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The Role of Minority Shareholders Protection as a Moderator of the Influence of Green Environmental Cost Disclosure and Company’s Financial Performance on Its Stock Return – An Empirical Study on Indonesian Mining Companies

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  • Sumaryo
  • Agus Ismaya Hasanudin
  • Elvin Bastian
  • Munawar Muchlish

Abstract

This study aims to examine the role of minority shareholders protection (MSP) as a moderator influence of green environmental cost disclosure (GECD) and the company's financial performance (FFP) on its stock returns (STR). Drawing on contingency theory, the authors developed and tested hypotheses using secondary data from 260 Indonesian mining sector observations from 2016 to 2020. The sample used in this study is purposive sampling, and the analysis uses panel data with Eviews 10. The result showed that MSP moderate significantly positive influence of GECD and FFP on STR. The results also showed that MSP is a pure moderate variable. This is consistent with contingency theory, which posits that management must adapt all regulations and mix internal capabilities to be monitored better and reduce pollution for pursuing FFP, which improves STR. The evidence supports the emphasis green policy statements have put on increasing green environment cost disclosure and the intensity of the role of minority protection shareholders. This study offers new insights to policymakers in enhancing the monitoring role of mining corporations. The study also adds value to the understanding of predicting stock returns by using GECD, the Company’s financial performance, and the role of MSP as moderating influences of this relationship, particularly in an emerging economy like Indonesia.

Suggested Citation

  • Sumaryo & Agus Ismaya Hasanudin & Elvin Bastian & Munawar Muchlish, 2024. "The Role of Minority Shareholders Protection as a Moderator of the Influence of Green Environmental Cost Disclosure and Company’s Financial Performance on Its Stock Return – An Empirical Study on Indo," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 85-104.
    • Handle: RePEc:bas:econst:y:2024:i:7:p:85-104
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    More about this item

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • P17 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Performance and Prospects
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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