The Role of Sustainability Reporting in Moderating the Effect of Earnings Management and Capital Structure on Firm Value (Study on Manufacturing Companies Listed on the Indonesia Stock Exchange)

Tejan Dayyan Armazy; Rida Prihatni; Muhammad Yusuf

doi:10.55047/jhssb.v5i2.2241

The Role of Sustainability Reporting in Moderating the Effect of Earnings Management and Capital Structure on Firm Value (Study on Manufacturing Companies Listed on the Indonesia Stock Exchange)

Tejan Dayyan Armazy*

Rida Prihatni

Muhammad Yusuf

Keywords: Capital Structure Earnings Management Firm Value Signaling Theory Sustainability Reporting

Firm value constitutes a pivotal barometer reflecting investor appraisals of a company's operational efficacy and future trajectories. Indonesian manufacturing enterprises have latterly witnessed a perceptible deterioration in their valuations. This intimates the sway of determinants such as earnings management, capital structure, and sustainability-oriented dimensions. This study seeks to identidy the effect of earnings management and capital structure on firm value, and to examine the role of sustainability reporting as a moderating variable. A quantitative approach was employed using secondary data, with the unit of analysis comprising manufacturing companies listed on the Indonesia Stock Exchange for the period 2019–2023. The analytical technique used was multiple regression with a moderation approach (Moderated Regression Analysis). The empirical findings indicate that earnings management has no significant effect on firm value, while capital structure has a positive and significant effect. Sustainability reporting was also found to have a positive effect on firm value. Furthermore, sustainability reporting was proven to moderate the relationship between earnings management and capital structure on firm value. The implications of this study suggest that companies need to improve the quality of financial reporting and sustainability disclosure as a strategy to enhance firm value and investor confidence.

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