The Benefit of Sustainable Engagement for the Firms: Is It Still Need Earnings Management?


  • Dini Lestari Institut Teknologi Bandung
  • Sudarso Kaderi Wiryono Institut Teknologi Bandung


Sustainability, Cost of Capital, Earnings Management, SOEs, Private Companies


The study's objective is the need for critical re-examinations on the sustainability practices of firms that benefit from transparent, accurate, and, importantly, relevant financial and non-financial information including corporate social responsibility (CSR) and environmental, social and governance (ESG) performance on their reporting. The research will investigate the relationship between sustainable practice and the cost of capital and earnings management as the moderating variable. The samples are 41 state-owned enterprises (SOEs) and private companies listed on Indonesia Stock Exchange (IDX). The source of the data from the annual report and sustainability reporting is obtained from the firm's website. The research is a quantitative study with generalized least square (GLS) random effect of the regression. Findings show that sustainable engagement in Indonesian firms has significant relation to the cost of capital but earnings management is not related to moderating variables' role between them.


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