The Effect of Sustainability Report Disclosure and Institutional Ownership on Firm Value with Profitability as a Moderating Variable

Abstract

As it reflects investors’ perceptions of future prospects, firm value is considered one of the essential indicators of a company’s performance and sustainability. In the mining sector, efforts to enhance firm value are challenged by environmental and social risks arising from operational activities, requiring companies to improve transparency and strengthen oversight. During the study period, several mining companies experienced declining financial performance, fluctuating stock prices, and Tobin’s Q ratios below 1, indicating suboptimal firm value. These conditions suggest that firm value is influenced not only by financial performance but also by sustainability report disclosure and institutional ownership, with profitability expected to strengthen these relationships. The objectives of this study include analyzing the impact of sustainability reporting disclosure and institutional ownership on the firm value, where profitability will act as the moderator, for firms in the mining sub-sector listed at the Indonesia Stock Exchange between the years 2021 until 2024. The study used a quantitative research approach whereby data was sourced secondarily from annual and sustainability reports. The sample size comprised 28 firms selected through purposive sampling, with data analysis done by multiple linear regressions and Moderated Regression Analysis (MRA). The results reveal that sustainability report disclosure negatively influences firm value, while institutional ownership and profitability positively affect firm value. Simultaneously, sustainability report disclosure and institutional ownership significantly influence firm value. However, profitability does not moderate the relationship between sustainability report disclosure, institutional ownership, and firm value. The study is expected to give knowledge for corporations and investors to make decisions.