The Effect of Corporate Sustainability Performance on Profitability Moderated by Liquidity and Stock Price Volatility in Oil, Gas, and Coal Sub-Sector Companies of Indonesia in 2019-2023
Keywords:
Corporate Sustainability Performance, Liquidity, Profitability, Stock Price VolatilityAbstract
This study aims to investigate the Effect of Corporate Sustainability Performance on Profitability Moderated by Liquidity and Stock Price Volatility of Oil, Gas and Coal Sub-Sector Company in Indonesia. The population of this study is the oil, gas, and coal sub-sector firms listed on the Indonesia Stock Exchange in 2019-2023, with a total of 81 companies. By using the purposive sampling method, 14 samples were taken. This study uses panel data regression analysis to analyze the impact of sustainability (economic, social, and environmental) on firm profitability. Further, 38 criteria were utilized in the study to measure CSP to understand whether firms ranked high on sustainability parameters perform better than low-ranked firms. The results of this study show that corporate sustainability performance (CSP) has a positive and significant effect on profitability. Liquidity moderates the influence of corporate sustainability performance (CSP) on profitability, with the interaction coefficient value showing a negative influence. While stock price volatility moderates the effect of corporate sustainability performance (CSP) on return on equity (ROE), with a positive influence direction. Companies are advised to continuously improve the quality and scope of their sustainability programs, especially in environmental and social aspects, so that they can provide a positive image, improve their reputation, and have a direct impact on long-term profitability. This study provides insight into the factors influencing the profitability of mining companies in Indonesia. The findings of this study underline the importance of corporate sustainability performance, liquidity, and stock price volatility in improving mining company profitability.
References
Ahmad, A. (2018). The Effect Of Dividend Policy On Stock Price Volatility: Empirical Evidence From Amman Stock Exchange.
Ajide, F., & Aderemi, A. (2014). The effects of corporate social responsibility activity disclosure on corporate profitability: Empirical evidence from Nigerian commercial banks. IOSR Journal of Economics and Finance, 2(6), 17–25.
Ali, M. M., Hussin, N. N. A. N., & Ghani, E. K. (2019). Liquidity, growth and profitability of non-financial public listed Malaysia: A Malaysian evidence. International Journal of Financial Research, 10(3), 194–202.
Alshehhi, A., Nobanee, H., & Khare, N. (2018). The impact of sustainability practices on corporate financial performance: Literature trends and future research potential. In Sustainability (Switzerland) (Vol. 10, Issue 2). MDPI.
Ameer, R., & Othman, R. (2012). Sustainability practices and corporate financial performance: A study based on the top global corporations. Journal of Business Ethics, 108, 61–79.
Barnett, M. L., & Salomon, R. M. (2006). Beyond dichotomy: The curvilinear relationship between social responsibility and financial performance. Strategic Management Journal, 27(11), 1101–1122.
Baskin, J. (n.d.). Baskin, J. (1989). Dividend policy and the volatility of common stock.
Berger, V. W., & Zhou, Y. (2014). Kolmogorov–Smirnov Test: Overview. Wiley StatsRef: Statistics Reference Online, 1–5.
Bilqis, R., & Yumna, A. (2024). The Influence of Corporate Sustainability Performance (CSP) on Profitability with Liquidity and Leverage as Moderating Variables in LQ45 Index Companies on the Indonesia Stock Exchange (IDX). Financial Management Studies, 4(2), 137–153.
Donaldson, T., & Preston, L. E. (1995). The Stakeholder Theory Of The Corporation: Concepts, Evidence, And Implications and from the specific comments of many people, including Professors Aupperle. In Academy of Management Review (Vol. 20, Issue 1).
Dyllick, T., & Muff, K. (2016). Clarifying the Meaning of Sustainable Business: Introducing a Typology From Business-as-Usual to True Business Sustainability. Organization and Environment, 29(2), 156–174.
Fombrun, C. J., Gardberg, N. A., & Sever, J. M. (2000). The Reputation QuotientSM: A multi-stakeholder measure of corporate reputation. Journal of Brand Management, 7(4), 241–255.
Freeman, R. E. (1999). Response: Divergent Stakeholder Theory. In Source: The Academy of Management Review (Vol. 24, Issue 2).
Freeman, R. E. (2010). Strategic management A stakeholder approach.
Galindo-Manrique, A. F., Pérez-Calderón, E., & Rodríguez-García, M. del P. (2021). Eco-efficiency and stock market volatility: Emerging markets analysis. Administrative Sciences, 11(2).
Harjoto, M., Laksmana, I., & Lee, R. (2015). Board Diversity and Corporate Social Responsibility. Journal of Business Ethics, 132(4), 641–660.
Hatane, S. E., & Soewarno, N. (2022). Corporate social responsibility and internationalisation in mitigating risk. In Int. J. Sustainable Society (Vol. 14, Issue 3).
Hategan, C. D., Sirghi, N., Curea-Pitorac, R. I., & Hategan, V. P. (2018). Doing well or doing good: The relationship between corporate social responsibility and profit in Romanian companies. Sustainability (Switzerland), 10(4).
Huang, H. H., Chan, M. L., Huang, I. H., & Chang, C. H. (2011). Stock price volatility and overreaction in a political crisis: The effects of corporate governance and performance. Pacific Basin Finance Journal, 19(1), 1–20.
Irawati, D. E. (2012). Pengaruh struktur modal, pertumbuhan laba, ukuran perusahaan dan likuiditas terhadap kualitas laba. Accounting Analysis Journal, 1(2).
Jang, L., Sugiarto, B., & Siagian, D. (n.d.). Faktor-faktor yang mempengaruhi Kualitas Laba pada Perusahaan Manufaktur di BEJ.
Kasbun, N. F., Teh, B. H., & Ong, T. S. (2016). Sustainability reporting and financial performance of Malaysian public listed companies. Institutions and Economies, 8(4), 78–93.
Kılıç, M., Gurler, H. E., Kaya, A., & Lee, C. W. (2022). The Impact of Sustainability Performance on Financial Performance: Does Firm Size Matter? Evidence from Turkey and South Korea. Sustainability (Switzerland), 14(24).
Kotzé, D. A. A. (2005). Stock Price Volatility: a primer 1 Introduction 2 The Statistical Nature of Volatility. January.
Luo, X., & Bhattacharya, C. B. (2009). The debate over doing good: Corporate social performance, strategic marketing levers, and firm-idiosyncratic risk. Journal of Marketing, 73(6), 198–213.
Manullang, S. V., & Hutabarat, F. (2020). Sustainable Growth and Liquidity on Profitability: A Study on Mining Sector Companies Listed at Indonesia Stock Exchange in 2018. Jurnal AKSI (Akuntansi Dan Sistem Informasi), 5(1), 24–29.
Morgan, A. K., Awafo, B. A., & Quartey, T. (2021). The effects of COVID-19 on global economic output and sustainability: evidence from around the world and lessons for redress. Sustainability: Science, Practice, and Policy, 17(1), 77–81.
Nastiti, P. K. Y., Atahau, A. D. R., & Supramono, S. (2019). Working capital management and its influence on profitability and sustainable growth. Business: Theory and Practice, 20, 61–68.
Purbawangsa, I. B. A., Solimun, S., Fernandes, A. A. R., & Mangesti Rahayu, S. (2020). Corporate governance, corporate profitability toward corporate social responsibility disclosure and corporate value (comparative study in Indonesia, China and India stock exchange in 2013-2016). Social Responsibility Journal, 16(7), 983–999.
Sartono, A. (2001). Manajemen keuangan dan Aplikasi. Yogyakarta: BPEF-YOGYAKARTA.
Sartono, A. (2010). Manajemen Keuangan teori dan Aplikasi edisi 4. Yogyakarta: Bpfe.
Sekaran, U., & Bougie, R. (2016). Research methods for business: a skill-building approach (Seventh ed). John Wiley & Sons.
Shabbir, M. S., & Wisdom, O. (2020). The relationship between corporate social responsibility, environmental investments and financial performance: evidence from manufacturing companies. In Environmental Science and Pollution Research (Vol. 27, Issue 32, pp. 39946–39957). Springer Science and Business Media Deutschland GmbH.
Silalahi, U. (2009). Metode Penelitian Sosial.
Siregar, B. (2022). The Effect of Profitability, Liquidity, and Solvency on Sustainable Reporting with Corporate Governance as Moderating Variable. Journal of International Conference Proceedings, 5(3), 79–87.
Suad, H. (2000). Manajemen Keuangan Teori dan Penerapan. Edisi Ketiga. Yogyakarta: UPP AMP YKPN.
Sugiyono. (2013). Metode Penelitian Kuantitatif, Kualitatif dan R &. D.
Taha, R., Al-Omush, A., & Al-Nimer, M. (2023). Corporate sustainability performance and profitability: The moderating role of liquidity and stock price volatility - evidence from Jordan. Cogent Business and Management, 10(1).
Tarmuji, I., Maelah, R., & Tarmuji, N. H. (2016). The Impact of Environmental, Social and Governance Practices (ESG) on Economic Performance: Evidence from ESG Score. International Journal of Trade, Economics and Finance, 7(3), 67–74.
Titman, S., Keown, A. J., & Martin, J. D. (2014). Financial Management: Principles and Applications. Pearson.
Turban, D. B., & Greening, D. W. (1996). Corporate social performance and organizational attractiveness to prospective employees. In research notes t Academy of Management Journal (Vol. 40, Issue 3).
Whetman, L. L. (2017). The Impact of Sustainability Reporting on Firm Profitability. In Undergraduate Economic Review (Vol. 14).
Wood, D., & Ross, D. G. (2006). Environmental social controls and capital investments: Australian evidence. Accounting and Finance, 46(4), 677–695.
Yameen, M., Farhan, N. H. S., & Tabash, M. I. (2019). The impact of liquidity on firms’ performance: Empirical investigation from Indian pharmaceutical companies. Academic Journal of Interdisciplinary Studies, 8(3), 212–220.
Zhang, J., Djajadikerta, H. G., & Zhang, Z. (2018). Does sustainability engagement affect stock return volatility? Evidence from the Chinese financial market. Sustainability (Switzerland), 10(10).
