Green innovation and corporate value: The mediating role of financial performance and the moderating role of green accounting

Abstract

This study examined how Green Innovation affects Firm Value in non-financial companies listed on the Indonesia Stock Exchange, both directly and mediated by Financial Performance, and analyzed the role of Green Accounting as a moderator of the relationship between Green Innovation and Financial Performance. We employed a quantitative approach using 767 panel data observations of non-financial companies listed on the Indonesia Stock Exchange between 2015 and 2023, and used robust standard errors to correct biases in standard errors that may arise due to heteroskedasticity (unequal variance of errors) or autocorrelation (serial correlation in errors), which often occur in panel data. The results indicate that Green Innovation increases Firm Value, and Financial Performance mediates the influence of Green Innovation on Firm Value. The findings also indicate that Green Accounting can strengthen the influence of Green Innovation on Financial Performance. Practical implications highlight the need for government efforts to strengthen regulations related to the implementation and disclosure of Green Accounting, and provide recommendations for investors to consider green innovation in their investment decisions.