Green development and its impact on financial performance and corporate value in the coal industry

The Purpose of this research is to examine the impact of Green Innovation, Environmental Management Systems (EMS), and Research & Development (R&D) on Firm Value, with Corporate Financial Performance as a moderating factor. Green Innovation is assessed using 12 specific innovation disclosure items, while EMS is measured by the ISO-14001 certification. Firm value, the dependent variable, is quantified by the price-to-book value (PBV) ratio. Additionally, this research includes price-to-book value and corporate financial performance as control variables to provide a clearer understanding of their influence. The sample for this study consists of coal companies listed on the Indonesia Stock Exchange (IDX) from 2020 to 2023, with a total of 26 companies selected using a purposive sampling method. This technique ensures that the sample aligns with specific criteria relevant to the research objectives. The observational data gathered over this period are analyzed using partial least squares (PLS), a statistical method commonly used for analyzing complex relationships between variables.The results indicate that both green innovation and research & development do not significantly influence firm value, suggesting that these factors alone may not drive immediate changes in market perceptions or financial metrics like price-to-book value. However, the environmental management system (EMS) does have a significant positive effect on firm value. Interestingly, EMS does not moderate the relationship between green innovation, research & development, and firm value, meaning it does not enhance the impact of these variables on firm value. From a theoretical standpoint, while actions aimed at improving environmental sustainability, such as pollution prevention and sustainable development, may contribute to a company’s long-term competitive advantage, they may not always be reflected in short-term financial measures like price-to-book value. This highlights the complexity of linking sustainable practices to firm value.