Indonesia Accounting Research Journal

Enhancing firm value through ESG: Fraud, financial performance, sustainability disclosure

2026-02-22T06:49:03+00:00

This research analyzes the effect of Fraudulent Financial Reporting (FFR), Financial Performance, and Sustainability Disclosure on Firm Value, with Environmental, Social, Governance (ESG) as a mediating. The novelty of this this study lies in positioning ESG as a post-pandemic mediation mechanism that explains how FFR risk, financial performance, and sustainability disclosure affect firm value. In addition, it shows ESG’s role as an intermediary linking the company’s internal practices to market valuation. Research data were obtained from technology sector companies listed on IDX for the period 2021- 2024, with a sample of 88. Data analysis using PLS-SEM based on SmartPLS version 4.0. The result showed that FFR doesn’t affect on firm value, as the direction of influence is opposite to the hypothesis, it has positive effect. Financial performance and ESG have a significant positive effect on the firm value, while sustainability disclosure have no effect. The result of the mediation test showed that ESG mediated the effect of FFR and sustainability disclosure on firm value, but didn’t mediate the effect of financial performance on firm value. This finding shows that the market isn’t capable of directly detecting manipulation practices. However, ESG commitment acts as a credibility signal that can increase investor confidence in the company’s commitment to implementing sustainable business practices and help reduse risk perception related to potential FFR and sustainability disclosure burden in the formation of the firm value of post-pandemic technology sector sompanies.

Redefining business sustainability maturity model for micro, small, medium enterprises

2026-06-15T03:10:13+00:00

Sustainability maturity models developed for large corporations have limited applicability to Micro, Small, and Medium Enterprises due to implicit indicators and contextual misalignment. This conceptual study developed a Business Sustainability Maturity Model for Indonesian MSMEs through five prototyping stages: literature selection, narrative analysis, accounting overlay mapping, disclosure standard alignment, and digital deployment. The resulting model comprises nine value activities and 26 indicators, each described across five maturity levels, with 10 indicators supplemented by SAK EMKM-based accounting practices and 5 indicators aligned with the national sustainability disclosure standard PSPK-1. A 39-item self-assessment questionnaire was embedded into a web platform delivering instant maturity scores, visualisations, and improvement recommendations. Expert judgment involving 21 specialists, pilot testing with 255 MSME respondents across ten Indonesian provinces, and system testing collectively indicated that the model is relevant, feasible, and usable; detailed validation results are reported in a companion paper. The novelty lies in simultaneously integrating accounting-based measurement, disclosure-standard alignment, and digital operationalisation into a single MSME-oriented sustainability maturity instrument. Theoretically, the study advances maturity model literature by grounding progression levels in Stakeholder Theory, reframing sustainability maturity as the progressive broadening of stakeholder accountability. Practically, the model supports MSME operators, regulators, and supply-chain partners through standardised assessment.

Board diversity and sustainability performance in Indonesia firms

2026-08-07T14:55:28+00:00

This study examines the effect of board gender diversity (BDG) on sustainability performance and whether ownership concentration and sustainability assurance moderate this relationship. Although prior ESG research has examined board diversity, it provides limited explanation of why Board Gender Diversity may be more or less effective under different governance conditions, particularly in emerging markets. Indonesia offers a relevant setting because listed firms commonly exhibit concentrated ownership, while ESG reporting, assurance, and stakeholder accountability are still developing. Using a quantitative approach, this study analyzes 150 firm-year observations from firms listed in the IDX ESG Leaders Index during 2020-2024, selected through purposive sampling based on the availability of complete annual and sustainability reports. Panel regression with interaction terms shows that BGD improves sustainability performance. However, this effect weakens as ownership concentration increases and strengthens when sustainability assurance is present. The study’s novelty lies in demonstrating that the effect of Board Gender Diversity is a conditional, internal ownership power constrains its effectiveness, whereas external assurance strengthens it.

Building cooperative stability: Strategic responses to financial digitalization in East Java

2026-07-10T09:11:49+00:00

This study examines the impact of financial digitization on cooperative stability in East Java and identifies strategic responses to strengthen cooperatives during digital transformation. A mixed-method approach was applied to four medium- to large-scale cooperatives involving 60 informants, including members, administrators, regulators, digital startup actors, and academics. Quantitative data were analyzed using multiple linear regression to assess the effects of cyber readiness, member trust, resource constraints, and government support on cooperative stability, while qualitative interviews were used to contextualize the statistical findings. The results show that only cyber readiness has a significant negative effect on cooperative stability, whereas member trust, resource constraints, and government support are not statistically significant. These findings indicate that digital transformation may introduce operational vulnerabilities when cybersecurity capabilities are not sufficiently developed. Strategically, the study recommends phased digital adoption, stronger institutional capacity, and fintech-based partnerships to improve cooperative resilience. Theoretically, this study extends the RBV–VRIO perspective by conceptualizing cooperative stability as an integrated outcome of operational continuity, member confidence, governance effectiveness, and adaptive capacity. Its novelty lies in showing that a valuable digital capability such as cybersecurity readiness may simultaneously create vulnerabilities when it is not effectively organized and institutionalized.

Environmental disclosure moderates corporate performance and market perceptions

2026-06-02T13:33:54+00:00

This study advances a signal-reweighting perspective by examining whether environmental disclosure changes how investors interpret corporate performance signals in an emerging capital market. The research gap arises because prior studies commonly treat environmental disclosure as a direct determinant of firm value, while paying limited attention to its role as an information context that modifies the valuation relevance of market capitalization, earnings per share, and leverage. Using an unbalanced panel of 263 firm-year observations from Indonesian listed companies during 2020-2024, this study applies fixed-effects panel regression and Moderated Regression Analysis. The main model explains 72.81% of the variation in average annual stock prices, with market capitalization and earnings per share showing positive significant effects, while leverage is insignificant. The moderation results clarify an inconsistent pattern: environmental disclosure strengthens the market capitalization-stock price relationship, weakens the EPS-stock price relationship, and does not alter the leverage-stock price relationship. These findings extend signaling theory by showing that environmental disclosure does not merely add an ESG signal, but selectively reweights financial signals in market valuation.

Carbon risk and corporate financial resilience in Indonesia

2026-09-02T03:43:25+00:00

Empirical evidence linking carbon risk to corporate financial resilience largely comes from developed markets, leaving this relationship unexamined in emerging economies with still-developing carbon-regulatory regimes such as Indonesia’s. This study addresses that gap, examining whether and through which mechanisms carbon exposure shapes financial resilience when disclosure and carbon pricing remain incomplete. The contribution is conceptual: explaining how carbon exposure becomes financial vulnerability through transition-cost, financing, governance, and stakeholder-legitimacy mechanisms, rather than treating the Indonesian context as the source of novelty. The argument is tested on nonfinancial firms listed on the Indonesia Stock Exchange from 2021–2024, using panel data regression across 857 firm-year observations; financial resilience is captured via the Altman Z-score, and carbon risk through emission intensity relative to revenue. Findings show a significant negative association between carbon risk and financial resilience (β = -0.0365, p = 0.0492), along with significant associations for profitability (β = -5.5433, p = 0.0000) and leverage (β = -0.3339, p = 0.0000); the model explains 24 percent of the variation (adjusted R² = 0.2372). The study integrates Transition Risk, Agency, and Stakeholder/Legitimacy Theory into a single framework explaining why carbon exposure weakens financial resilience absent mandatory disclosure. These results underscore embedding environmental considerations into corporate financial strategy and risk management as emerging economies develop their sustainability regulations.

Determinants of banking firm value: Financial performance and audit quality

2026-08-11T04:06:29+00:00

This study examines whether audit quality conditions the association between banking financial performance and firm value in Indonesia. Using an 11-year panel of 20 commercial banks listed on the Indonesia Stock Exchange (2013–2023; 220 firm-year observations), the study estimates a random-effects moderated regression with heteroskedasticity-robust standard errors. Firm value is proxied by Price-to-Book Value (PBV), while financial performance is represented by Return on Assets (ROA), Capital Adequacy Ratio (CAR), Loan to Deposit Ratio (LDR), and Net Interest Margin (NIM); audit quality equals one for Big Four auditors. CAR has a positive significant association with PBV (β = 0.0690; p = 0.001), whereas ROA has a significant negative coefficient (β = −0.8626; p < 0.001). LDR (p = 0.064) and NIM (p = 0.084) are not significant at the 5% level. Audit quality attenuates the CAR effect (CAR×AQ: β = −0.0651; p = 0.007) and offsets the negative ROA association (ROA×AQ: β = 0.9171; p < 0.001). LDR×AQ is positive at the reported 5% boundary (β = 0.0349; p = 0.050), while NIM×AQ is not significant. The evidence therefore positions audit quality as a selective credibility mechanism rather than a uniform amplifier of financial signals, extending agency and signaling perspectives in emerging-market banking

Digital accounting-based MSME governance to increase transparency and access to financing

2026-07-10T09:13:33+00:00

restricted access to formal financing, partly due to suboptimal digital accounting implementation. Although previous studies have examined digital transformation, financial technology, and MSME governance separately, limited evidence integrates digital accounting, financial transparency, access to financing, and governance within a single empirical framework. This study develops and validates an integrative Digital Accounting-Based MSME Governance model examining the mediating roles of financial transparency and access to financing. A quantitative approach was employed using purposive sampling, involving 175 valid MSME respondents in North Sumatra. Data were collected through documentation, interviews, and questionnaires and analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS). The results show that Digital Accounting significantly affects Financial Transparency (β = 0.503), Access to Financing (β = 0.513), and MSME Governance (β = 0.525). Financial Transparency significantly affects Access to Financing (β = 0.417) and MSME Governance (β = 0.570), while Access to Financing significantly affects MSME Governance (β = 0.520). Financial transparency and access to financing also significantly mediate the relationship between Digital Accounting and MSME Governance. Theoretically, the study extends digital accounting from a technological capability to a governance-enabling mechanism by demonstrating complementary mediating pathways through financial transparency and access to financing. The findings contribute empirical evidence on how digital accounting can strengthen MSME governance in an emerging economy.

Competitive advantage: Selective mediator of digital-financial capabilities MSME performance

2026-06-24T04:25:52+00:00

This study examines how financial literacy, financial inclusion, and e-commerce adoption enhance MSME performance through competitive advantage as a mediating mechanism. While prior research demonstrates these capabilities independently improve performance, limited understanding exists regarding the underlying pathways through which they operate. Competitive advantage serves as a critical mediator because it transforms isolated resources into distinctive, inimitable capabilities that create sustainable business value, a principle underexplored in rural MSME contexts. Theoretically, this study advances RBV and Dynamic Capability Theory by demonstrating that resource ownership alone is insufficient for performance improvement without strategic transformation into competitive advantages. Additionally, we extend the TOE framework by revealing that technological adoption (e-commerce) generates greater value when converted into competitive advantage compared to financial capabilities alone. Using a quantitative approach with 70 MSME owners from Sukodono Village, Kendal District, data were analyzed via Smart-PLS structural equation modeling. Results reveal that financial literacy, financial inclusion, and e-commerce adoption positively affect MSME performance. Critically, competitive advantage significantly mediates only the e-commerce-performance relationship, not financial capability relationships. This selective mediation indicates that digital capabilities are more effectively translated into competitive advantage than financial capabilities. These findings suggest that sustainable MSME development requires integrating financial capability enhancement with digital transformation initiatives. However, financial resources alone require complementary strategic management to yield competitive advantages, highlighting the need for holistic business development approaches combining financial education, digital training, and innovation support to strengthen long-term MSME competitiveness and sustainability.