The Effect of Profitability, Leverage, and Company Size on Carbon Emission Disclosure in Manufacturing Companies

Abstract

This study aims to examine and assess the influence of profitability, leverage, and company size on carbon emissions disclosure among manufacturing companies. The research population consists of 182 manufacturing firms registered on the Indonesia Stock Exchange, covering the years 2020-2022. Using a purposive sampling method, 38 companies were selected, resulting in 114 data points. Secondary data for this research were obtained from sustainability and annual reports available on the companies’ official websites. Panel data regression was used for analysis, with t-tests conducted for hypothesis testing. The data reveal that profitability and firm size do not have a substantial impact on carbon emissions disclosure, while leverage has a positive significant effect. A limitation of this research is its relatively small sample size. The variables were measured using information from annual and sustainability reports, with carbon emission disclosure relying solely on sustainability reports, which may not be available for all manufacturing firms. This research provides valuable insights into accounting and environmental management practices. The results can be used by companies to enhance their transparency and environmental responsibility. It is also valuable for academics interested in carbon emission disclosure studies, as well as for policymakers in designing regulations that encourage better environmental disclosure. This research is among the first studies to combine the analysis of profitability, leverage, and company size in the context of carbon emission disclosure in the manufacturing sector in Indonesia. It provides new insights into how financial factors affect environmental transparency, a topic that has not been extensively discussed in previous literature.