The Impact of Greenhouse Gas Emissions Disclosure and Institutional Ownership on Firm Value: Evidence from Mining Industry in Indonesia

Abstract

In the mining industry, handling and mitigating greenhouse gas emissions (GHG) is crucial to maintaining business and environmental sustainability. A large portion of the world's carbon dioxide emissions come from the mining industry as a result of deforestation and heavy machinery exploration run by fossil fuels in the mining site. This study aims to investigate whether GHG emission reporting, as well as institutionally owned share ownership, would increase the firm's value in the eyes of capital market investors. A panel data regression of the one hundred and sixty-eight listed mining companies on Indonesia’s capital market in 2019–2023 reveals that GHG emissions reporting and institutional ownership are likely to increase firm value. The results suggest that investors would value companies with higher GHG emissions and institutional ownership. This study advises mining company management that, although GHG emission mitigation action and reporting and dealing with institutional investors are costly, they will boost company image and value in the capital market.