THE EFFECT OF PROFITABILITY AND ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) DISCLOSURE ON FIRM VALUE THROUGH EARNINGS MANAGEMENT IN MINING SECTOR COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE

Wilianti  Bulung; Muspa Muspa; Rachman  Suwandaru

doi:10.53067/ijomral.v5i5.508

Authors

Wilianti Bulung Institut Bisnis dan Keuangan Nitro
Muspa Muspa Institut Bisnis dan Keuangan Nitro
Rachman Suwandaru Institut Bisnis dan Keuangan Nitro

DOI:

https://doi.org/10.53067/ijomral.v5i5.508

Keywords:

Profitability; ESG Disclosure; Earnings Management; Firm Value; Mining Companies.

Abstract

This study aims to analyze the effect of profitability and environmental, social, and governance (ESG) disclosure on firm value through earnings management in mining companies listed on the Indonesia Stock Exchange. The study uses a quantitative approach with secondary data sourced from annual reports and corporate sustainability reports for the 2022-2024 period. The study population consisted of mining companies listed on the Indonesia Stock Exchange, with a purposive sampling technique resulting in 48 companies or 144 observations over three years. Data analysis was performed using the Partial Least Squares-Structural Equation Modeling (PLS-SEM) method with the assistance of SmartPLS software. Profitability was measured using Return on Assets (ROA), ESG disclosure using the ESG disclosure index, firm value using Tobin's Q, while earnings management was measured using Discretionary Accruals with the Modified Jones Model. The results show that profitability and ESG disclosure have a positive and significant effect on firm value. Profitability and ESG disclosure also have a positive and significant effect on earnings management. Furthermore, earnings management has a positive and significant effect on firm value. Earnings management has been shown to mediate the influence of profitability and ESG disclosure on firm value. These findings suggest that financial factors, sustainability disclosure, and earnings management practices play a role in shaping mining company value.

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