JANUARTI, Indira (2019) Determinants and Consequences of Environmental Investment: an Empirical Study of Indonesian Firms. Journal of Asia Business Studies, 13 (3). pp. 433-449. ISSN 1558-7894

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Abstract

Purpose- Th.is study aims to examine the effect of institutiona( o!ll'nership, audit committee and types of industry on envkonmental investment. Furthermor:e. this resesrct. investigates the consequences of environmental in vestments on firm financial performance.
Design/methocJology/approach - The sample consisted of 145 companies listed on the Indonesia Stock Exchanges and receiving PROPER awards issued by the Ministry of Environment. Republic of Indonesia in the year 2009·2015. The data were then ana(yzed using ordinal logistic regression and multiple regression.
Findings - The findings showed that environmental investment was significantly affected by types of industry. However. institutional ownership and audit committee did not influence environmental investment. Finally, rhe finding indicated rhat en wronmental investments positively affected firm financial performance.
Researoh1 limitations/implioations - This research only covered companies listed on the lndoneSia Stock Exchanges and receiving PROPER awards. Thus, the findings cannot be generalized for all companies in Indonesia and other markets.
Originality/value - This study is the first effort intended lo Jnvesrigale lhe determinants and consequences of environmental investment whicll have been ignored by previous studies, especial(y in the Asian emerging markets. This study at least provides us with two main contribuMns. First, the findings on determinants of environmental investment can be used by governmems in Asian countries. especially Indonesia as a reference in making policies concerning the obligations of companies to the environmental problems. Second. the finding on the relationship of environmental investment and financial performance can be used by companies as strategies to generate profits without destroying the environment.

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