The mediating role of carbon emission disclosure in the relationship between structure of corporate governance and firm performance

Purpose This study aims to investigate the relationship between the structure of corporate governance (CG) and firm performance (FP), with carbon emission disclosure (CED) as a mediator. Design/methodology/approach The study is panel data of 35 mining companies listed in Indonesia Stock Exchange from 2011 to 2020 and 350 firm-year observations. The CED use the global reporting initiative framework, which was applied through content analysis in the annual reports. The governance structure and FP were also extracted from the report. Findings The results of this study that CED mediates the relationship between CG structure (board size, independent board and, audit committee) and FP. Meanwhile, CED does not mediate the relationship between ownership concentration and FP. The results support theory of stewardship, which is very suitable for use in Indonesia when viewed from the geography and culture of Indonesia itself. Indonesia is a country influenced by Eastern culture, where shareholders' interests are prioritized and agents are more devoted to their clients. Research limitations/implications First, this study only includes samples from Indonesian mining companies. Consequently, it must be conducted for all industries from various nations, particularly ASEAN, that have an effect on environmental change, particularly companies that produce carbon emissions as a result of company operations. Second, this study employs secondary data so that further research can be conducted with primary data, such as asking questions and conducting interviews with company executives, in the aim of obtaining different results. Practical implications This research encourages management to implement CED information with an effective CG structure in order to enhance long-term FP. This study advises company management to increase their focus on sustainability activities, particularly with regard to environmental changes caused by company operations. Through disclosing valid, accurate, and credible CED information, the CG structure can reduce information asymmetry between various stakeholders and companies using the findings of this study. The result aims to help investors in taking responsibility for environmental changes and selecting environmentally beneficial investments, providing them to make the best investment decisions to increase FP. Social implications This study invites existing literature by investigating the direct and indirect effects of FP on associat between governance structure and disclosure of carbon emissions in mining companies that produce the most carbon emissions in Indonesia, which is a developing country. Originality/value This is the first study to examine the three-way relationship between CED as a mediator of the relationship between CG structure and FP in mining companies in Indonesia, where Indonesia is the number 5 country in the world and number 3 in ASIA as a contributor to carbon emissions. This means that Indonesia also plays a role in global environmental change. This study answers the gaps in the previous literature with various variables and indicators.