The impact of green innovation and environmental reporting on corporate performance

This study investigates the effect of green innovation and environmental disclosure on firm performance related to consumers and shareholders. This study uses sales growth to see firm performance related to consumers and market value added (MVA) calculations related to shareholders. We obtained a sample of 54 food and beverage industry companies listed on the Indonesia Stock Exchange (IDX) based on the purposive sampling technique. The food and beverage industry was chosen to sample this study because it is one of Indonesia’s most significant contributors to waste. This study uses path analysis panel data and the Sobel test to test the hypothesis. The test results show that green innovation significantly positively affected sales growth, while environmental reporting negatively affected. Firm size as a control variable positively affects MVA. In addition, sales growth does not indirectly affect the relationship between green innovation and environmental disclosure to MVA. This study shows that consumers are more interested in companies that engage in actual action through green innovation to reduce environmental damage. At the same time, the shareholders do not pay attention to the company’s environmental activities.


Introduction
Concern about the environment has evolved into a tactic used by businesses to win over stakeholders [1].Many company activities related to protecting the environment create a positive image so that shareholders are interested in investing shares.The main goal of management is not to increase company profits but to increase company value.The company's value is seen as more consistent than the company's profit because the company's profit may decline in the future, but not with the company's value.Under any circumstances, companies that already have a high value will still attract the attention of stakeholders.
In order to achieve the company's goals, management performance measurement can be calculated from the side of market calculations and accounting calculations.Several classifications can calculate calculation of the company's financial performance, including market calculations (such as market capitalization and Beta index), accounting calculations (such as ROE, ROA, ROCE), and combined market and accounting calculations (such as MVA and Tobin's Q) [2].Accounting measurement is historical, so it has the disadvantage of not evaluating the potential benefits that the company will get in the future.Therefore, recently many studies measure financial performance using a combination of accounting and market calculations.MVA calculation is the best measurement that can describe the company's financial performance from an investor's point of view because it can calculate at a specific 1248 (2023) 012014 IOP Publishing doi:10.1088/1755-1315/1248/1/012014 2 time but assess performance from time to time to see whether a value has been generated by the company [3].
Market Value Added (MVA) is an indicator that can assess how well the business is doing on the market in terms of maximizing corporate value, especially to see the prosperity of shareholders [4].MVA is the deviation of the organization's overall market value and economic capital, also known as investment capital [3].Therefore, the MVA calculation is recommended to measure the company's market value of shareholder equity to see its ability to use its investment capital effectively during its operations.
In addition to shareholders, customers are important stakeholders in the functioning of the organization.One of the constraints that corporations frequently face is customer demand for them to engage in sustainable practices [5].Consumers tend to take action through product purchasing behaviour in companies with environmental awareness initiatives [6].Companies that are obligated to the sustainability of the environment not only save money and reduce hazards, but they also acquire customer trust and may increase sales [7], [8], [9].One sign of client desire for the company's products is sales growth.Sales growth is a measurement of company performance based on revenue Stakeholder demand for the corporation to solve environmental problems as soon as possible drives the organization to innovate in the manufacturing process [10].Many businesses have developed solutions through green innovation in recent years to address the issue of global warming.Green innovation is an approach for businesses to obtain an edge over competitors in the future and a requirement for gaining stakeholder confidence [11].Innovation in the environment has been proved to enhance sales and expansion in the stock market [12], [13].
Companies typically disclose environmental initiatives in annual reports or separately in the sustainability reports as a means of communicating with stakeholders.Environmental disclosure is an opportunity made by companies to change stakeholder perceptions regarding the company's responsiveness to environmental problems [1].Companies disclose environmental evaluations and impacts due to business activities to grow their good reputation and increase profitability and performance [14].In Indonesia, reporting on corporate environmental activities is still voluntary, so not all companies provide clear information to stakeholders.Environmental disclosures made by companies broadly and objectively are seen as better by investors [8].
Stakeholder theory describes a company's approach or strategy responsible for all stakeholders.Stakeholders are individuals or groups that are potentially influenced by an organization or have an impact on its success [15].Another of the company's obligations to stakeholders is to perform better environmental disclosure practices.Currently, several stakeholder groups' demand for data on corporate environmental performance continues to increase [16].Disclosure of environmental activities that are carried out consistently will provide community legitimacy to the company.Legitimacy theory describes that managers can ensure their organizations operate "legitimately" following societal expectations [17].In other words, if the company can consistently fulfil the stakeholder's demands, it will gain the trust of all levels of society.
Research on environmental activities on stakeholder value has been done before.According to previous research findings indicate that green innovation has a significant and beneficial impact on company value and market outcomes for companies that implement it [10], [7].Green innovation has grown to be an essential business instrument since it has been shown to increase stock market position, attract customer attention and gain a competitive advantage [12].In addition, companies that have a high level of environmental reporting are significant to customers and shareholders [1].This result is in line to earlier studies demonstrating a positive and statistically significant correlation between environmental reporting quality and financial performance [14].Environmental disclosure is a form of transparency carried out by companies in environmental activities to attract the sympathy of stakeholders.Thus, customers and shareholders prefer companies that care about environmental issues.
Several other research findings state different things.Focusing too much on green innovation than other innovations negatively effect accounting and stock market performance [18].The creation of green innovations entails major investments for study and exploration by companies [10], [11].Therefore, investors view green innovation companies as too risky, which can result in a significant reduction in capital.Furthermore, other research findings indicate that environmental disclosure is detrimental to financial performance [19].Environmental integrity has no substance associated to profitability [8].Additionally, companies with environmental accreditation have no influence on sales growth [20].
The research evaluates the company's achievement from the consumer and shareholder perspectives.Company performance indicators related to customers using sales growth calculations.While company performance indicators related to shareholders using MVA calculations.Sales growth reflects the growth rate of customer loyalty to the company's products.Meanwhile, MVA is the best measure of company performance from an investor's perspective because it calculates the company's performance at a specific time but assesses performance from time to time to see whether a value has been generated by the company [3] .
This study adopts and develops indicators for measuring the variables used in previous studies.On the green innovation variable, adopting and developing the measurement indicators used in [10].The environmental disclosure variable adopted and developed the measurement indicators used by [1].Both green innovation and environmental disclosure variables will be given various scores for each disclosure indicator, namely a score of 0 if the information not available, a score of 1 if the information is disclosed briefly, a score of 2 if the information disclosed is more specific.However, it does not use quantitative information and a score of 3 if the information disclosed is more specific and uses quantitative information.The research was conducted on the food and beverage industry listed on the Indonesia Stock Exchange.The selection of samples in the food and beverage industry is because the food and beverage industry is one of the most significant contributors to waste, especially postproduction waste.
This study explores the impact of green innovation and environmental disclosure on company performance from both the consumer and shareholder perspectives.The performance of companies related to consumers is described by sales growth, while the performance of companies related to shareholders is described by the prosperity of shareholders, or MVA (Market Value Added).In addition, this research also intends to assure whether sales growth affecting indirectly on green innovation and environmental reporting to MVA.To the author's knowledge, there have been no studies examining corporate environmental activities, mainly green innovation and environmental reporting, and their impact on shareholder wealth.

Methodology
This research was conducted in the food and beverage industry companies listed on the IDX.Food and beverage industry companies are manufacturing companies whose business activities are closely related to environmental damage.Until the product is sold to the market during the production process, it will produce waste.This study utilises secondary data in financial statements and annual reports issued on the IDX and related companies website.
The sample selection used a purposive sampling technique, namely selecting research samples based on specific criteria.As of 2019, there are 26 food and beverage companies listed on the IDX.The selected companies publish annual and financial reports respectively during the year of observation.Eight companies do not publish annual reports and financial statements.This study observed 18 companies in 3 years to obtain 54 sample companies.The control variable functions as a controller to ensure that the effect of the independent variable on the dependent variable is not affected by external factors that are not examined.In this study, firm size was the control variable.The company's size becomes a control variable because the bigger the company, the various problems will arise, including the company's performance [21].Large companies are proven to have good performance, high stock prices, and also high MVA calculations [7], [22], [23].This study's size uses the natural logarithm of total assets following previous research [22], [23], [1].
The data analyses in this study; the first is a descriptive statistical test for all variables in this study.The descriptive statistical test will display all variables' minimum, maximum, mean, and standard deviation values .The research data is panel data, which combines cross-section data and time-series data, so the second test uses panel data path analysis.Path analysis is used to examine the correlation between variables to determine the direct or indirect impact of a set of exogenous variables on an endogenous variable.In addition, this study uses intervening variables, so the third test is the Sobel test.Sobel test is conducted to test whether a variable is an intervening variable.The regression equations in this study are as follows: =  + 1  + 2  + 3  +   (1) Where: SG = Customer-related firm performance (sales growth) MVA = Shareholder-related firm performance (market value added).GI = Green Innovation.ED = Environmental Disclosure.
Where: ab : indirect effect coefficient obtained from the multiplication between direct effects a and b. a : independent direct effect coefficient (X) on the mediator (M).b : the direct effect coefficient of the mediator (M) on the dependent (Y).Sa : standard error of coefficient a. Sb : standard error of coefficient b.
The firm performance variable related to customers is measured by the proportion of sales growth each year.The sales growth variable (SG) calculation in this study follows previous research [1], which is the proportional variation between salest with salest-1 by salest-1.The firm performance variable related to shareholders is measured by market value added (MVA).MVA calculation based on [4] is as follows: MVA = Market capitalization -Total common stockholders' equity = (Total shares outstanding X Share price) -Total common stockholders' equity The assessment of green innovation in research is by analyzing the content of product innovation reporting in the corporate's annual report.The assessment of the green innovation variable combines indicators and scoring from previous research, using the indicators used in [10] by providing an assessment score used by [14].Components or materials from the manufacturing procedure are recyclable.
Environmental disclosure in this research is also done by analyzing the content contained in the company's annual report.The assessment of environmental reporting variables also combines indicators and scoring from previous studies, using the indicators used in the research of [1] by providing an assessment score used by [14].The assessment indicators in this study include the following: The green innovation variable (GI) has a minimum value of 0, a maximum of 8, and an average of 3.80 (table 3).The sample companies are still deficient in green innovation, especially eco-friendly packaging.This phenomenon occurs because the research sample has developed innovation in production to produce good products in meeting market demands.
The variable environmental disclosure (ED) has the lowest score of 0 and the highest score of 25 as presented in Table 3; This demonstrates that the sample has diverse environmental management disclosure ratings.Many organisations have disclosed environmental management in their annual reports, yet there are still a significant number of companies that have not reported it in their annual reports.The sample companies' average environmental disclosure score was 10,556, indicating that many sample companies have engaged in environmentally friendly practises and informed the general public.In the firm size (FS) variable, the average company sample has assets of 9,618.80 billion.

Panel data path analysis
This study uses path analysis with the E-views Program based on secondary data in the form of panel data.The data is a combination of cross-sectional data with time-series data.Path analysis is a method to investigate the direct or indirect impact from a mediating variable of a exogenous variables on an endogenous variable.In estimating the panel data regression model, it is necessary to test whether to use the Common Effect Model, Fixed Effect Model, or Random Effect Model.
A Chow test was performed to determine whether a fixed-effect or common-effect model is more fit for the research.If the value of Prob.Cross-section F on the results of the Chow test <0.05 then the fixed effect model is by the study, on the contrary, if the Prob value.Cross-section F on the results of the Chow test > 0.05, the common effects model is the most suitable.The Hausman test must be performed to decide whether the fixed-effects or random-effects model is more suitable.In the Hausman test, if the test results obtain a probability value of random cross-section (Prob.)> 0.05, then the appropriate model is a random effect; otherwise, a fixed-effects model is the best model.The last model-fit test is the Lagrange multiplier test to determine the common-effect or random-effect model that best fits to the data.When the LM test output results show the value of Prob.Breusch-Pagan (BP) < 0.05, indicating the most suitable model is Random Effect model, otherwise the Common Effect model is the best fits model if the Prob value.Breusch-Pagan (BP) larger than 0.05.The first research model is to examine the effect of the variable Green Innovation (GI), Environmental Disclosure (ED), with the control variable Firm Size (FS) on customer-related performance as measured by sales growth (SG).
Table 5 clearly shows that a coefficient of the GI variable is 0.047053 with a probability value 0.0289, lower than 0.05, indicating the GI variable has a positive and statistically significant impact to the SG.In contrast, a coefficient of the ED variable to the SG variable is -0.021056 with value of probability 0.0128 <0.05, showing that ED significantly has a negative effect on SG.Meanwhile, the FS variable has a coefficient of 0.000001 and a probability value of more than 0.05 to SG, meaning that the FS variable does not affect the SG.
Table 5 also gives an information about examination result of the second research model.It examines the variables GI, ED, SG with the control variable FS on shareholder-related performance as measured by market value added (MVA).The coefficient for the GI variable on the MVA variable is 692.2312 and the value of probability value is 0.4511, greater than 0.05.Furthermore, the ED variable produced a coefficient of -200.7707, and the value of probability to MVA was 0.5701, greater than 0.05.On the SG variable to the MVA variable, it obtained a coefficient of 233.9601 and a probability value of 0.9236, greater than 0.05 also.The result indicating that GI, ED and SG variables has no impact on the MVA.In contrast, the corelation of control variable FS to the MVA has a coefficient of 0.484392 and a probability value lower than 0.05, that is 0.0218, indicating the FS variable variable has a substantial positive impact on MVA.

Sobel Test
Sobel test is conducted to test whether a variable can be an intervening variable.When there is an intervening variable, the mediating effect will usually appear on the indirect effect on the direct relationship of the two variables [24].This study examines whether customer-related performance as calculated by sales growth indirectly affects the relation of green innovation and environmental reporting to shareholder-related performance.variable does not indirectly affect the relationship between ED and MVA.The sales growth variable cannot be used as an intervening variable between GI and ED to MVA.
Green Innovation (GI) statistically has a significant and positive impact on performance related to customers and shareholders.The more businesses that use green innovation, they will receive the sales growth bigger than before.In addition, the more companies developed green innovation, the greater the value and prosperity for their shareholders.This study's results support previous research that states that organization that engage on green innovation will get several benefits, namely increasing market position, attracting consumers, and increasing competitive advantage in the future [2], [12].The environmental damage that occurs due to business activities causes stakeholders' demands for companies to carry out green innovations to anticipate more severe environmental damage.To meet consumer demands, companies that reduce environmental damage will improve sales and potentially enhance the profitability [6].Consumers tend to be more enthusiastic about actions taken by businesses that directly affect them, such as ecological innovation.When organization can develop the innovation to be more eco-friendly on their products, consumers will be more devoted, thus potentially increasing the sales growth.Investor believes that corporate that implement innovation in environmental-friendly can increase their company's value, giving them a future competitive advantage.Therefore, firm that implement green innovation will gain the trust of stakeholders and provide prosperity for shareholders.
Environmental Disclosure (ED) harms both customer-related and shareholder-related performance.This result is consistent with previous studies' findings that environmental disclosure has no bearing on financial performance and profitability [19], [8].Additionally, companies with environmental accreditation have no effect on sales growth [20].The findings of this study contradict the findings of previous research, which state that environmental disclosure positively impacts the growth of sales and corporate performance [14], [9].
Environmental reporting does not enhance the growth of sales or the value of shareholders for companies.Both customers and shareholders did not respond well to companies providing information related to the company's environmental activities.Consumers are not interested in information related to environmental activities that the company has carried out because it does not directly impact consumers.As for investors, companies that carry out environmental activities implicitly require special costs in dealing with environmental damage, primarily due to business activities.Investors may feel anxious because the costs of dealing with environmental damage incurred by the company impact the capital that shareholders have invested.The more companies carry out environmental activities to cope with environmental damage, the more they will not provide prosperity for shareholders.
Sales Growth (SG) has a positive effect on MVA.The results of this study are in line with previous research, which states that sales growth has a positive effect on the company's stock price.One of the characteristics of good company performance related to customers is sales growth that continues to increase [23].The increase in sales volume is the right indicator to explain that the company is superior to competitors [22].Customers are the most important stakeholder group because they directly impact the company's economic performance.Increased sales growth in the company is seen as more attractive to investors because it is considered to have promising prospects in the future.Thus, the higher the company's sales growth, the higher the company's value and ability to provide prosperity for shareholders.The sales growth variable has no indirect effect on the relationship between green innovation and environmental disclosure on MVA.This shows that the relationship between the green innovation variable and environmental disclosure is stronger on the MVA variable directly without any intervention from the sales growth variable.

Conclusion
This study examines the effect of green innovation and environmental disclosure on customer and shareholder-related performance.In addition, this study also examines the indirect effect of customerrelated performance on the relationship between green innovation and environmental disclosure on 10 shareholder-related performance.The results show that green innovation has a positive and significant effect on performance related to customers and shareholders.Consumers and shareholders are more interested in companies that carry out green innovations for their products.When companies can innovate on environmentally friendly products, consumers will be more loyal so that they have the potential to increase sales growth.In addition, according to investors, companies that implement green innovation will gain the trust of stakeholders and provide prosperity for shareholders.
Environmental disclosure harms both customer-related performance and shareholder-related performance.Both customers and shareholders did not respond well to companies providing information related to the company's environmental activities.Consumers are considered not interested in the environmental activities that the company has carried out.Meanwhile, for investors, companies that carry out environmental activities implicitly require a particular budget in dealing with environmental damage, mainly due to business activities.Investors may feel anxious because the costs of dealing with environmental damage incurred by the company impact the capital invested by shareholders, so it is considered not to provide prosperity for shareholders.
Customer-related performance has a positive effect on shareholder-related performance.Increased sales growth in the company is seen as more attractive to investors because it is considered to have promising prospects in the future.Thus, the higher the company's sales growth, the higher the company's value and ability to provide prosperity for shareholders.However, customer-related performance has no indirect effect on the relationship of green innovation and environmental disclosure to shareholder-related performance.The relationship between green innovation and environmental disclosure is stronger directly on shareholder-related performance, so customer-related performance cannot be used as an intervening variable.
Our research has limitations; namely, the measurement of the independent variables, green innovation, and environmental disclosure, is content analysis.Further research can add other variables, such as environmental costs or other costs incurred related to environmental activities that are thought to affect performance related to customers and shareholders.In addition, the research population can also be expanded not only in the food and beverage sector to obtain representative research results.

Figure 1 .
Figure 1.Conceptual Framework.The control variable functions as a controller to ensure that the effect of the independent variable on the dependent variable is not affected by external factors that are not examined.In this study, firm size was the control variable.The company's size becomes a control variable because the bigger the company, the various problems will arise, including the company's performance[21].Large companies are proven to have good performance, high stock prices, and also high MVA calculations[7],[22],[23]. This study's size uses the natural logarithm of total assets following previous research[22],[23],[1].The data analyses in this study; the first is a descriptive statistical test for all variables in this study.The descriptive statistical test will display all variables' minimum, maximum, mean, and standard deviation values .The research data is panel data, which combines cross-section data and time-series data, so the second test uses panel data path analysis.Path analysis is used to examine the correlation between variables to determine the direct or indirect impact of a set of exogenous variables on an endogenous variable.In addition, this study uses intervening variables, so the third test is the Sobel test.Sobel test is conducted to test whether a variable is an intervening variable.The regression equations in this study are as follows:  =  + 1  + 2  + 3  +   (1)   =  + 4  + 5  + 6  + 7  +  (2) Testing the intensity of the indirect influence of the exogenous variable (X) on the endogenous variable (Y) through the use of the intermediate variable (M) using the Sobel test.The indirect impact is calculated by multiplying path X→M (a) by path M→Y (b) or ab.The equation is presented as follows  =  √( 2  2 )+( 2  2 )

Figure 2 .A 7 )
Figure 2. direct and indirect effect of variables.After conducting the path analysis, the next step is to perform a Sobel test on the intervening variables.The following is a Sobel test for the indirect effect of the SG variable on the relationship between GI and MVA:  =  √(    )+(    )

Table 1 .
Table 1 presents the assessment indicators used in this study.Green innovation variable measurement indicator.

Table 2 .
Indicators of measuring environmental disclosure variables.The results of the descriptive statistical test of this study can be seen in table3.The average value of the MVA variable is 12,342.19,orpositive,indicating that the sample company has had an excellent shareholder-related performance.Indonesian food and beverage sector as research samples have successfully demonstrated the company's financial performance in using the company's investment capital for operations.The company's performance related to customers in the research sample shows good things.Table3shows during the entire period of observation, the mean sales growth (SG) value of the research sample rose by 0.0748 or 7.48%.This information indicates that the food and beverages sector in Indonesia will continue to grow together with the purchasing power of the population.

Table 3 .
Descriptive Statistics Test Results.

Table 4 .
4ppropriate Research Model Test Results.In testing the suitability of model 1, it can be seen in table4that the probability value of Crosssection F on the chow test results is 0.0000 <0.05, then the fixed effect model is more in line with the study.Then the Hausman test was carried out; the test results obtained a probability value (Prob.)Cross-sectionrandom 0.5668 > 0.05, then the appropriate model was a random effect.The final test for model suitability is Lagrange multiplier test, obtained the Prob value.Breusch-Pagan (BP) 0.0000 < 0.05 means the best model for model 1 in this research is Random Effect Model.Research model 2 also carried out the same test, namely the Chow, Hausman, and Lagrange multiplier tests.In table 4. the probability value of Cross-section F on the results of the Chow test is 0.9841 > 0.05, then the common effects model is more in line with the research model.The next test is the Hausman test, and the probability value (Prob.) of a random cross-section is 0.8302 > 0.05, so the more suitable model is the random effect.The suitability test in the last two models, namely the Lagrange multiplier test, obtained the value of Prob.Breusch-Pagan (BP) 0.0174 <0.05, the Random Effects Model is the most suitable for model 2 research.Both research models are most suitable for the random-effects model; for this reason, models 1 and 2 were tested for hypotheses using the randomeffects model.The test results can be seen in the following table: