The Impact of Corporate Green Investment on Company Value with Sustainability Reporting Quality as a Mediating Variable

Abstract

Purpose: This study aims to examine whether corporate green investment enhances firm value and to analyze the mediating role of sustainability reporting quality in the relationship between green investment and firm value.

Method: The study employs a quantitative explanatory research design. Data were collected from publicly listed companies that publish sustainability reports. The analysis was conducted using Structural Equation Modeling–Partial Least Squares (SEM–PLS) to test both direct and indirect relationships among corporate green investment, sustainability reporting quality, and firm value.

Findings: The results indicate that corporate green investment does not have a significant direct effect on firm value. However, green investment exerts a strong and significant indirect effect on firm value through sustainability reporting quality. These findings suggest that environmental investments are recognized by the market only when they are communicated transparently, credibly, and supported by high-quality sustainability disclosures.

Implications: The study highlights the strategic importance of sustainability reporting as a signaling mechanism that translates environmental initiatives into market-recognized corporate value. Firms are encouraged not only to invest in environmentally responsible activities but also to improve the quality of sustainability disclosures to enhance investor perception and firm value.

Novelty/Value: This study contributes to the literature by demonstrating the critical mediating role of sustainability reporting quality in linking green investment to firm value. It provides empirical evidence that sustainability disclosure quality is a key mechanism for converting environmental expenditures into tangible financial benefits.