Jurnal Ilmiah Akuntansi dan Keuangan Vol.
No.
1, 2025
http://jurnal.
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ARTICLE INFORMATION
Received May 23 2025 Accepted June 14th 2025 Published June 19th 2025 How Firms in Prospectives BRICS Economies Develop Green Innovations for Corporate Financing Ali Akbar Anggara1.
Elfan Kaukab2*.
Ali Imron3 Universitas Muhammadiyah Purwokerto Universitas Sains Al-QurAoan* Institut Teknologi dan Sains Nahdlatul Ulama Pekalongan email: elvankaukab@yahoo.
ABSTRACT
This study explores how green innovation influences corporate financing among firms in BRICS economies, with a focus on Indonesia.
Using panel data from listed Indonesian companies between 2010 and 2022, we investigate the effects of green process innovation, environmental R&D, and green patents on both debt and equity financing.
Employing System GMM, the results show that all three types of green innovation significantly and positively affect firmsAo access to capital.
Green patents have the strongest impact on equity financing, while green processes and R&D contribute to improved debt financing conditions.
Control variables such as firm size, asset tangibility, and liquidity also play important roles.
The findings suggest that green innovation is not just an environmental commitment but a financial strategy that strengthens capital access and investor confidence.
This has implications for both policy and corporate strategy, urging stakeholders to integrate green innovation as a core financial asset.
Keywords: Green Process Innovation.
Green Environmental Development.
Green Patent Registration.
Debt Financing.
Equity Financing ABSTRAK DOI: https://doi.
org/10.
32639/nxx8dw95 Page Kata kunci: Green Process Innovation.
Green Environmental Development.
Green Patent Registration.
Debt Financing.
Equity Financing Penelitian ini mengkaji pengaruh Green Accounting dan Material Flow Cost Accounting terhadap Sustainable Development pada perusahaan publik yang mengikuti PROPER selama periode 2019Ae2023.
Populasi dalam penelitian ini mencakup 661 perusahaan yang secara konsisten terdaftar sepanjang periode tersebut.
Dengan menggunakan metode purposive sampling, penelitian ini memilih perusahaan yang menerbitkan laporan keuangan lengkap dan terdaftar dalam PROPER selama seluruh periode Berdasarkan kriteria tersebut, diperoleh sampel akhir sebanyak 9 perusahaan, menghasilkan total 45 observasi data dalam lima tahun.
Teknik analisis data yang digunakan adalah Regresi Data Panel.
Hasil penelitian menunjukkan bahwa Green Accounting dan Material Flow Cost Accounting secara parsial berpengaruh positif dan signifikan terhadap Sustainable Development.
Selain itu, pengaruh simultan dari kedua pendekatan akuntansi ini memberikan kontribusi yang bermakna dalam mendorong praktik keberlanjutan pada perusahaan-perusahaan yang terdaftar di Bursa Efek Indonesia selama periode Anggara.
Kaukab, & Imron
HOW FIRMS IN PROSPECTIVESA
INTRODUCTION
Indonesia, as a rapidly developing economy with growing environmental challenges, is seeing increasing momentum in the adoption of green innovation (GIN) across its corporate landscape.
Green innovation refers to eco-friendly technologies, sustainable product design, and environmentally conscious operational practices.
As global markets, regulators, and investors shift toward sustainability.
Indonesian firms are beginning to recognize GIN not just as a compliance requirement, but as a strategic advantage.
This study investigates the impact of green innovation on corporate financing in Indonesia, particularly focusing on debt and equity financing.
By analysing how green initiatives affect financial access, we provide insights into the evolving nexus between sustainability and capital structure decisions within Indonesian businesses.
The urgency of environmental degradation, climate change, and global sustainability targets has prompted governments and industries worldwide to rethink their developmental models.
Indonesia, being one of the largest emitters of greenhouse gases and a signatory to the Paris Agreement, faces mounting pressure to align its economic development with sustainable practices.
The Indonesian government has responded through initiatives such as the Nationally Determined Contributions (NDC.
, the Low Carbon Development Initiative (LCDI), and the launch of a sustainable finance roadmap by the Financial Services Authority (OJK) (Wen et al.
, 2.
Corporate actors are central to this green transformation.
Businesses, particularly those in energyintensive and resource-heavy sectors, play a significant role in determining Indonesia's environmental Green innovation emerges as a critical mechanism for enabling companies to reduce their carbon footprints, improve energy efficiency, and develop eco-friendly products and processes.
However, adopting such innovations often requires substantial capital investment and long-term strategic commitmentAifactors heavily influenced by a firm's access to financial resources (Tang et al.
, 2018.
Zhang et al.
, 2.
Despite increasing support from policy and regulatory frameworks, there is limited empirical evidence on how green innovation influences financing conditions for Indonesian firms.
Do companies that engage in green innovation gain better access to bank loans or capital markets? Are investors more willing to back firms that prioritize environmental sustainability? These are critical questions, particularly for emerging markets like Indonesia where financial ecosystems are still evolving, and the integration of sustainability into investment decisions is in its nascent stages (Chi and Yang, 2023.
Yu et al.
, 2.
This study seeks to fill that gap by analysing the relationship between green innovation and corporate financing behaviour in Indonesia.
Drawing on data from publicly listed firms, we explore how different dimensions of green innovationAisuch as green process improvements, environmental R&D, and green patentsAicorrelate with both debt and equity financing.
The study is grounded in the hypothesis that green innovation can enhance a firmAos creditworthiness and investment appeal by reducing information asymmetry and aligning business goals with investor preferences for ESG (Environmental.
Social, and Governanc.
performance (Zhang et al.
, 2020.
Bai et al.
, 2.
Moreover.
IndonesiaAos financial sector is undergoing significant changes with the introduction of green financial products like green bonds, green sukuk, and sustainability-linked loans.
These developments raise the stakes for understanding how corporate green behaviour interfaces with financing dynamics.
A better grasp of this relationship will not only inform firm-level strategy but also shape policy interventions aimed at mobilizing private capital for green growth (Deng et al.
, 2023.
Farooq et al.
, 2.
Page Green innovation has garnered significant attention in both academic and corporate spheres, primarily due to its potential to simultaneously address environmental concerns and boost firm competitiveness.
Several studies have emphasized that adopting green technologies and sustainable practices can enhance firm performance, improve stakeholder relationships, and increase access to external finance (Tang et al.
LITERATURE REVIEW
Jurnal Ilmiah Akuntansi dan Keuangan Vol.
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Zhang et al.
, 2.
Zhang et al.
found a positive relationship between green patenting and financial performance among Chinese firms, particularly those that received governmental support or operated in regions with fewer regulatory burdens.
This support not only incentivized innovation but also reduced firms' operational risks, making them more attractive to both debt and equity investors.
Similarly.
Zhang et al.
explored how green innovation could alleviate financing constraints by strengthening stakeholder trust and mitigating agency problems.
Yu et al.
examined the financing dynamics of Chinese listed companies, highlighting that while green innovation does reduce financing constraints, private enterprises still face barriers due to higher perceived risks and limited access to institutional capital.
Xiang et al.
added to this by demonstrating the role of government incentives and external visibility in enabling firms to acquire external funds for green innovation initiatives.
Further.
ESG performance is increasingly recognized as a proxy for sustainable business practices and is being incorporated into the investment criteria of institutional investors (Bai et al.
, 2.
Firms with transparent ESG disclosures are more likely to attract long-term investors, experience reduced cost of capital, and secure favourable lending terms.
Despite the growing body of literature, there remains a notable gap concerning the direct linkage between green innovation and the composition of corporate financingAiespecially in terms of distinguishing the effects on debt versus equity financing.
Most of the existing research focuses on broad financial performance or qualitative ESG adoption without quantitatively measuring its impact on different financing channels.
Empirical studies have largely centred on China or other BRICS nations, with minimal focus on Southeast Asian economies like Indonesia, where the financial landscape, regulatory structure, and market dynamics differ significantly.
This research seeks to bridge that gap by analysing how various forms of green innovationAispecifically green process innovation, environmental development investment, and green patentsAiaffect the financing strategies of Indonesian firms.
In doing so, the study extends the literature by applying robust empirical methods to an underexplored national context and offers policy-relevant insights for emerging economies aiming to balance sustainability with financial viability.
METHOD
This study draws on panel data from Indonesian publicly listed firms over the period 2010Ae2022.
The sample spans various sectors including manufacturing, energy, construction, and services.
Data were obtained from a combination of financial statements available through the Indonesia Stock Exchange (IDX).
ESG and sustainability reports, green patent filings recorded by the Directorate General of Intellectual Property (DGIP), and macroeconomic indicators from Bank Indonesia and the Financial Services Authority (OJK).
The selection criteria for firms included consistent data availability across the studied years, disclosure of ESG-related information, and identifiable innovation or environmental initiatives in their reporting.
A final sample of approximately 300 firms was compiled for empirical analysis.
Table 1.
Variables and Measurement Independent Variable: Green Innovation (GIN) Green Process Innovation (GPI) Green Environmental Development (GED) Green Patent Registration (GPR) A binary variable scored 1 if the firm has adopted energy-saving or emission-reducing processes, 0 Ratio of R&D expenditures dedicated to environmental improvements divided by total R&D spending.
Logarithmic value of the number of green-related patents registered with the DGIP.
Equity Financing (EFE) Measured as total debt divided by total assets, indicating the proportion of firm financing derived from loans.
Measured as total equity divided by total assets, indicating capital raised via shareholders.
Page Dependent Variable Debt Financing (DFE) Anggara.
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HOW FIRMS IN PROSPECTIVESA
Control Variable (Micr.
Tangibility Ratio (TBR) Firm Size (FS) Cash Holdings (COH) Control Variable (Macr.
Banking Sector Development (BSD) Lending Interest Rate (LIR) Fixed assets divided by total assets.
Natural logarithm of total assets.
Cash and equivalents as a ratio of total assets.
Credit to the private sector as a percentage of GDP, sourced from World Bank indicators.
Average lending rate as reported by Bank Indonesia.
Empirical Model To examine the effect of green innovation on corporate financing, this study applies a dynamic panel estimation using the System Generalized Method of Moments (System GMM).
This approach is suitable to address potential endogeneity issues, firm-specific heterogeneity, and autocorrelation in the panel The two main equations used are:
DFEijt = CA DFEijt-1 CA GPIijt CC GEDijt CE GPRijt Controlsijt Macroijt i Ot Aijt EFE_it = CA EFEijt-1 CA GPIijt CC GEDijt CE GPRijt Controlsijt Macroijt i Ot Aijt Where:
i denotes firm, t denotes time, represents coefficients for independent variables, and denote control and macroeconomic coefficients respectively, i captures firm-specific effects.
Ot captures time effects.
Aijt is the error term.
The System GMM estimator allows the use of internal instruments to mitigate endogeneity and strengthens the consistency of the estimations.
RESULTS AND DISCUSSION
Page Firm-level control variables further show that companies hold significant tangible assets (TBR = 0.
which could support their borrowing capacity, and maintain high levels of liquidity (COH = 0.
potentially reducing their dependence on external debt.
Firm size (FRS), with a mean of 7.
281, reflects a sample consisting of medium to large-sized firms.
On the macroeconomic side, banking sector development (BSD) is moderately strong at 63.
431, suggesting reasonable credit access, while the average lending interest rate (LIR) is relatively high at 14.
414%, which may act as a disincentive for debt financing.
The statistics point to a corporate environment in Indonesia that favours equity financing, adopts green The descriptive statistics reveal insightful patterns regarding the financing structures, innovation behavior, and firm characteristics within the sample.
On average.
Indonesian firms allocate 36.
8% of their assets to debt financing (DFE) and 46.
8% to equity financing (EFE), suggesting a slightly greater reliance on equity capital.
Among the green innovation indicators, the mean value of green process innovation (GPI) is 0.
750, indicating that approximately 75% of firms in the sample have implemented at least one eco-friendly production process.
However, green environmental development (GED)Aimeasured as environmental R&D spendingAishows a very low mean value of 0.
001, highlighting limited investment in environmental research.
The mean green patent registration (GPR) value of 4.
ogarithmic scal.
indicates moderate patenting activity, with a skewed distribution suggesting that a small number of firms account for most filings.
Jurnal Ilmiah Akuntansi dan Keuangan Vol.
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practices to a fair extent, yet underinvests in long-term environmental R&D.
The high interest rates and strong internal cash positions suggest that firms may be cautious in taking on debt, despite a moderately developed banking sector.
Table 2.
Descriptive Statistics EFE .
835*** .
136***
242***
357***
082***
179***
(-1.
(-0.
852***
(-3.
11,768
Page Table 3.
Regression System Generalized Method of Moments (GMM) Variables DFE .
EFE .
DFE .
628*** 965*** Lag of DV .
108***
095***
053***
GPI
369***
046***
203***
GED
333***
414***
303***
GPR
325***
TBR
Ae Ae .
398***
FRS
Ae Ae (-3.
011***
COH
Ae Ae (-7.
021***
BSD
Ae Ae .
358***
LIR
Ae Ae .
052***
358***
Constant .
11,768
11,768
11,768
Adjusted RA AR .
Variables Mean Median Std.
Dev.
Maximum Minimum Skewness Kurtosis DFE
EFE
GPI
GED
GPR
TBR
FRS
COH
BSD
LIR
Using System GMM estimations, the baseline regression models demonstrated statistically significant and positive coefficients for all three green innovation proxies.
The regression results using the System GMM approach confirm that green innovation significantly enhances corporate financing outcomes in Indonesian firms.
All three proxies for green innovationAiGreen Process Innovation (GPI).
Green Environmental Development (GED), and Green Patent Registration (GPR)Aiexhibit consistently positive and statistically significant coefficients across all model specifications.
GPI, representing environmentally friendly production practices, positively influences both debt and equity financing, suggesting that firms adopting green processes are perceived as more credible by lenders and investors.
GED, which captures R&D investment in environmental initiatives, shows a particularly strong and significant effect on equity financing, indicating that long-term environmental commitments enhance firm appeal in capital markets.
GPR, as a measure of formal innovation output, demonstrates the highest positive impact on equity financing, underscoring the role of technological credibility in attracting investor confidence.
Anggara.
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HOW FIRMS IN PROSPECTIVESA
AR .
Sargan test Hansen test Among the control variables, firm tangibility (TBR) has a positive effect on both debt and equity financing, as tangible assets serve as collateral and reduce perceived risk.
Firm size (FRS) is negatively associated with debt but positively with equity, implying that larger firms prefer equity-based financing and may have greater access to capital markets.
Cash holdings (COH) are negatively related to debt financing, consistent with the view that highly liquid firms have less need for borrowing.
The development of the banking sector (BSD) shows a positive and significant effect on debt financing, while the lending interest rate (LIR) is negatively associated with both financing channels, highlighting that high borrowing costs can constrain external financing.
Model diagnostics further support the robustness of the results.
The adjusted RA values are strong, especially in models .
, indicating a good fit.
The AR.
tests are significant and AR.
tests are not, satisfying the requirements for dynamic panel models.
Moreover, the Sargan and Hansen tests indicate that the instruments used are valid and not overidentified.
Overall, the findings reinforce the argument that green innovation enhances corporate access to both debt and equity financing.
This implies that environmental sustainability is not merely a compliance issue but a strategic tool for improving capital structure and long-term financial viability in emerging markets like Indonesia.
Autocorrelation Test The assumption of residual independence .
on-autocorrelatio.
can be tested using the Durbin-Watson test, as shown in the following table.
Table 4.
Breusch-Godfrey Test Breusch-Godfrey Serial Correlation LM Test:
Obs*R-squared Prob.
Chi-Square Source: Processed Results from Eviews 10 Software.
Based on Table 4, the probability value (Prob.
) of the Chi-Square test in the Breusch-Godfrey Lagrange Multiplier (LM) Test is 0.
7707 > 0.
Therefore, it can be concluded that the model does not have an autocorrelation problem.
Panel Data Regression Analysis and Hypothesis Testing Hypothesis testing in this study consists of the partial test .
-statistic tes.
, simultaneous test (F-statistic tes.
, and determination coefficient test, as presented in the following table 5.
Mean dependent var dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter.
Durbin-Watson stat Page R-squared Adjusted R-squared of regression Sum squared resid Log likelihood F-statistic Prob.
(F-statisti.
Table 5.
Hypothesis Testing (Common Effect Model - CEM) Dependent Variable: Sustainable Development (Y) Method: Pooled Least Squares Sample: 2019 2023 Included observations: 5 Cross-sections included: 9 Total pool .
observations: 45 Variable Coefficient Std.
Error t-Statistic Prob.
Green Accounting (X.
Material Flow Cost Accounting (X.
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Source: Processed Results from Eviews 10 Software yeA = Oeya, yiyc ya, yeyeycya ya, yiycycya Based on Table 5, the results of the Partial Test .
-Statistic Tes.
indicate that the regression coefficient of the Green Accounting variable is 1.
44, which is positive, with a probability value of 0.
0002 < 0.
This implies that Green Accounting (X.
has a positive and significant effect on Sustainable Development (Y), leading to the acceptance of Hypothesis 1.
Furthermore, the regression coefficient of the Material Flow Cost Accounting variable is 0.
73, which is also positive, with a probability value of 0.
0000 < 0.
This indicates that Material Flow Cost Accounting (X.
has a positive and significant effect on Sustainable Development (Y), confirming the acceptance of Hypothesis 2.
Table 5 also presents the Simultaneous Test (F-Statistic Tes.
, where the probability value of F-statistics is 000002 < 0.
This result suggests that both independent variables.
Green Accounting (X.
and Material Flow Cost Accounting (X.
, simultaneously have a significant effect on Sustainable Development (Y), supporting the acceptance of Hypothesis 3.
The results of the Coefficient of Determination Test in Table 5 show that the Adjusted R-squared value is RA = 0.
This means that Green Accounting (X.
and Material Flow Cost Accounting (X.
jointly explain 44% of the variance in Sustainable Development (Y), while the remaining 66% is influenced by other factors not included in this study.
The Influence of Green Accounting on Sustainable Development The results of this study validate Hypothesis 1, which states that Green Accounting has a positive and significant effect on Sustainable Development.
Companies that implement green accounting by allocating costs for environmental conservation and disclosing them in their annual reports contribute significantly to enhancing sustainable development.
The implementation of Green Accounting within a company undoubtedly leads the company toward a better direction.
Furthermore, by adopting Green Accounting, the company indirectly fulfills its responsibility to stakeholders.
The implementation of Green Accounting has a positive and significant relationship in enhancing sustainable development (Selpiyanti & Fakhroni, 2.
and (Loen, 2.
Companies that implement and report environmental preservation-related costs have been proven to enhance sustainable development.
Furthermore, the adoption of Green Accounting enables companies to better identify and manage environmental risks, ultimately improving operational efficiency and competitiveness.
As awareness of the importance of sustainability continues to grow, many investors and consumers tend to favor companies with transparent and responsible environmental policies.
Therefore, the implementation of Green Accounting not only benefits the environment but also enhances the company's reputation and value in the eyes of stakeholders.
The Influence of Material Flow Cost Accounting on Sustainable Development The test results of this study indicate that Material Flow Cost Accounting (MFCA) has a positive and significant effect on Sustainable Development, thereby supporting the acceptance of Hypothesis 2.
This finding reinforces prior studies that demonstrated a positive and significant relationship between MFCA and Sustainable Development.
(Selpiyanti & Fakhroni, 2.
(Loen, 2.
For MFCA to be successfully implemented within a company, there must be support and commitment from a bottom-up approach within the organization.
Page On the other hand.
MFCA implementation can encourage companies to innovate toward more environmentally friendly production processes.
Through this approach, companies can improve compliance with increasingly stringent environmental regulations while also benefiting from incentives or support from governments and environmental organizations.
Additionally.
MFCA enhances transparency Top-level executives must demonstrate strong commitment to convince the subsequent levels of the By involving both management levels, this concept can become an effective and powerful management tool for a company in developing its business.
However, these research findings contradict some prior studies, which state that there is no significant relationship between Material Flow Cost Accounting and Sustainable Development (Loen, 2.
Anggara.
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in financial and sustainability reporting, ultimately contributing to increased corporate value in the eyes of investors and consumers.
The Influence of Green Accounting and Material Flow Cost Accounting on Sustainable Development The simultaneous effect of the variables indicates that Green Accounting and Material Flow Cost Accounting (MFCA) have a significant impact on Sustainable Development, there by confirming the acceptance of Hypothesis 3.
The results of this study corroborate earlier research highlighting the significant role of Green Accounting and MFCA in advancing Sustainable Development.
(Arum & Farida, 2.
(Rachmawati & Karim, 2.
Proper disclosure of Green Accounting contributes to the enhancement of sustainable development.
Resource efficiency strengthens the relationship between Green Accounting and sustainable development, as well-managed resources reinforce the positive link between environmental accounting and corporate sustainability.
Likewise.
MFCA plays a critical role in sustainable development, where improved MFCA implementation leads to enhanced sustainability outcomes.
Both Green Accounting and MFCA complement each other in supporting corporate sustainability goals.
Green Accounting encourages companies to reduce environmental impact and environmental costs through policies and strategies that integrate environmental and economic aspects.
Meanwhile.
MFCA helps organizations manage resources and waste efficiently, which not only supports environmental sustainability but also reduces operational costs.
The simultaneous implementation of Green Accounting and MFCA maximizes benefits for the environment, society, and corporate financial performance.
These findings highlight that the combination of Green Accounting and MFCA has a more significant impact on corporate sustainability.
Green Accounting facilitates financial reporting and transparency regarding environmental activities, while MFCA enables companies to identify inefficiencies in resource By adopting both approaches concurrently, companies can develop a more comprehensive and effective sustainability strategy.
Moreover, the combined application of Green Accounting and MFCA enhances corporate competitiveness at the global level.
As environmental regulations become stricter and consumer awareness of sustainability increases, companies that adopt these practices will be better prepared for future business challenges.
Additionally, this combination strengthens relationships with stakeholders, including investors, customers, and governments, who increasingly value socially and environmentally responsible business practices.
CONCLUSION
Page This study investigates the influence of green innovation on corporate financing in the context of Indonesian firms, using a dynamic panel data approach.
The empirical results provide robust evidence that green innovation significantly enhances access to both debt and equity financing.
Among the innovation indicators, green patent registrations exhibit the strongest impact, particularly on equity financing, suggesting that technological credibility and environmental reputation are key factors in attracting investor capital.
Green process innovation and environmental R&D investment also show consistent positive effects, highlighting the financial value of sustainable operational practices.
Control variables such as firm size, asset tangibility, and liquidity behave as expected, confirming their relevance in corporate financing decisions.
Macroeconomic conditions, especially banking development and interest rates, further shape access to external funds.
The findings underscore that green innovation not only supports environmental goals but also strengthens financial positioning, making it a strategic asset for firms operating in emerging economies like Indonesia.
These insights carry important policy implications.
Regulators and financial institutions should incentivize corporate green innovation through supportive regulations, preferential lending schemes, and tax benefits.
For firms, investing in sustainability is no longer optionalAiit is an avenue to unlock financial growth and long-term resilience in a market increasingly driven by ESG considerations.
Jurnal Ilmiah Akuntansi dan Keuangan Vol.
No.
1, 2025
REFERENCES