The Effect of Governance Mechanisms and Environmental Disclosure on Financial Performance

The Mediating Role of Earnings Management

Authors

  • Widijaya Universitas Internasional Batam
  • Wesliana Irvetta Universitas Internasional Batam

DOI:

https://doi.org/10.33062/ajb.v10i02.152

Keywords:

Governance, Environmental Disclosure, Earnings Management, Financial Performance

Abstract

This study examines the influence of Good Corporate Governance mechanisms, Corporate Environmental Disclosure, and Earnings Management on Financial Performance among publicly listed companies in Indonesia. In response to growing demands for transparency and sustainability, the research explores whether Earnings Management mediates the relationship between governance, disclosure, and firm performance. Using a quantitative approach, secondary data were collected from annual and sustainability reports available on the Indonesia Stock Exchange website for the 2019–2023 period. The results show that corporate governance and environmental disclosure positively affect Financial Performance, while Earnings Management partially mediates these relationships. These findings suggest that effective governance structures and transparent environmental reporting can enhance firm performance by limiting opportunistic managerial behavior. The study contributes empirical evidence from an emerging market context and provides practical insights for policymakers, regulators, and investors to strengthen financial reporting transparency and accountability in Indonesia.

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Published

2025-12-30

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Vol. 10 No. 02 (2025): December 2025

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