The Effect of Carbon Risk on Firm Value: An Empirical Study on Companies Listed on the IDX 2024 Period
DOI:
https://doi.org/10.61132/ijema.v3i2.1245Keywords:
Carbon Risk, Corporate Carbon Emissions, Firm Value, Investor Perception, Tobin's QAbstract
Climate change and increasing carbon emissions have raised concerns regarding how investors evaluate firms exposed to carbon-related risks. This study focuses on companies listed on the Indonesia Stock Exchange (IDX) and examines whether Carbon Risk influences Firm Value. Although carbon emissions are often associated with regulatory, financial, and reputational risks, previous studies have reported mixed findings regarding their impact on firm valuation. Therefore, this study aims to analyze the effect of Carbon Risk on Firm Value and investigate whether High Carbon Intensity Industry (HCII) moderates this relationship. Using a quantitative approach, this study employs cross-sectional data from 459 companies listed on the IDX in 2024. Carbon Risk is measured using the natural logarithm of total Scope 1 and Scope 2 carbon emissions, while Firm Value is proxied by Tobin’s Q. Multiple Linear Regression Analysis and Moderated Regression Analysis (MRA) are used to test the hypotheses. The results show that Carbon Risk does not have a significant effect on Firm Value. However, the interaction between Carbon Risk and HCII is positive and statistically significant, indicating that industry carbon intensity significantly moderates the relationship between Carbon Risk and Firm Value. These findings suggest that investors may interpret carbon emissions differently across industries, particularly in sectors where high emissions are considered a normal consequence of business operations. Therefore, industry characteristics play an important role in shaping market responses to carbon-related information.
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