Transformative Green Accounting in Indonesian Capital Market: Synthesizing Environmental Management with Investor Analysis

Abstract

This study examines the transformative role of green accounting in Indonesia's capital market by integrating environmental management principles with investor analysis. Using a mixed-methods approach with data spanning 2020-2023, this research explores how environmental accounting frameworks influence investment decisions and market valuations in publicly listed companies on the Indonesia Stock Exchange (IDX). The conceptual model incorporates Environmental Management Accounting (EMA), sustainability reporting standards, and market dynamics, with particular focus on disclosure quality, investor responses, and sustainability index rankings. Employing structural equation modeling (SEM) and multiple regression analysis, findings reveal that comprehensive green accounting practices significantly enhance investor confidence, reduce information asymmetry, and positively influence market valuations. Key drivers include environmental transparency, carbon footprint disclosure, and sustainability performance metrics. The results demonstrate that green accounting serves as a strategic tool for attracting environmentally conscious investors and securing green financing mechanisms, thereby establishing new benchmarks for corporate environmental accountability in Indonesia's evolving capital market landscape.