Impact Analysis of Sustainable Financial Reporting and Environmental Regulatory Compliance on Decision Making Effectiveness in Bandung Manufacturing Industry
DOI:
https://doi.org/10.58812/wsis.v2i05.933Keywords:
Sustainable Financial Reporting, Environmental Regulations Compliance, Decision-making Effectiveness, Manufacturing Industry, BandungAbstract
This research investigates the impact of sustainable financial reporting and compliance with environmental regulations on decision-making effectiveness within the Bandung manufacturing industry. A quantitative analysis was conducted using survey data collected from manufacturing firms in Bandung, Indonesia. Descriptive statistics, correlation analysis, and multiple regression analysis were employed to examine the relationships between sustainable financial reporting, environmental regulations compliance, and decision-making effectiveness. The results reveal significant positive correlations between sustainable financial reporting, environmental regulations compliance, and decision-making effectiveness. Regression analysis demonstrates that both sustainable financial reporting and environmental regulations compliance are significant predictors of decision-making effectiveness, even after controlling for relevant covariates. These findings underscore the importance of integrating sustainability principles and regulatory compliance into organizational decision-making processes to enhance performance outcomes and stakeholder value within the manufacturing sector.
References
J. Huang, M. Irfan, S. S. Fatima, and R. M. Shahid, “The role of lean six sigma in driving sustainable manufacturing practices: an analysis of the relationship between lean six sigma principles, data-driven decision making, and environmental performance,” Front. Environ. Sci., vol. 11, p. 1184488, 2023.
M. Z. Hasan, T. Z. Yaacob, H. I. C. Hashim, M. N. M. Asaad, and R. Iteng, “Sustainability and Lean Manufacturing Practices: The Mediating Role of Manufacturing Performance,” Int. J. Acad. Res. Bus. Soc. Sci., vol. 13, no. 3, pp. 715–740, 2023.
A. K. Al‐Swidi, J. F. Hair, and M. A. Al‐Hakimi, “Sustainable development‐oriented regulatory and competitive pressures to shift toward a circular economy: The role of environmental orientation and Industry 4.0 technologies,” Bus. Strateg. Environ., vol. 32, no. 7, pp. 4782–4797, 2023.
H. Gholami, F. Abu, S. Sharif, G. Abdul-Nour, and M. A. Badar, “A Review of Global Research Trends on Sustainable Manufacturing,” Sustain. Manuf. Ind. 4.0 Pathways Pract., pp. 1–17, 2023.
A. Bello‐Pintado, J. A. D. Machuca, and P. Danese, “Stakeholder pressures and sustainability practices in manufacturing: Consideration of the economic development context,” Bus. Strateg. Environ., vol. 32, no. 7, pp. 4084–4102, 2023.
A. O. Cahyaningrum, R. M. Permana, A. Y. Rukmana, S. Suroso, and F. Fachrurazi, “Regulatory Environmental Impact, Contract Law, Intellectual Property Rights, and Taxation of Entrepreneurial Activities in Bandung City,” J. Ekon. dan Kewirausahaan West Sci., vol. 1, no. 02, pp. 109–121, 2023.
A. P. Widyadi and J. Widiatmoko, “Pengaruh Pengungkapan Sustainability Report Dan Kualitas Audit Terhadap Nilai Perusahaan Pada Perusahaan Manufaktur 2016-2020,” JIMAT (Jurnal Ilm. Mhs. Akuntansi) Undiksha, vol. 14, no. 01, pp. 38–47, 2023.
A. J. Putri and M. Y. R. Bangun, “Identifying Environmental, Social, and Governance (ESG) Implementation towards Growth and Sustainability: A Case Study at Assisted Micro, Small, and Medium Enterprise (MSME) by Bank Indonesia,” 2019.
D. R. S. Dewi and Y. B. Hermanto, “Indonesia in the headlight: fighting sustainability through the implementation of the product-oriented Product–Service Systems,” Indones. headlight Fight. Sustain. through Implement. Prod. Prod. Syst., vol. 1, pp. 1–9, 2023.
A. A. P. Sutarsa and B. Tjahjadi, “THE EFFECT OF WOMEN COMMISSIONERS ON FIRMS’VALUE IN THE INDONESIAN MANUFACTURING INDUSTRY: MEDIATING ROLE OF ENVIRONMENTAL ENGAGEMENT,” Assets J. Akunt. dan Pendidik., vol. 12, no. 1, pp. 12–24, 2023.
S. S. Veriyanto and M. Yasin, “Sektor Industri Pada Pemetakan Peluang Ekonomi Makro Kota Surabaya,” Wawasan J. Ilmu Manajemen, Ekon. dan Kewirausahaan, vol. 1, no. 3, pp. 13–23, 2023.
D. N. Maulidia, M. R. Kurniawan, and M. Yasin, “Analisis Struktur Industri Unggulan Terhadap Perkembangan Ekonomi Di Kota Pekalongan Jawa Tengah,” Student Res. J., vol. 1, no. 3, pp. 310–324, 2023.
D. A. Puspita, A. A. Maulana, and M. Yasin, “Keragaman Industrialisasi Pada Kebijakan Pemerintah,” J. Kaji. dan Penelit. Umum, vol. 1, no. 3, pp. 78–83, 2023.
N. A. Robbani and A. Y. Mafruhat, “Analisis Pergeseran Pertumbuhan Struktur Ekonomi dan Sektor Unggulan Kota Bandung,” in Bandung Conference Series: Economics Studies, 2023, pp. 24–34.
F. Elmawati, H. Rohman, and M. Yasin, “Analisis Struktur Kinerja Dan Kluster Industri Unggulan,” J. Mhs. J. Ilm. Penal. dan Penelit. Mhs., vol. 5, no. 2, pp. 312–326, 2023.
A. Wagenhofer, “Sustainability reporting: a financial reporting perspective,” Account. Eur., vol. 21, no. 1, pp. 1–13, 2024.
N. Saini, A. Antil, A. Gunasekaran, K. Malik, and S. Balakumar, “Environment-social-governance disclosures nexus between financial performance: A sustainable value chain approach,” Resour. Conserv. Recycl., vol. 186, p. 106571, 2022.
S. Mukwarami, C. Nkwaira, and H. M. van der Poll, “Environmental management accounting implementation challenges and supply chain management in emerging economies’ manufacturing sector,” Sustainability, vol. 15, no. 2, p. 1061, 2023.
P. Wiraguna, D. I. Burhany, M. Rosmiati, and S. Suwondo, “The Effect of Sustainability Accounting and Environmental Performance on Financial Performance (Study of Manufacturing Companies Listed on IDX in 2018-2021),” Int. J. Curr. Sci. Res. Rev, vol. 6, no. 07, pp. 3857–3869, 2023.
N. L. Mgilane, “The impact of environmental reporting on the value of listed manufacturing firms in South Africa.” 2023.
S. Nzama, O. M. Olarewaju, and O. A. Arise, “Influence of Barriers to Environmental Sustainability on Environmental Management Accounting in the Food and Beverage Manufacturing Firms,” Int. J. Environ. Sustain. Soc. Sci., vol. 4, no. 3, pp. 832–841, 2023.
A. J. Pramono, Suwarno, F. Amyar, and R. Friska, “Sustainability Management Accounting in Achieving Sustainable Development Goals: The Role of Performance Auditing in the Manufacturing Sector,” Sustainability, vol. 15, no. 13, p. 10082, 2023.
Y.-C. Kuo, Y.-H. Huang, L. Sun, G. Small, and S.-J. Lin, “Identifying key factors of sustainability practice in financial institutions based on decision-making trial and evaluation laboratory method,” Asian Rev. Account., vol. 31, no. 5, pp. 661–679, 2023.
P. Mishra and T. G. Sant, “Examine the level of environmental, social and governance disclosure in sustainability report–a study of the Indian banking sector,” Int. J. Innov. Sci., vol. 16, no. 2, pp. 420–442, 2024.
M. Claudia-Larisa, “THE IMPACT OF SUSTAINABLE REPORTING ON THE FINANCIAL PERFORMANCE OF ENERGY AND GAS COMPANIES LISTED ON THE BUCHAREST STOCK EXCHANGE. AN EMPIRICAL APPROACH.,” Manag. Sustain. Dev., vol. 15, no. 1, 2023.
K. Bonato, “Seeing sustainability reporting through a lens of value creation,” APPEA J., vol. 63, no. 2, pp. S40–S43, 2023.
L. K. David, D. V. A. Jianling Wang, and N. Amjad, “The Impact of Environmental and Social Governance (ESG) Sustainability Disclosure on Accounting Performance: A Case Study of Firms in Liberia”.
T. C. Gonçalves, V. Barros, and J. V. Avelar, “Environmental, social and governance scores in Europe: what drives financial performance for larger firms?,” Econ. Bus. Lett., vol. 12, no. 2, pp. 121–131, 2023.
T. Korkmaz and T. Nur, “The Effect of ESG Sustainability on Firm Performance: A View under Size and Age on BIST Bank Index Firms,” Ekon. Polit. ve Finans Araştırmaları Derg., vol. 8, no. 2, pp. 208–223, 2023.
V. Khandelwal, P. Sharma, and V. Chotia, “ESG disclosure and firm performance: An asset-pricing approach,” Risks, vol. 11, no. 6, p. 112, 2023.
H. Sun, “Legal Risks and Prevention Paths of Corporate Environmental Protection Compliance under the Carbon-Neutral Vision,” J. Leg. Stud. Res., vol. 8, no. 3, pp. 8–33, 2022.
A. Mikhailova, “The role of environmental compliance in the environmental activities of a legal entity: legal aspect (on the example of the oil refinering enterprise jsc «Naftan»),” Vestn. Polotsk State Univ. Part D. Econ. Leg. Sci., vol. 1, pp. 120–125, May 2022, doi: 10.52928/2070-1632-2022-60-5-120-125.
D. Dubovik, “Compliance as a Necessary Element of Legal Regulation of Environmental Relations,” Theor. Appl. Law, pp. 39–44, Dec. 2022, doi: 10.22394/2686-7834-2022-4-39-44.
J. Hildebrand, “RISK MANAGEMENT IN ENVIRONMENTAL COMPLIANCE: WHAT HAPPENS WHEN YOUR OPERATION IS BEING CONSTRUCTED?,” J. Green Build., vol. 9, no. 3, pp. 37–49, 2014.
D. T. Rogers, Fundamentals of Environmental Law and Compliance. CRC Press, 2022.
A. Ibenrissoul, Z. Benjouid, and S. Kammoun, “Evaluating the compliance of environmental management systems: evidence from Moroccan banks,” Arab Gulf J. Sci. Res., 2023.
B. B. Tyler et al., “Environmental practice adoption in SMEs: The effects of firm proactive orientation and regulatory pressure,” J. Small Bus. Manag., pp. 1–36, 2023.
M. A. Hossain and M. S. Kabir, “Evaluation of environmental compliance and challenges on mitigation measures for EMS, Energy & GHG, Water & Wastewater, Air Emission, Waste & Chemical Management due to decreased profit margin.”.
S. Kayitesi, “Strategic Decision-Making Approaches and Organizational Performance Case of Rugarama Estate Park, Rwanda,” J. Strateg. Manag., vol. 7, pp. 12–25, Apr. 2023, doi: 10.53819/81018102t2127.
R. I. Awulor, R. L. Mallam-Obi, and N. M. Chukwu, “Enhancing organisational decision-making through management information system,” J. Glob. Soc. Sci., vol. 3, no. 11, pp. 115–133, 2022.
A. Otara, “Mitigating organizational decision making amidst the dragging effect,” Qeios, 2023.
L. Parii and A. Kubrak, “ADOPTION OF MANAGEMENT DECISIONS AT THE ENTERPRISE,” Her. UNU. Int. Econ. Relations World Econ., Jan. 2023, doi: 10.32782/2413-9971/2023-47-13.
A. A. Al-Qudah and A. Houcine, “Firms’ characteristics, corporate governance, and the adoption of sustainability reporting: evidence from Gulf Cooperation Council countries,” J. Financ. Report. Account., vol. 22, no. 2, pp. 392–415, 2024.
P. Yadav and A. Jain, “Sustainability disclosures and corporate boards: a stakeholder approach to decision-making,” J. Appl. Account. Res., vol. 24, no. 5, pp. 1027–1047, 2023.
S. Anvari, C. Macharis, and M. Turkay, “An integrated framework based on triple bottom line accounting and stakeholders’ perspective to promote sustainable facility location and route allocation network decisions,” Corp. Gov. Sustain. Rev., vol. 7, pp. 43–69, Apr. 2023, doi: 10.22495/cgsrv7i1p4.
A. Y. Owusu Yeboah, A. B. Jibril, and P. Novak, “A strategic framework for developing sustainable value propositions,” Probl. Perspect. Manag., 2022.
S. Ferri, A. Tron, F. Colantoni, and R. Savio, “Sustainability Disclosure and IPO Performance: Exploring the Impact of ESG Reporting,” Sustainability, vol. 15, no. 6, p. 5144, 2023.
R. Bulyga, M. Melnik, I. Safonova, and V. Gisin, “A Model of ESG-Transparency Index in Corporate Reporting,” 2023.
H. Al Amosh and S. F. A. Khatib, “Environmental, social and governance performance disclosure and market value: Evidence from Jordan,” Bus. Perspect. Res., p. 22785337221148860, 2023.
W. Li, M. Y. Bhutto, I. Waris, and T. Hu, “The nexus between environmental corporate social responsibility, green intellectual capital and green innovation towards business sustainability: an empirical analysis of Chinese automobile manufacturing firms,” Int. J. Environ. Res. Public Health, vol. 20, no. 3, p. 1851, 2023.
C. Quintana‐García, M. Marchante‐Lara, and C. G. Benavides‐Chicón, “Towards sustainable development: Environmental innovation, cleaner production performance, and reputation,” Corp. Soc. Responsib. Environ. Manag., vol. 29, no. 5, pp. 1330–1340, 2022.
H. Li, Y. K. Kuo, M. M. Mir, and M. Omar, “Corporate social responsibility and environmental sustainability: Achieving firms sustainable performance supported by plant capability,” Econ. Res. istraživanja, vol. 35, no. 1, pp. 4580–4602, 2022.
M. Kalubanga and W. Mbekeka, “Compliance with government and firm’s own policy, reverse logistics practices and firm environmental performance,” Int. J. Product. Perform. Manag., 2023.
S. Ali Qalati, B. Barbosa, and S. Iqbal, “The effect of firms’ environmentally sustainable practices on economic performance,” Econ. Res. istraživanja, vol. 36, no. 3, 2023.
O. A. Ogunode and F. F. Adegbie, “Environmental disclosure practices and sustainable performance of quoted manufacturing companies in Nigeria,” Asian J. Econ. Bus. Account., vol. 22, no. 23, pp. 455–469, 2022.
N. Karia and R. C. Davadas Michael, “Environmental Practices That Have Positive Impacts on Social Performance: An Empirical Study of Malaysian Firms,” Sustainability, vol. 14, no. 7, p. 4032, 2022.
S. Carnini Pulino, M. Ciaburri, B. S. Magnanelli, and L. Nasta, “Does ESG disclosure influence firm performance?,” Sustainability, vol. 14, no. 13, p. 7595, 2022.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Mei Rani Amalia, Tera Lesmana, Rani Eka Arini
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Facebook 
Instagram 
Twitter 
Youtube 
+62 821 1557 5700 
info@westscience-press.com 