The Effect of Environmental Disclosure and Return on Assets (ROA) on Firm Value with Audit Quality as a Moderating Variable in Basic Materials Sector Companies Listed on the IDX (2021–2025)

Abstract

Firm value reflects a company’s ability to meet investor expectations through effective performance and transparent disclosure. However, the relationship between environmental disclosure and firm value remains inconclusive, particularly regarding the role of audit quality in strengthening this relationship. This study aimed to examine the effects of environmental disclosure and return on assets (ROA) on firm value, with audit quality as a moderating variable, among basic materials companies listed on the Indonesia Stock Exchange from 2021 to 2025. A quantitative descriptive-associative approach was employed using secondary data obtained from company annual reports and sustainability reports. The population comprised 113 companies, from which 18 companies were selected through purposive sampling, yielding 90 observations. Data were analyzed using partial least squares structural equation modeling with SmartPLS 4.0. The results showed that environmental disclosure had no significant effect on firm value (t = 0.509; p = 0.611), whereas ROA had a significant positive effect on firm value (t = 3.192; p = 0.001). Audit quality significantly moderated the relationships between environmental disclosure and firm value (t = 2.058; p = 0.040) and between ROA and firm value (t = 2.540; p = 0.011). These findings indicate that accounting profitability is an important determinant of firm value, while the value relevance of environmental disclosure may depend on audit quality. The study contributes to the literature by highlighting the moderating role of audit quality and provides practical insights for corporate managers and investors regarding financial performance, environmental transparency, and the credibility of corporate reporting.