The Effect of Green Innovation on Firm Value at Different Life Cycle: The Role of Sustainable Growth and Debt Financing Cost
DOI:
https://doi.org/10.35838/jrap.2024.011.02.025
Abstract views: 41 | Pdf downloads: 32
Abstract views: 41 | Pdf downloads: 32
Keywords:
Company’s Life Cycle, Energy Firm, Firm Value, Green Innovation
Abstract
Purpose: This study investigates the impact of green innovation on firm value at different stages of the life cycle of energy sector companies in Indonesia. It also examines the moderating effects of sustainable growth and debt financing costs.
Methodology: The study utilizes panel data from 61 companies during the period from 2017 to 2022 to analyze the impact of green innovation on firm value and the moderating roles of sustainable growth and debt financing costs.
Finding: The findings show that green innovation significantly increases firm value. However, the study finds that there is no significant moderating role of sustainable growth and debt financing costs on the impact of green innovation on firm value. Additionally, the influence of green innovation on firm value varies across life cycle stages. It positively affects firm value during the growth and decline stages, while the impact is not significant at the mature stage.
Implication: These findings enhance our understanding of the importance of green innovation for improving the value of firms in the energy sector throughout their life cycles.
Originality: This study provides a novel contribution by exploring the impact of green innovation on firm value in Indonesia's energy sector and assessing the moderating roles of sustainable growth and debt financing costs.
References
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Büyükbalcı, P. ınar. (2012). Sustaining firm performance through innovation oriented value investments. Procedia - Social and Behavioral Sciences, 41, 450–455.
Chen, Y. S., Lai, S. B., & Wen, C. T. (2006). The influence of green innovation performance on corporate advantage in Taiwan. Journal of Business Ethics, 67(4), 331–339.
Cheng, B., Ioannou, I., & Serafeim, G. (2013). Corporate Social Responsibility and Access to Finance. Strategic Management Journal.
Dai, D., & Xue, Y. (2022). The Impact of Green Innovation on a Firm’s Value from the Perspective of Enterprise Life Cycles. Sustainability (Switzerland), 14(3).
Dickinson, V. (2011). Cash flow patterns as a proxy for firm life cycle. Accounting Review, 86(6), 1969–1994.
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Margolis, J. D., & Walsh, J. P. (2003). Misery Loves Companies: Rethinking Social Initiatives by Business. Administrative Science Quarterly, 268-305.
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Sezen, B., & Çankaya, S. Y. (2013). Effects of Green Manufacturing and Eco-innovation on Sustainability Performance. Procedia - Social and Behavioral Sciences, 99, 154–163.
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Sharafeddine, R. I. (2015). A Cash-FLow Theory of Stock Valuation. International Journal of Finance and Accounting, 2015(1), 79–107.
Shi, J., Yu, C., Li, Y., & Wang, T. (2022). Does green financial policy affect debt-financing cost of heavy-polluting enterprises? An empirical evidence based on Chinese pilot zones for green finance reform and innovations. Technological Forecasting and Social Change, 179.
Slaper, T. F., & Hall, T. J. (2011). The Triple Bottom Line: What Is It and How Does It Work. Indiana Business Review, 4-8.
Spence, M. (1973). Job Market Siganling. The Quarterly Journal of Economics, 355-374.
Suki, N. M., Suki, N. M., Sharif, A., Afshan, S., & Rexhepi, G. (2023). Importance of green innovation for business sustainability: Identifying the key role of green intellectual capital and green SCM. Business Strategy and the Environment, 32(4), 1542–1558.
Van der Ploeg, F., & Rezai, A. (2019). Stranded Assets in the Transition to a Carbon-Free Economy. Munich: CESifo Working Papers.
VanderPal, G. A. (2015). Impact of R&D Expenses and Corporate Financial Performance. Journal of Accounting and Finance.
Walters, J. E. (1963). Dividend Policy: Its Influence on the value of the Enterprise. Journal of Finance.
Xie, Z., Wang, J., & Zhao, G. (2022). Impact of Green Innovation on Firm Value: Evidence From Listed Companies in China’s Heavy Pollution Industries. Frontiers in Energy Research, 9.
Yao, J. jing, Qi, Y. ang, & Guo, B. (2022). Corporate social responsibility, debt financing cost and enterprise innovation. Scientific Reports, 12(1).
Zhang, D., Rong, Z., & Ji, Q. (2019). Green innovation and firm performance: Evidence from listed companies in China. Resources, Conservation and Recycling, 144, 48–55.
Aguilera-Caracuel, J., & Ortiz-de-Mandojana, N. (2013). Green Innovation and Financial Performance: An Institutional Approach. Organization and Environment, 26(4), 365–385.
Agustia, D., Sawarjuwono, T., & Dianawati, W. (2019). The mediating effect of environmental management accounting on green innovation - Firm value relationship. International Journal of Energy Economics and Policy, 9(2), 299–306.
Apergis, N., Poufinas, T., & Antonopoulos, A. (2022). ESG scores and cost of debt. Energy Economics, 112.
Ar, I. M. (2012). The Impact of Green Product Innovation on Firm Performance and Competitive Capability: The Moderating Role of Managerial Environmental Concern. Procedia - Social and Behavioral Sciences, 62, 854–864.
Büyükbalcı, P. ınar. (2012). Sustaining firm performance through innovation oriented value investments. Procedia - Social and Behavioral Sciences, 41, 450–455.
Chen, Y. S., Lai, S. B., & Wen, C. T. (2006). The influence of green innovation performance on corporate advantage in Taiwan. Journal of Business Ethics, 67(4), 331–339.
Cheng, B., Ioannou, I., & Serafeim, G. (2013). Corporate Social Responsibility and Access to Finance. Strategic Management Journal.
Dai, D., & Xue, Y. (2022). The Impact of Green Innovation on a Firm’s Value from the Perspective of Enterprise Life Cycles. Sustainability (Switzerland), 14(3).
Dickinson, V. (2011). Cash flow patterns as a proxy for firm life cycle. Accounting Review, 86(6), 1969–1994.
Freeman, R. E. (1984). Strategic Management. Marshfield: Pitman Publishing Inc.
Jensen, M. C. (1986). Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers. The American Economic Review, 323-329.
Kemp, R., & Arundel, A. (1998). Survey Indicator for Environmental Innovation. .: STEP Group.
Li, J., & Chen, H. (2023). Research on Enterprise Green Innovation and Debt Financing Costs. In Proceedings of the 2022 International Conference on Mathematical Statistics and Economic Analysis (MSEA 2022).
Margolis, J. D., & Walsh, J. P. (2003). Misery Loves Companies: Rethinking Social Initiatives by Business. Administrative Science Quarterly, 268-305.
Miller, D., & Friesen, P. H. (1984). A Longitudinal Study of the Corporate Life Cycle. Management Science, 1161-1183.
Parmar, B. L., Freeman, R. E., Harrison, J. S., Wicks, A. C., Colle, S. d., & Purnell, L. (2010). Stakeholder Theory: The State of The Art. Management Faculty Publications.
Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance (First Edition ed.). New York: The Free Press.
Porter, M. E. (1991). Towards a dynamic theory of strategy. Strategic Management Journal, 12(2 S), 95–117.
Porter, M. E., & Van Der Linde, C. (1995). Toward a New Conception of the Environment-Competitiveness Relationship. The Journal of Economic Perspectives.
Qiao, S., Shen, T., Zhang, R. R., & Chen, H. H. (2021). The impact of various factor market distortions and innovation efficiencies on profit sustainable growth: From the view of China’s renewable energy industry. Energy Strategy Reviews, 38.
Ramus, C. A. (2002). Encouraging innovative environmental action: what companies and managers must do. Journal of World Business, 37(2), 151-164.
Rezende, L. de A., Bansi, A. C., Alves, M. F. R., & Galina, S. V. R. (2019). Take your time: Examining when green innovation affects financial performance in multinationals. Journal of Cleaner Production, 233, 993–1003.
Ross, S. A., Westerfield, R. W., Jaffe, J., & Jordan, B. D. (2019). Corporate Finance (Twelfth edition ed.). New York: McGraw-Hill Education.
Sezen, B., & Çankaya, S. Y. (2013). Effects of Green Manufacturing and Eco-innovation on Sustainability Performance. Procedia - Social and Behavioral Sciences, 99, 154–163.
Shahzad, F., Ahmad, M., Fareed, Z., & Wang, Z. (2022). Innovation decisions through firm life cycle: A new evidence from emerging markets. International Review of Economics and Finance, 78, 51–67.
Sharafeddine, R. I. (2015). A Cash-FLow Theory of Stock Valuation. International Journal of Finance and Accounting, 2015(1), 79–107.
Shi, J., Yu, C., Li, Y., & Wang, T. (2022). Does green financial policy affect debt-financing cost of heavy-polluting enterprises? An empirical evidence based on Chinese pilot zones for green finance reform and innovations. Technological Forecasting and Social Change, 179.
Slaper, T. F., & Hall, T. J. (2011). The Triple Bottom Line: What Is It and How Does It Work. Indiana Business Review, 4-8.
Spence, M. (1973). Job Market Siganling. The Quarterly Journal of Economics, 355-374.
Suki, N. M., Suki, N. M., Sharif, A., Afshan, S., & Rexhepi, G. (2023). Importance of green innovation for business sustainability: Identifying the key role of green intellectual capital and green SCM. Business Strategy and the Environment, 32(4), 1542–1558.
Van der Ploeg, F., & Rezai, A. (2019). Stranded Assets in the Transition to a Carbon-Free Economy. Munich: CESifo Working Papers.
VanderPal, G. A. (2015). Impact of R&D Expenses and Corporate Financial Performance. Journal of Accounting and Finance.
Walters, J. E. (1963). Dividend Policy: Its Influence on the value of the Enterprise. Journal of Finance.
Xie, Z., Wang, J., & Zhao, G. (2022). Impact of Green Innovation on Firm Value: Evidence From Listed Companies in China’s Heavy Pollution Industries. Frontiers in Energy Research, 9.
Yao, J. jing, Qi, Y. ang, & Guo, B. (2022). Corporate social responsibility, debt financing cost and enterprise innovation. Scientific Reports, 12(1).
Zhang, D., Rong, Z., & Ji, Q. (2019). Green innovation and firm performance: Evidence from listed companies in China. Resources, Conservation and Recycling, 144, 48–55.
Published
2024-10-25
How to Cite
Wilutama, N. A., & Viverita, V. (2024). The Effect of Green Innovation on Firm Value at Different Life Cycle: The Role of Sustainable Growth and Debt Financing Cost. JRAP (Jurnal Riset Akuntansi Dan Perpajakan), 11(2), 320-333. https://doi.org/10.35838/jrap.2024.011.02.025
Section
Articles
Copyright (c) 2024 Nonie Anggun Wilutama, Viverita Viverita
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