Article Sidebar

Download
PDF
Statistic
Read Counter : 281 Download : 262

Main Article Content

Abstract

By employing environmental audits, businesses can meticulously assess environmental risks, fortify sustainability practices, and foster enhanced stakeholder trust. Concurrently, the adoption of CSR practices emerges as a driving force behind improved financial performance, operational efficiency, and long-term sustainability.  This study investigates the profound impact of environmental audit and Corporate Social Responsibility (CSR) practices on the financial performance of small and medium manufacturing companies in Indonesia. This research uses quantitative methods with primary data obtained through a questionnaire. The sample selection from the population of manufacturing companies in Indonesia was carried out purposefully. The data that has been collected will be analyzed by regression to be able to answer existing hypotheses. The results showed that environmental audits  and CSR can have a positive and significant effect on their financial performance. This means that financial performance  and CRS will increase along with improvements in financial performance. These findings carry substantial implications for the manufacturing sector, advocating for responsible business practices and making theoretical strides by emphasizing the integration of sustainability into financial theories and models, specifically within the context of Indonesia's industrial landscape.

Keywords

Environmental Audit Corporate Social Responsibility Financial Performance Manufacturing Companies Sustainability

Article Details

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

How to Cite
Nugrahanti, T. P., & Lysandra, S. (2024). Environmental Audit and CSR Practices on the Financial Performance of Small and Medium Manufacturing Companies in Indonesia. Ilomata International Journal of Tax and Accounting, 5(2), 322-337. https://doi.org/10.61194/ijtc.v5i2.1024

References

  1. Aditi, B., Hafizah, & Muda, I. (2019). The Effect of Services, Price Discount and Brand Equity on Consumer Purchase Decisions in Go-Jek a Technology Start-up Transport. Academic Journal of Economic Studies, 5, 21. https://link.gale.com/apps/doc/A593546331/AONE?u=anon~4a65354a&sid=googleScholar&xid=adf1a120
  2. Boateng, G. O., Neilands, T. B., Frongillo, E. A., Melgar-Quiñonez, H. R., & Young, S. L. (2018). Best Practices for Developing and Validating Scales for Health, Social, and Behavioral Research: A Primer. In Frontiers in Public Health (Vol. 6). Frontiers Media S.A. https://doi.org/10.3389/fpubh.2018.00149
  3. Cherian, J., Umar, M., Thu, P. A., Nguyen-Trang, T., Sial, M. S., & Khuong, N. V. (2019). Does corporate social responsibility affect the financial performance of the manufacturing sector? Evidence from an emerging economy. Sustainability (Switzerland, 11(4). https://doi.org/10.3390/su11041182
  4. Coelho, R., Jayantilal, S., & Ferreira, J. J. (2019). The impact of social responsibility on corporate financial performance: A systematic literature review. Corporate Social Responsibility and Environmental Management, 30(ue 4), 1535–1560. https://doi.org/10.1002/csr.2446
  5. Eremeeva, O. S. (2020). Audit of future environmental events in financial statements. Revista Espacios, 41(07).
  6. Fadila, B., Khaswarina, S., & Kusumawaty, Y. (2022). THE EFFECT OF MARKETING MIX STRATEGY ON MARKETING PERFORMANCE OF SMALLHOLDER RUBBER FARMERS IN GUNUNG TOAR DISTRICT, KUANTAN SINGINGI REGENCY. Agricultural Socio-Economics Journal, 22(4), 245–253. https://doi.org/10.21776/ub.agrise.2022.022.4.1
  7. Ghasemi, A., & Zahediasl, S. (2012). Normality tests for statistical analysis: A guide for non-statisticians. International Journal of Endocrinology and Metabolism, 10(2), 486–489. https://doi.org/10.5812/ijem.3505
  8. Ghozali, I. (2013a). Ghozali, Imam. Badan Penerbit Universitas Diponegoro.
  9. Ghozali, I. (2013b). Multivariate Analysis Application with IBM SPSS. Program, 25.
  10. Hair, J., & Alamer, A. (2022). Partial Least Squares Structural Equation Modeling (PLS-SEM) in second language and education research: Guidelines using an applied example. Research Methods in Applied Linguistics, 1(3). https://doi.org/10.1016/j.rmal.2022.100027
  11. Hasnida, N., & Ghazali, M. (2016). A Reliability and Validity of an Instrument to Evaluate the School-Based Assessment System: A Pilot Study. International Journal of Evaluation and Research in Education (IJERE, 5(2), 148–157.
  12. Jati, K. W., Agustina, L., Deviani, U., A., I. G. K., & Respati, D. K. (2023). The effect of environmental performance on sustainability reporting: A case of Indonesia. Environmental Economics, 14(1), 36–46. https://doi.org/10.21511/ee.14(1).2023.04
  13. Javed, F., Yusheng, K., Iqbal, N., Fareed, Z., & Shahzad, F. (2022). A Systematic Review of Barriers in Adoption of Environmental Management Accounting in Chinese SMEs for Sustainable Performance. Frontiers in Public Health, 10. https://doi.org/10.3389/fpubh.2022.832711
  14. Jenkins, D. G., & Quintana-Ascencio, P. F. (2020). A solution to minimum sample size for regressions. PLoS ONE, 15(2). https://doi.org/10.1371/journal.pone.0229345
  15. Jihwan Yeon, B. (2021). The Impact of Corporate Social Responsibility on Firm Performance: Does the Life Cycle Stage of a Firm and its Corporate Governance Structure Matter? www.bu.edu/bhr
  16. Kurniawati, S. B., & Fauzi, H. (2021). CSR Practical Orientation in Small Medium Enterprises (SMEs): A Case Study in Solo City Indonesia. In H. Kamyab (Ed.), Elaeis guineensis. https://doi.org/10.5772/intechopen.99859
  17. Liu, S. (2023). Government Environmental Audit Can Improve Company Performance. SHS Web of Conferences, 169, 1003. https://doi.org/10.1051/shsconf/202316901003
  18. Meier, S. (2018). Stop talking about how CSR helps your bottom line. Harvard Business Review.
  19. Meiryani, H., M., S., Soepriyanto, G., Jessica, F., M., G., S., & Aljuaid, M. (2023). The effect of voluntary disclosure on financial performance: Empirical study on manufacturing industry in Indonesia. PLoS ONE, 18(6. https://doi.org/10.1371/journal.pone.0285720
  20. Meiwanto Doktoralina, C., Anggraini, D., Melzatia, S., Mercu Buana, U., & Yahaya, S. (2018). The Importance of Sustainability Reports In Non-Financial Companies: Vol. XXII (Issue Issue 03). http://www.liputan6.com
  21. Nareswari, N., Bramanti, G. W., Gunawan, M. F., Kunaifi, A., & Negoro, N. P. (2022). Descriptive Analysis of Environmental Performance, Sustainability Report, and Access to Finance. Proceedings of the 3rd International Conference on Business and Management of Technology (ICONBMT 2021, 202. https://doi.org/10.2991/aebmr.k.211226.034
  22. Nasir, W., Hassan, A., & Khan, M. H. (2023). Corporate social responsibility and firm performance nexus: Moderating role of CEO chair duality. PLoS ONE, 18(8. https://doi.org/10.1371/journal.pone.0289037
  23. Nugrahanti, T. P., & Jahja, A. S. (2018). Audit judgment performance: The effect of performance incentives, obedience pressures and ethical perceptions. Journal of Environmental Accounting and Management, 6(3), 225–234.
  24. Nur Achmad, I., & Setyo Witiastuti, R. (2018). Management Analysis Journal UNDERPRICING, INSTITUTIONAL OWNERSHIP AND LIQUIDITY STOCK OF IPO COMPANIES IN INDONESIA. Management Analysis Journal, 7(3). http://maj.unnes.ac.id
  25. Pahuja, S. (2013). Environmental Audit. In S. O. Idowu, N. Capaldi, L. Zu, & A. D. Gupta (Eds.), Encyclopedia of Corporate Social Responsibility (pp. 969–979). Springer Berlin Heidelberg. https://doi.org/10.1007/978-3-642-28036-8_692
  26. Patel, J. D., Shah, R., & Trivedi, R. H. (2022). Effects of energy management practices on environmental performance of Indian small- and medium- sized enterprises. Journal of Cleaner Production, 333, 130170. https://doi.org/10.1016/j.jclepro.2021.130170
  27. Patino, C. M., & Ferreira, J. C. (2018). Meeting the assumptions of statistical tests: An important and often forgotten step to reporting valid results. Jornal Brasileiro de Pneumologia, 44(ue 5), 353. https://doi.org/10.1590/s1806-37562018000000303
  28. Sajid, M. R., Muhammad, N., & Zakaria, R. (2019). Construct Validation in Secondary Data: A Guideline for Medical Data Mining. Journal of Physics: Conference Series, 1366(1). https://doi.org/10.1088/1742-6596/1366/1/012115
  29. Sameer, I. (2021). Impact of corporate social responsibility on organization’s financial performance: evidence from Maldives public limited companies. Future Business Journal, 7(1). https://doi.org/10.1186/s43093-021-00075-8
  30. Saptioratri Budiono, H. D., Nurcahyo, R., & Habiburrahman, M. (2021). Relationship between manufacturing complexity, strategy, and performance of manufacturing industries in Indonesia. Heliyon, 7(6). https://doi.org/10.1016/j.heliyon.2021.e07225
  31. Tanjung, A., Giatman, G., Ambiyar, A., & Syahril, S. (2020). Influence of Leadership Orientation and Level of Awards Against Employee Loyalty in Lancang Kuning University. International Journal for Educational and Vocational Studies, 2(6). https://doi.org/10.29103/ijevs.v2i6.2697
  32. Tzouvanas, P., Kizys, R., Chatziantoniou, I., & Sagitova, R. (2020). Environmental and financial performance in the European manufacturing sector: An analysis of extreme tail dependency. The British Accounting Review, 52(6), 100863. https://doi.org/10.1016/j.bar.2019.100863
  33. Uyanto, S. S. (2020). Power comparisons of five most commonly used autocorrelation tests. Pakistan Journal of Statistics and Operation Research, 16(1), 119–130. https://doi.org/10.18187/PJSOR.V16I1.2691
  34. Wang, X., Song, X., & Sun, M. (2023). How Does a Company’s ESG Performance Affect the Issuance of an Audit Opinion? The Moderating Role of Auditor Experience. International Journal of Environmental Research and Public Health, 20(5). https://doi.org/10.3390/ijerph20053878
  35. Yulianty, R., & Nugrahanti, T. P. (2022). PENGARUH SUSTAINABILITY REPORTING TERHADAP NILAI PERUSAHAAN DENGAN KINERJA KEUANGAN SEBAGAI VARIABEL INTERVENING.
  36. Zahid, R. M. A., Khan, M. K., Anwar, W., & Maqsood, U. S. (2022). The role of audit quality in the ESG-corporate financial performance nexus: Empirical evidence from Western European companies. Borsa Istanbul Review, 22, 200– 212. https://doi.org/10.1016/j.bir.2022.08.011