THE VALUE RELEVANCE OF ENVIRONMENTAL PERFORMANCE, CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE, AND RETURN ON EQUITY

Abstract

This study aims to examine the value relevance of green accounting practice measured byenvironmental rating through PROPER, which is assessed by the Ministry of Environment and Forestry (KLHK), and environmental disclosure activities from an internal party, called sustainability report, of listed mining and agriculture companies on the Indonesian Stock Exchange. This study also tests whether the return on equity can strengthen the value relevance of environmental performance and CSR disclosure. The sample consists of 63 firm-year observations. The empirical results showed that the book value of equity and earnings on share price is significant. The study reveals book value of equity exhibits a negative relationship in stock price, while earnings exhibit a negative relationship. However, environmental performance and CSR disclosure are not statistically significant in terms of share price, concluding they do not have value relevance. The study also found that ROE has not succeeded in strengthening the value relevance of environmental performance and CSR disclosure.