GOOD CORPORATE GOVERNANCE, GREEN ACCOUNTING, AND EARNINGS SUSTAINABILITY: EVIDENCE FROM JAKARTA ISLAMIC INDEX
DOI:
https://doi.org/10.26418/jebik.v13i2.78787Keywords:
good corporate governance, green accounting, earnings sustainability, sustainability theory, sustainable performanceAbstract
This research examines the influence of good corporate governance (GCG) practices on the earnings sustainability of companies listed in the Jakarta Islamic Index. Additionally, it explores the role of green accounting in the relationship between GCG and sustainable earnings. GCG is represented by management ownership, boards of commissioners, the audit committee, and institutional ownership. Green accounting is measured using the corporate environmental management (PROPER) results, which are aligned with the regulations of the Ministry of Environment and Forestry of Indonesia. Data analysis was carried out using panel data regression analysis. The findings indicate that GCG components (management ownership, boards of commissioners, and audit committee) positively impact sustainable earnings. Moreover, green accounting has been empirically proven to moderate the positive effect of GCS on sustainable earnings. Based on the sustainability theory, companies tend to undertake ethical and legal measures to achieve sustainable performance. Thus, sustainability theory suggests that the synergy between corporate governance and green accounting may improve earnings sustainability.
JEL: M14, M41, L25.
References
Agustina, Y., Winarno, A., & Dyan, A. (2021). Good Corporate Governance and Financial Performance on Capital Adequacy Ratio: A Reflection of Indonesian Conventional Banking. JBMP (Jurnal Bisnis, Manajemen dan Perbankan), 7(2), 293–306. https://doi.org/10.21070/jbmp.v7i2.1542
Aibarâ€Guzmán, B., Raimo, N., Vitolla, F., & GarcÃaâ€Sánchez, I. (2024). Corporate Governance and Financial Performance: Reframing Their Relationship in the Context of Climate Change. Corporate Social Responsibility & Environmental Management, 31(3), 1493–1509. https://doi.org/10.1002/csr.2649
Al-Ahdal, W. M., Hashim, H. A., Almaqtari, F. A., & Saudagaran, S. M. (2023). The Moderating Effect of an Audit Committee on the Relationship between Ownership Structure and Firm Performance: Evidence from Emerging Markets. Cogent Business & Management, 10(1), 1–24. https://doi.org/10.1080/23311975.2023.2194151
Alfariz, R., & Asmara, R. Y. (2024). Company Size, Managerial Ownership, Sustainability Report on Financial Performance with Operational Efficiency as an Intervening. Asian Journal of Social & Humanities, 2(12), 3125–3135. https://doi.org/10.59888/ajosh.v2i12.391
Alkurdi, A., Hamad, A., Thneibat, H., & Elmarzouky, M. (2021). Ownership Structure’s Effect on Financial Performance: An Empirical Analysis of Jordanian Listed Firms. Cogent Business & Management, 8(1), 1–21. https://doi.org/10.1080/23311975.2021.1939930
Anggraeni, R. F., & Kartini, K. (2024). The Effect Of Good Corporate Governance on the Profitability of Banking Companies Listed on the IDX. International Journal of Social Service and Research, 4(05), 1252–1265. https://doi.org/10.46799/ijssr.v4i05.800
Arum, E. D. P. (2019). The Implementation of Green Accounting and its Implication on Financial Reporting Quality in Indonesia. Journal of Business Studies and Management Review, 3(1), 67–75. https://doi.org/10.22437/jbsmr.v3i1.8646
Bodoff, N. M. (2011). Sustainability of Earnings: A Framework for Quantitative Modeling of Strategy, Risk, and Value. Casualty Actuarial Society E-Forum, Summer 2012, 1–14. http://library.soa.org/library/monographs/other-monographs/2011/november/mono-2011-m-as11-1-bodoff.pdf
Bsoul, L., Omer, A., Kucukalic, L., & Archbold, R. H. (2022). Islam’s Perspective on Environmental Sustainability: A Conceptual Analysis. Social Sciences, 11(6), 1–11. https://doi.org/10.3390/socsci11060228
Budiono, S., & Dura, J. (2021). The Effect of Green Accounting Implementation on Profitability in Companies Compass Index 100. International Journal of Educational Research & Social Sciences, 2(6), 1526–1534. https://doi.org/10.51601/ijersc.v2i6.216
Cahyono, S., Fernando, H. A., & Primasatya, R. D. (2023). The Nexus between Corporate Financial Ratio and Price Earnings Performance: Evidence from President Election Period in Indonesia. Jurnal Akuntansi dan Keuangan, 25(2), 101–116. https://doi.org/10.9744/jak.25.2.101-116
Christina, V. D., & Lenggogeni. (2024). Internal Audit Function and Board of Commissioners on Financial Performance With Institutional Ownership As A Moderation Variable (Study of Companies in the Financial Sector Listed on the Indonesia Stock Exchange for the Period 2020-2022). Dinasti International Journal of Economics, Finance & Accounting (DIJEFA), 4(6), 796–806. https://doi.org/10.38035/dijefa.v4i6
Ekardt, F. (2020). Sustainability. Springer International Publishing. https://doi.org/10.1007/978-3-030-19277-8
El Nahas, K. E. D. (2023). Examining the Effect of Ownership Structure on Firm Financial Performance in Egypt. Cardiff Metropolitan University. https://doi.org/10.25401/cardiffmet.22567447.v1
Endiana, I. D. M., Dicriyani, N. L. G. M., Adiyadnya, M. S. P., & Putra, I. P. M. J. S. (2020). The Effect of Green Accounting on Corporate Sustainability and Financial Performance. Journal of Asian Finance, Economics and Business, 7(12), 731–738. https://doi.org/10.13106/jafeb.2020.vol7.no12.731
Febriani, I., Sumiartini, R. L., & Hadiyati, S. N. (2024). The Role of Intellectual Capital and Good Corporate Governance on Financial Performance (Empirical Study on Food and Beverage Subsector Manufacturing Sector Companies listed on the IDX 2019-2022). Indonesian Journal of Business Analytics, 4(3), 1162–1181. https://doi.org/10.55927/ijba.v4i3.9423
Fibriani, C. D., Islahuddin, I., & Zuraida, Z. (2022). The Effect of Government Ownership, Foreign Ownership, Managerial Ownership, Institutional Ownership on Financial Performance With Corporate Governance as Moderate in Soe Companies. Journal of World Science, 1(9), 756–770). https://doi.org/10.58344/jws.v1i9.93
Hanjani, A., & Kusumadewi, R. K. A. (2023). Environmental Performance and Financial Performance: Empirical Evidence from Indonesian Companies. Corporate Social Responsibility and Environmental Management, 30(3), 1508–1513. https://doi.org/10.1002/csr.2433
Hazzaa, O. T., Abdullah, D. F., & Sadaa, A. M. (2024). Influence of CEO Characteristics and Audit Committee on Financial Performance: Evidence from Iraq. Journal of Open Innovation: Technology, Market, and Complexity, 10(2), 100290. https://doi.org/10.1016/j.joitmc.2024.100290
Huzaimi, M. J. Y., Razak, S. N. A. A., Noor, W. N. B. W. M., Hudayati, A., Puspaningsih, A., & Aida, A. N. F. (2022). Audit Committee Characteristics and Timeliness of Financial Reporting: Social Enterprises Evidence. Contemporary Economics, 16(2), 211–226. https://doi.org/10.5709/ce.1897-9254.478
Kalbuana, N., Kusiyah, K., Supriatiningsih, S., Budiharjo, R., Budyastuti, T., & Rusdiyanto, R. (2022). Effect of Profitability, Audit Committee, Company Size, Activity, and Board of Directors on Sustainability. Cogent Business & Management, 9(1), 1–17. https://doi.org/10.1080/23311975.2022.2129354
Kateb, I., & Belgacem, I. (2024). Navigating Governance and Accounting Reforms in Saudi Arabia’s Emerging Market: Impact of Audit Quality, Board Characteristics, and IFRS Adoption on Financial Performance. International Journal of Disclosure and Governance, 21(2), 290–312. https://doi.org/10.1057/s41310-023-00193-5
Li, H., & Qi, A. (2018). Impact of Corporate Governance on Voluntary Disclosure in Chinese Listed Companies. Corporate Ownership and Control, 5(2), 360–366. https://doi.org/10.22495/cocv5i2c3p5
Luthan, E., Satria, I., & Ilmainir. (2016). The Effect of Good Corporate Governance Mechanism to Earnings Management before and after IFRS Convergence. Procedia - Social and Behavioral Sciences, 219, 465–471. https://doi.org/10.1016/j.sbspro.2016.05.021
Ma, Y., & Ren, Y. (2021). Insurer Risk and Performance Before, During, and After the 2008 Financial Crisis: The Role of Monitoring Institutional Ownership. Journal of Risk & Insurance, 88(2), 351–380. http://10.0.4.87/jori.12323
Mahrani, M., & Soewarno, N. (2018). The Effect of Good Corporate Governance Mechanism and Corporate Social Responsibility on Financial Performance with Earnings Management as Mediating Variable. Asian Journal of Accounting Research, 3(1), 41–60. https://doi.org/10.1108/AJAR-06-2018-0008
Melenia, F., Agustini, A. T., & Putra, H. S. (2023). The Effect of Implementing Green Accounting on the Environmental Performance of Cement, Energy, and Mining Companies in Indonesia. The Indonesian Accounting Review, 13(1), 49–60. https://doi.org/10.14414/tiar.v13i1.3135
Melinda, F. I., & Sutejo, B. S. (2008). Interdependensi Kepemilikan Manajerial dan Kepemilikan Institusional serta Pengaruhnya terhadap Kinerja Keuangan. Journal of Management and Business, 7(2), 167–182. https://doi.org/10.24123/jmb.v7i2.127
Millenianto, A. B. (2024). How to Cite: Corporate Governance on Profitability. Corporate Governance on Profitability. Journal Eduvest, 4(6), 5313–5325. http://eduvest.greenvest.co.id
Qian, W., Tilt, C., & Belal, A. (2021). Social and Environmental Accounting in Developing Countries: Contextual Challenges and Insights. Accounting, Auditing & Accountability Journal, 34(5), 1021–1050. https://doi.org/10.1108/AAAJ-03-2021-5172
Qoyum, A., Sakti, M. R. P., Thaker, H. M. T., & AlHashfi, R. U. (2022). Does the Islamic Label Indicate Good Environmental, Social, and Governance (ESG) Performance? Evidence from Sharia-Compliant Firms in Indonesia and Malaysia. Borsa Istanbul Review, 22(2), 306–320. https://doi.org/10.1016/j.bir.2021.06.001
RodrÃguezâ€González, R. M., Maldonadoâ€Guzman, G., & Madridâ€Guijarro, A. (2022). The Effect of Green Strategies and Ecoâ€Innovation on Mexican Automotive Industry Sustainable and Financial Performance: Sustainable Supply Chains as a Mediating Variable. Corporate Social Responsibility & Environmental Management, 29(4), 779–794. https://doi.org/10.1002/csr.2233
Rusydi, A. R., Palutturi, S., Noor, N. B., & Pasinringi, S. A. (2020). The Comparison of Good Corporate Governance on Human Resources Performance in Regional General Hospital of Labuang Baji and Ibnu Sina Hospital Makassar, South Sulawesi. EnfermerÃa ClÃnica, 30(2), 482–486. https://doi.org/10.1016/j.enfcli.2019.07.143
Saha, R., & Kabra, K. C. (2019). Does Corporate Governance Influence Voluntary Disclosure? Evidence from India. Indonesian Journal of Sustainability Accounting anad Management, 3(2), 203–2014. https://doi.org/10.28992/ijsam.v3i2.97
Tjahjadi, B., Soewarno, N., & Mustikaningtiyas, F. (2021). Good Corporate Governance and Corporate Sustainability Performance in Indonesia: A Triple Bottom Line Approach. Heliyon, 7(3), 123–132. https://doi.org/10.1016/j.heliyon.2021.e06453
Yoga, I. G. A. P., & Sastri, I. I. D. A. M. (2020). Green Accounting: An Environmental Pollution Prevention Effort to Support Business Continuity. Jurnal Ekonomi & Bisnis JAGADITHA, 7(2), 128–137. https://doi.org/10.22225/jj.7.2.2488.128-137
Zainal, A., Ritonga, A. N. A., Putra, P. D., Harahap, K., & Thohiri, R. (2024). Do Institutional Ownership, Managerial Ownership, Independent Commissioners and Audit Committees Affect Earnings Persistence of Listed Manufacturing Companies Listed in Indonesia? In Integrated Journal of Business and Economics, 8(2), 203–217 https://doi.org/10.33019/ijbe.v8i2.893
Zulfizaredo, D. S. (2024). The Influence of Good Corporate Governance on The Company’s Financial Performance. Journal of Syntax Transformation, 5(7), 954–969. https://doi.org/10.46799/jst.v5i7.982
Zulpahmi, Sumardi, Al-Azizah, U. S., Nugroho, A. W., & Setiawan, E. (2024). Investigating the Impact of Corporate Governance on Financial Performance and Firm Value Prior to and During the Covid-19 Pandemic. Revista de Gestão Social e Ambiental, 18(6 SE-), e05334. https://doi.org/10.24857/rgsa.v18n6-069
