Green on Paper, Profitable on the Balance Sheet? Green Accounting Disclosure and Financial Performance of Energy Firms Listed on the Indonesia Stock Exchange, 2020–2025

Abstract

This study examines whether the extent of green accounting disclosure is associated with the financial performance of Energy-sector companies listed on the Indonesia Stock Exchange (IDX). Financial performance is measured by Return on Assets (ROA), and disclosure by a Green Accounting Disclosure Index (GADI), the proportion of environmental cost and activity checklist items disclosed. Data were hand-collected from the sustainability and annual reports of 26 firms with complete data, drawn from a population of 74, giving 149 firm-year observations for 2020–2025. A baseline pooled OLS model controlling for firm size (SIZE) and leverage (LEV) is complemented by firm-clustered standard errors and fixed- and random-effects estimators. In the baseline model GADI is positively associated with ROA (β = 0.177, p < 0.001; R² = 0.140), while SIZE and LEV are not significant at the 5% level. The association remains positive under firm-clustered inference (p = 0.03 to 0.04 using normal and t critical values), random effects (p = 0.013), and year effects (p = 0.043), but is only marginally significant under the wild cluster bootstrap (p = 0.053) and firm fixed effects (p = 0.097); it reflects mainly differences between firms, is not found within firms once 2020 is excluded, and a lagged specification does not show that earlier disclosure predicts later profitability. The results are observational associations in a complete-data sample and do not establish that disclosure causes higher profitability; reverse causality and omitted variables cannot be ruled out. The study provides item-level firm-year evidence from a resource-intensive, environmentally sensitive industry, with implications for how managers and regulators evaluate environmental cost reporting.