Determinants of Carbon Emission Disclosure: An Empirical Study on Indonesian Manufacturing Companies

Abstract

Due to the worsening environmental issues e.g, climate change, the stakeholders impose greater demand and pressure more towards the companies of caring about the environment. The emergence of carbon accounting is a supplement to the adoption of Kyoto Protocol. However, the government has not applied carbon accounting to all companies in Indonesia, because of non-explicit laws and low quality of human resources. Various studies have been conducted to find the determinant factors for companies to make carbon emission disclosure. This research aims at examining the influence of type of industry, profitability, company size, environmental performance, and audit firm reputation on the carbon emission disclosure of manufacturing companies listed on the Indonesia Stock Exchange years 2016-2019. It employed a purposive sampling technique and obtained 290 observations and the data were analyzed using Ordinary Least Square. The shows that type of industry, profitability and company size influence carbon emission disclosure. However, this research does not successfully show the influence of environmental performance and reputation of public accountant office on carbon emission disclosure.

The Effect of Corporate Governance Structures, Environmental Performance, and Media Coverages to Carbon Emissions Disclosure

“…These results support the result of research by Dawnkin & Fraas (2011), Jannah & Muid (2014), and Prafitri & Zulaika (2016, which states that environmental performance has a positive effect on carbon emissions disclosure. These results contradict with the result of research by Ulfa & Ermaya's (2019), Ulupui et al (2020), andPratiwi et al (2021) that environmental performance doesn't affect carbon-emissions disclosure. Increasing the PROPER rating can motivate companies to disclose carbon emissions in their companies.…”

“…If a company has PROPER, it is expected that stakeholders can make decisions to invest in the company (Dawnkins & Fraas, 2011). It is in line with the legitimacy theory where the company, when carrying out company activities, must also protect the environment around the company to gain legitimacy and improve its image from the community (Pratiwi et al, 2021). Ha3: Environmental performance affects positively to carbon emissions disclosure.…”

“…The research results by Janah & Muid (2014) prove that environmental performance, media coverage, and firm size have a positive effect on carbon emissions disclosure. Cahya (2016), Ulfa & Ermaya (2019), Ulupui et al (2020), andPratiwi et al (2021) prove that environmental performance does not affect the carbon-emissions disclosure. Cahya (2016), in his research, states that media coverage does not have a significant effect on carbon emissions disclosure.…”

“…Large companies are under more pressure to disclose carbon emissions than small companies (Yusuf, 2020). The more prominent company will have higher pressure and demand from various parties to do carbon emission disclosure than a small company because its operation activities are equal to its contribution to the surrounding environment (Pratiwi et al, 2021).…”

The Effect of Industrial Type, Environmental Performance and Leverage on Carbon Emission Disclosure: Evidence from Indonesian LQ45 Companies

“…Profitability then serves as a gauge for the amount of carbon emissions produced. To reduce this pressure, companies can disclose their actual carbon emissions (Pratiwi et al, 2021). Research by Pratiwi et al (2021), which demonstrates how profitability influences the disclosure of carbon emissions, supports the findings of this study.…”