The Effect of Environmental Performance on Firm Value with Good Corporate Governance as a Moderator

Abstract

Based on the theory of firm, the main purpose of a company is established is to maximize the wealth or value of the company. Changes in perception of corporate obligations have shifted since the advent of the stakeholder theory. The minimization of environmental damage caused by business activities and the protection of the natural environment is a signal of the company's environmental performance, and has received increasing attention from the community so environmental performance factor can affect company value. By understanding the relationship patterns between these two variables, it is hoped that companies can take the right steps in increasing the value of the company by contributing to the environment that is now a concern of the business world. However, the relation between two variables still inconsistent so this study uses good corporate governance as moderating variable. The study conducted on 37 manufacture company in Indonesian Stock Exchange and use Moderated Regression Analysis. The result of this study shows that environmental performance has no significant effect on firm value while good corporate governance that proxied by independent commissioner have no moderating effect. This can be an indication of the lack of environmental awareness owned by capital market investors so it is suggested that the active role of the government to raise awareness of environmental issues that occur at this time.