The Relationship of Sustainability Report with Firm Values Jakarta Islamic Index

Abstract

Sustainability reporting reveals information related to sustainability issues, including environmental, social and governance. This report is to measure the extent to which sustainability efforts can create value, minimize risks and meet stakeholder expectations. This
condition is to identify areas that require improvement and optimize sustainability strategies to support long-term growth and sustainability. The aim of this research is to analyze the influence of environmental dimensions, social dimensions and governance dimensions of sustainability reports on company value. The research sample used the 30 most liquid sharia stocks included
in the Jakarta Islamic Index sector for the 2019-2022 observation period. Multiple linear regression analysis techniques are used to determine cause and effect relationships and help understand the extent to which environmental dimensions, social dimensions and governance dimensions influence company value. The test results found that environmental performance disclosure and social disclosure had a positive effect on company value as reflected by the Tobin'Q and PBV models. On the other hand, corporate governance disclosure does not have a positive effect on company value. The Tobin'Q model shows better model suitability than the
PBV model. These findings make it clear that the Tobin' Q model is superior because it reflects the company's overall assets, reflects market sentiment, reflects the company's intellectual capital, and can overcome the problem of estimating the rate of profit or marginal costs. These findings can inspire Bapepam; IAI; and other regulators to consider preparing environmental accounting standards and as input in improving the quality of existing standards and regulations.