises. SHS Web of Conferences, 165, 02013. https://doi.org/10.1051/shsconf/202316502013
Published
2024-12-28
How to Cite
SARAGIH, Afni Eliana.
The Effect of Debt Financing and Equity Financing Decisions on Green Accounting: Profitability as a Moderating Variable.
E-Jurnal Akuntansi, [S.l.], v. 34, n. 12, dec. 2024.
ISSN 2302-8556.
Available at: <https://ojs.unud.ac.id/index.php/akuntansi/article/view/119965>. Date accessed: 15 jan. 2025.
doi: https://doi.org/10.24843/EJA.2024.v34.i12.p09.
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