THE ROLE OF FIRM SIZE IN MODERATING GREEN ACCOUNTING, INNOVATION, AND STAKEHOLDER ENGAGEMENT ON FIRM VALUE
DOI:
https://doi.org/10.31000/dmj.v10i2.16220Abstract
Objective: This study examines the moderating role of firm Size in the relationships among green accounting, green product innovation, stakeholder involvement, and firm value in manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2020 to 2024.
Method: A quantitative approach was employed using panel data regression analysis (Eviews 12) on a sample of manufacturing firms.
Results: The findings reveal that: (1) green accounting negatively affects firm value; (2) green product innovation also negatively affects firm value; (3) stakeholder involvement has no significant effect; (4) firm Size significantly moderates the effect of green accounting on firm value, but (5) firm Size does not moderate the effects of green product innovation or stakeholder involvement.
Novelty: This study offers three key novelties. First, it provides empirical evidence from an emerging market (Indonesia), where sustainability practices are still voluntary, in contrast to prior studies from developed countries with mandatory disclosure regimes. Second, it demonstrates that firm size acts as a pure moderator selectively only for green accounting, not for innovation or stakeholder engagement, refining contingency theory in the context of environmental strategy. Third, unlike most prior research that assumes linear positive effects, this study reveals short-term value destruction from green practices, challenging the conventional "win-win" paradigm.
Contribution: The findings advance theory by integrating legitimacy theory and trade-off theory, demonstrating that firm Size determines whether green accounting translates into value. In practice, managers of small- and medium-sized manufacturing firms should anticipate short-term cost overruns when adopting green accounting, while large firms may leverage their size to absorb such costs.
References
Amu, C. U., Akuwudike, H. C., & Afolayan, S. M. (2025). Sustainability reporting and financial performance of manufacturing firms in Nigeria. International Review of Financial Studies, 1(1).
Ananda, S., & Murti, G. T. (2025). Pengaruh green accounting, kebijakan dividen, dan profitabilitas terhadap nilai perusahaan. e-Proceeding of Management, 12(4), 3925-3939.
Anyamaobi, C., & Onyema, C. G. (2025). Corporate governance and market valuation of quoted health care manufacturing firms in Nigeria. African Banking and Finance Review Journal, 20(11), 34-48.
Astuti, T., & Ahmar, N. (2025). Effects of green intellectual capital, green accounting, and green innovation on firm value: The moderating role of return on assets. Environmental Economics, 16(1), 1-12.
Ayuso, S., RodrÃguez, M. Ã., GarcÃa-Castro, R., & Ariño, M. Ã. (2011). Does stakeholder engagement promote sustainable innovation orientation? Industrial Management and Data Systems, 111(9), 1399-1417. https://doi.org/10.1108/02635571111182773
Barani, O., Ahmed, A. D., Joshi, M., & Asiaei, K. (2025). How environmental management accounting drives performance: A meta-analysis considering national EMA maturity. Journal of Accounting Literature, 47(5), 416-443. https://doi.org/10.1108/JAL-01-2025-0033
Bui, T. T. (2024). Linking green innovation to firm success: Cost leadership's mediating role in Vietnam. Journal of Business-to-Business Marketing, 31(1). https://doi.org/10.1080/1051712X.2024.2315344
Dal Maso, L., Liberatore, G., & Mazzi, F. (2017). Value relevance of stakeholder engagement: The influence of national culture. Corporate Social Responsibility and Environmental Management, 24(1), 44-56. https://doi.org/10.1002/csr.1390
Dang, C., Li, Z. F., & Yang, C. (2018). Measuring firm size in empirical corporate finance. Journal of Banking & Finance, 86, 159-176. https://doi.org/10.1016/j.jbankfin.2017.09.006
Darlis, E., Kurnia, P., Nurmayanti, P., Agusti, R., Alamsyah, M., Supriono, S., & Silalahi, S. P. (2024). Green accounting, corporate governance, and firm value in Southeast Asia region. Journal of Accounting Research, Organization and Economics, 7(1). https://doi.org/10.24815/jaroe.v7i1.34029
Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65-91. https://doi.org/10.5465/amr.1995.9503271992
Febrianto, H. G., Mikrad, Fitriana, A. I., Karim, A., Hakim, L., & Priharta, H. (2026). CEO duality, digital governance, and environmental, social, governance: Innovation-driven firm value in the digital era. Corporate Governance and Sustainability Review, 10(2), 56–65. https://doi.org/10.22495/cgsrv10i2p5
Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pitman.
Garcia-Blandon, J., Argilés-Bosch, J. M., & Ravenda, D. (2024). Leveraging stakeholder engagement for market value growth: Empirical evidence on sustainable development leadership in Europe. Sustainable Development, 32(1), 336-347. https://doi.org/10.1002/sd.2687
Handayani, W., Yaacob, Z., Utomo, S. S., Majid, N., & Mandasari, V. (2025). Green technology as an indispensable mediator of leadership and vision for green product development in Surabaya MSMEs. Discover Sustainability, 6(1). https://doi.org/10.1007/s43621-025-01123-5
Harjanti, S., Prabowo, H., & Rahim, R. K. (2025). Unlocking circular economy and green innovation pathways for sustainable biofuel: A global bibliometric analysis with insights from Indonesia's B40 transition. Frontiers in sustainability, 6. https://doi.org/10.3389/frsus.2025.1668947
Hristov, I., & Appolloni, A. (2022). Stakeholders' engagement in the business strategy as a key driver to increase companies' performance: Evidence from managerial and stakeholders' practices. Business Strategy and the Environment, 31(4), 1488-1503. https://doi.org/10.1002/bse.2965
Ismail, N. A., Indriana, I., & Rahmat, S. R. (2022). The effect of agriculture, manufacturing and transportation on environmental quality in Indonesian selected provinces. AGRIS.
Kiani, A., Yang, Y., & Li, D. (2024). Greening the path to disruptive innovation: The roles of CEOs' characteristics, green organizational identity, and green product competitiveness. Business Strategy and the Environment, 33(7), 6139-6155. https://doi.org/10.1002/bse.3799
Kurniawan, R., Nugroho, N. A., Fudholi, A., Purwanto, A., Sumargo, B., Gio, P. U., & Wongsonadi, S. K. (2024). The ecological footprint of industrial value added and energy consumption in Indonesia. International Journal of Energy Sector Management, 18(5), 1127-1153. https://doi.org/10.1108/IJESM-05-2023-0006
Muslikhah, S. (2025). Pengaruh green accounting dan struktur modal terhadap nilai perusahaan dengan corporate social responsibility sebagai variabel moderasi [Undergraduate thesis, Politeknik Negeri Semarang].
Myers, S. C. (1984). The capital structure puzzle. Journal of Finance, 39(3), 575-592. https://doi.org/10.1111/j.1540-6261.1984.tb03646.x
Nurdiyanti, & Sarumpaet, S. (2024). The effect of green technology innovation on financial performance in manufacturing companies listed on the Indonesia Stock Exchange. IJEMA, 1(3). https://doi.org/10.61132/ijema.v1i3.154
Pambudi, J. E., Sunaryo, D., Fitriana, A. I., & Febrianto, H. G. (2026). Can institutional investors shape tax efficiency? Evidence from green accounting, capital intensity, and deferred tax strategies in emerging markets. Corporate and Business Strategy Review, 7(2), 16–24. https://doi.org/10.22495/cbsrv7i2art2
Pramono, H., & Kusumawati, R. (2025). The moderating role of firm size on green accounting and firm value relationship: Evidence from Indonesian manufacturing sector. Jurnal Akuntansi dan Keuangan Indonesia, 22(1), 45-62.
Rahmawati, D., & Setyawan, I. R. (2025). Green product innovation and corporate financial performance: The moderating role of firm size. International Journal of Energy Economics and Policy, 15(2), 234-245.
Sari, B. T. P., & Cahyonowati, N. (2025). Pengaruh green accounting dan struktur modal terhadap kinerja keuangan dengan ukuran perusahaan sebagai variabel moderasi [Undergraduate thesis, Universitas Diponegoro].
Schaltegger, S., & Burritt, R. L. (2017). Contemporary environmental accounting: Issues, concepts and practice. Greenleaf Publishing.
Schiederig, T., Tietze, F., & Herstatt, C. (2012). Green innovation in technology and innovation management – An exploratory literature review. R&D Management, 42(2), 180-192. https://doi.org/10.1111/j.1467-9310.2011.00672.x
School of Business and Management, Bandung Institute of Technology. (2021). A proposed model of value co-creation through multi-stakeholder collaboration in domestic product development. Business: Theory and Practice, 22(2), 414-425.
Sitakara, A. S., & Pradita, G. B. A. (2024). Green accounting and corporate sustainability: A systematic literature review of impacts on firm value and profitability. Prosiding IAW, 1-15.
Sritharan, N., Ing, S. S., & Sian, K. V. J. (2025). Advancing green accounting in emerging Asian economies: A systematic literature review of drivers, frameworks, and technological enablers (2015–2025). International Journal of Academic Research in Accounting, Finance and Management Sciences, 15(4), 246-270.
Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20(3), 571-610. https://doi.org/10.5465/amr.1995.9508080331
Suhartini, D., Alimbudiono, R. S., Pertiwi, T. K., & Dewi, D. A. (2026). The effect of green innovation on firm value moderated by intellectual capital in Indonesian basic materials and chemical industry. Research Square. https://doi.org/10.21203/rs.3.rs-9042550/v1
Syahrani, A. (2025). Firm value: Tobin's Q. Muttaqien Conference of Management & Accounting Science and Practise, 4(1).
Trisnawati, E., & Wulandari, S. (2025). Stakeholder engagement and firm value: The moderating role of firm size in Indonesian manufacturing companies. Asian Journal of Accounting Research, 10(3), 278-295.
Uddin, M. S., Hossain, M. S., & Rahman, M. A. (2026). Green innovation and sustainable competitive advantage: Evidence from manufacturing firms in Bangladesh. Bangladesh Journal of Administration and Management, 38(1). https://doi.org/10.56379/bjam.v38i1.103
Wijaya, H., & Setiawan, A. (2025). Green accounting practices and firm value: A comparative study between Indonesia and Malaysia. Gadjah Mada International Journal of Business, 27(2), 156-178.
Yulianto, A., Karunia, A. N., & Nirbita, B. N. (2025). Landscape of sustainability accounting: Past, present, and future using bibliometric analysis 2009-2024. Journal of Applied Accounting and Taxation Research, 1(1).
Zhang, S., Wang, Y., & Liu, X. (2024). The impact of CSR disclosure and the roles of actors in the innovation ecosystem on firms' green innovation performance. International Journal of Technology Management, 96(1-3), 127-158. https://doi.org/10.1504/IJTM.2024.140252
Downloads
Published
Issue
Section
License
The author submits the manuscript with the understanding that if it is accepted for publication, the copyright of the article will be granted to the Dynamic Management Journal (DMJ), Management Study Program, Faculty of Economics and Business, University Of Muhammadiyah Tangerang, Indonesia as the publisher of the journal
Dynamic Management Journal (DMJ) first publication rights with works licensed simultaneously under a Creative Commons Attribution-ShareAlike 4.0 International License (CC BY-SA 4.0) which allows others to share (copy and redistribute material in the media or any format) and adapt (remix, modify, and build upon material) the work for any purpose, even commercially with acknowledgment of the work's authorship and initial publication in Dynamic Management Journal (DMJ). Authors may enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal published version of the work (for example, posting it to an institutional repository or publishing it in a book), with an acknowledgment of its initial publication in the Dynamic Management Journal (DMJ). Authors are permitted and encouraged to post their work online (for example, in an institutional repository or on their website) prior to and during the submission process, as this can lead to productive exchanges, as well as earlier and larger citations of published work (See The Effect of Open Access).
