SUSTAINABILITY REPORT AND EARNING QUALITY ON FIRM VALUE: THE ROLE OF FIRM SIZE

Abstract

This study aims to quantitatively evaluate the relationship between the sustainability reporting and the quality of profitability on a company's worth. This study also analyzes the impact of a firm's size on the relationship between sustainability reporting, profitability quality, and company value as a moderating variable. The empirical background of the research is limited to companies included on the SRI-KEHATI Index from 2020 to 2024 that consistently published both annual and sustainability reports. Fourteen companies were selected using a purposive sampling strategy to constitute the analytical sample. Hypothesis testing is conducted using multiple linear regression in conjunction with Moderated Regression Analysis (MRA). Theoretical analysis using interconnected studies demonstrates that sustainability reporting and profitability quality possess both separately and collectively unfavorable and significant correlations with business value. Conversely, firm size exhibits a positive and strong correlation with firm value, indicating its influence in enhancing business valuation. Nonetheless, the moderating results indicate that business size does not influence or alter the negative correlations between sustainability reporting, profits quality, and firm value, suggesting it offers minimal, if any, advantages as a moderating variable in this model.