THE INFLUENCE OF SUSTAINABILITY DISCLOSURE ON FINANCIAL PERFORMANCE: A STUDY OF PUBLICLY LISTED COMPANIES IN THE FOOD & BEVERAGE, MINING & OIL REFINERY, AND CHEMICAL & PHARMACEUTICAL SECTORS IN INDONESIA

• Main Author: Mufti Rachmat, Lutrika
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/80899
• Institution: Institut Teknologi Bandung

This study explores the relationship between sustainability disclosure practices and the financial performance of Indonesian firms. As sustainability disclosure, encompassing environmental, social, and governance aspects, becomes critical for businesses to showcase their commitment to sustainable practices, its impact on financial outcomes has sparked considerable discussion. This research contributes to this discourse by examining how the quality of sustainability disclosures influences the financial performance of firms in Indonesia. Employing a mixed-method approach, the study includes qualitative content analysis of data from annual reports and quantitative analysis from financial statements of publicly listed companies. The sample comprises firms from three key industry sectors, each exhibiting varied levels of sustainability disclosure quality. Financial performance is assessed using accounting-based metrics like return on assets (ROA) and return on equity (ROE). The results indicate a positive correlation between the quality of sustainability disclosures and financial performance, particularly in industries sensitive to environmental issues. Companies with more robust sustainability disclosure practices in these sectors tend to outperform those with weaker disclosures. These findings hold significant implications for businesses, investors, and policymakers. Improved sustainability disclosure can not only bolster a firm's financial success but also serve as a valuable criterion for investment decisions, offering insights into a company's commitment to sustainability and associated risks. Policymakers can leverage these insights to advocate for enhanced sustainability disclosure standards, promoting sustainable economic development in Indonesia. In conclusion, the study affirms that high-quality sustainability disclosures are positively linked to the financial performance of Indonesian firms, underscoring the importance of refining these practices for both economic and sustainable development goals.