https://dinastipub.
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No.
5, 2025
DOI: https://doi.
org/10.
38035/dijefa.
https://creativecommons.
org/licenses/by/4.
The Effect of Sustainability Report Disclosure and Financial Performance on Firm Value with Dividend Policy as a Mediating Variable Sarlinda Elizabeth Alomoy1*.
I Dewa Nyoman Badera2 Universitas Udayana.
Bali.
Indonesia, sarlindaelibeth350@gmail.
Universitas Udayana.
Bali.
Indonesia, dewaman@unud.
Corresponding Author: sarlindaelizabeth350@gmail.
Abstract: This study aims to examine the effect of sustainability reports and financial performance on firm value, with dividend policy as a mediating variable.
The population in this study consists of companies listed on the LQ45 index, with samples selected using purposive sampling techniques, resulting in 21 companies during the five-year observation period .
Data analysis was conducted using path analysis.
The results of the study indicate that sustainability reports do not influence dividend policy and have a negative effect on firm value.
Additionally, dividend policy does not mediate the relationship between sustainability reports and firm value.
Conversely, financial performance has a positive effect on dividend policy and firm value.
Dividend policy is also found to mediate the influence of financial performance on firm value.
Keywords: Firm Value.
Sustainability Report Disclosure.
Financial Performance.
Dividend Policy.
INTRODUCTION
Companies have several objectives, including generating profits, increasing shareholder wealth, and enhancing firm value (Widiastuti et al.
, 2.
Investors and company management must be able to work together to increase the value of the firm (Fajri & Munandar, 2.
Firm value is an important indicator for investors when considering investment decisions.
Increasing firm value aims to attract investors to invest (Hermawaty & Sudana 2.
Prospective investors will view the firm as healthy and of high value, reflecting the firm's good performance (Ompusunggu & Wijaya, 2.
A high firm value generally means that the firm is competitive, has good profitability, and promising growth prospects (Tambunan, 2.
Sustainability reporting is the practice of measuring, disclosing and ensuring accountability for an organisation's performance in achieving sustainable development goals to both internal and external stakeholders (Yulia et al.
, 2.
The standard commonly used in preparing sustainability reports is the GRI Standard (Silvana & Khomsyiah, 2.
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Sustainability reporting using GRI Standards guidelines aims to ensure transparency regarding how organisations contribute to sustainable development.
GRI Standards are used to evaluate the quality of sustainability reports, assessing how comprehensive they are.
The more information a company discloses, the better its sustainability report (Suharyani et al.
, 2.
Financial performance is a description of the financial condition of an entity analysed using financial analysis tools, so that the financial condition of the entity can be seen, showing its performance during a certain period (Marthadevi & Mimba, 2.
Financial performance reflects the success of a firm in its operations and resource management.
ROA shows how efficiently a firm uses its assets to generate profits (Sumarna, 2.
A high ROA value sends a positive signal to investors that the company is capable of generating profits efficiently.
This attracts investors to buy the company's shares, which ultimately drives up the share price and increases the value of the company (Merllizcha & Triyonowati, 2.
Dividend policy is a decision on whether the profits earned by a company will be distributed to shareholders in the form of dividends or retained to increase capital for future investment financing (Narayanti & Gayatri 2.
An indicator of dividend policy is the Dividend Payout Ratio (DPR).
A high DPR indicates that the company is more focused on profit distribution, while a low DPR indicates a greater allocation of profits for growth (Sherly & Edastami 2.
Signal theory explains that high-quality companies will send signals to the market through transparent financial disclosures.
This information can serve as a signal for investors and other parties in making economic decisions (Rahayu 2.
Companies can trigger positive reactions from the market and investors.
If the information has a negative impact, the information in the annual report can influence investor decisions (Najiyah & Lahaya, 2.
The stakeholder theory explains that companies, in conducting their operational activities, should not only act in the interests of shareholders, but should also involve several parties that are directly or indirectly affected by the firm's operational results (Sari & Budiasih.
The firm must have a positive impact on stakeholders.
This is done to provide a positive impact on stakeholders, so that the firm can gain support and insight from stakeholders that can increase the value of the firm (Putri & Mutumanikam, 2.
There are differences of opinion found by previous researchers.
Research by Chen et al.
and Matos et al.
, .
explains that sustainability reports have a positive influence on dividend policy, while research by Supriyadi et al.
explains that sustainability reports have no influence on dividend policy.
Research by Meirawati et al.
Prasetyoningrum et al.
and Zakaria .
explains that dividend policy has an impact on dividend policy.
Meanwhile, research by Erawati et al.
explains that financial performance does not have an impact on dividend policy.
Research by Sevnia & Mulyani .
shows that sustainability report disclosure sends a positive signal to investors, while research by Afifah & Irawan .
Amin et al.
and Susianto & Wirakusuma .
states that Indonesian investors remain more focused on financial gains.
Febriana et al.
,Mukhita et al.
, and Novianti et .
found that financial performance measured by ROA has a significant effect on company value, while research by Aditia et al.
and Saragih et al.
explains that financial performance measured by ROA does not affect company value.
Research by Kusumawati et al.
Seth & Mahenthiran .
and Setiawati .
explains that dividend policy affects company value, while research by Tiari & Adiputra .
Rahma & Arifin .
, and Safitri et al.
explain that dividend policy does not affect company The disclosure of sustainability reports provides ESG information that can enhance a company's reputation and risk management.
This encourages companies to implement sustainable dividend policies as a form of responsibility to stakeholders.
Based on stakeholder 4140 | P a g e https://dinastipub.
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theory, companies adjust their dividend policies to meet social and environmental expectations.
This is supported by research from Barros et al.
Chen et al.
Matos et al.
H1: The disclosure of sustainability reports has a positive effect on dividend policy.
Good financial performance indicates efficient use of assets and high profitability.
Companies that are able to generate profits tend to pay dividends as a positive signal to Signal theory explains that dividends serve as an indicator of confidence in a company's financial prospects.
This is supported by research conducted by Meirawati et al.
Prasetyoningrum et al.
, and Zakaria .
H2: Financial performance has a positive effect on dividend policy.
Sustainability reports reflect transparency and accountability for a company's social and environmental impact.
These reports increase public trust and strengthen relationships with Stakeholder theory asserts that this can enhance a company's reputation and This research is supported by Annisa et al.
Karya & Mimba .
, and Sevnia et al.
H3: Sustainability reports have a positive impact on firm value.
Good financial performance sends a positive signal about the company's prospects and ROA as a performance indicator shows effectiveness in generating profits.
According to signal theory, this information increases investor confidence and has an impact on company This research is supported by Febriana et al.
and Novianti et al.
H4: Financial performance has a positive effect on firm value.
Dividend policy is a tool for companies to communicate with investors about their financial prospects.
Stable dividends indicate management's confidence in good financial This strengthens the firm's value by increasing positive perceptions in the market.
This research is supported by Kusumawati et al.
and Seth & Mahenthiran .
H5: Dividend policy has a positive effect on firm value Sustainability reports enhance a company's reputation and accountability, while dividend policies reinforce positive signals to investors.
These two factors complement each other in building market confidence.
Signal theory and stakeholder theory suggest that dividends serve as a mediating mechanism for increasing firm value.
This research is supported by Akhmadi & Januarsi .
Gharbi & Jarboui .
, and Morieta et al.
H6: dividend policy mediates sustainability report on firm value Financial performance reflects a company's ability to generate profits, while dividend policy shows how those profits are distributed.
This combination sends a positive signal about the company's prospects to investors.
Dividends are an important intermediary in strengthening the influence of ROA on firm value.
This research is supported by studies conducted by Idrus & Anwar .
and Lestari, .
H7: dividend policy mediates financial performance on firm value METHOD This study focuses on companies listed on the LQ45 Index from 2019 to 2023 by accessing financial reports, annual reports, and sustainability reports on the official website of the Indonesia Stock Exchange (IDX) or the official websites of each company.
The object of this study is firm value, which is measured through sustainability report disclosure, financial performance, and dividend policy.
This study uses a quantitative approach with secondary data 4141 | P a g e https://dinastipub.
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in the form of financial statements, annual reports, and sustainability reports.
The research population consists of 45 companies listed on the LQ45 Index, and purposive sampling was used to determine the sample, resulting in 21 companies with a total of 105 observations.
Firm value is a market ratio used to measure the performance of a stock's market price relative to its book value (Firmansyah et al.
, 2.
The Price to Book Value (PBV) ratio is used to compare a company's stock price with its book value (Anggreni et al.
PBV can provide an indication of how much the market values a company's book value.
If PBV is high, it means that market confidence in the company's prospects is also high (Saddam et al.
, 2.
ycycycuycayco ycyycycnycayce Price to Book Value (PBV) = .
ycaycuycuyco ycycaycoycyce ycyyceyc ycEaycaycyce Sustainability Report is a measurable report published by a company regarding the economic, social, and environmental impacts of its activities, with the aim of fostering economic prosperity without harming the environment (Madani & Gayatri, 2.
The calculation method for sustainability report disclosure can be measured using the Sustainability Report Disclosure Index (SRDI) (Dewi & Putri, 2.
The SRDI measurement assigns a value of 1 if an item is disclosed and a value of 0 if it is not disclosed, based on the SRDI calculation.
From this, the authors obtained the total score for each item from each company (Amin et al.
SRDI =
ycuycycoycayceyc ycuyce yccycnycycaycoycuycycycyceyc ycuycycoycayceyc ycuyce yccycnycycaycoycuycycycyceyc yceycuycyyceycaycyceycc y 100 % .
Financial performance is an analysis conducted to measure the extent to which a company has successfully managed its finances in accordance with applicable regulations (Agustyawati et al.
, 2.
The higher the ROA, the greater the level of profit achieved by the The higher the profit that can be achieved by the company, the better the company's position in terms of asset utilisation (Lestari et al.
, 2.
ROA = ycAyceyc ycEycycuyceycnyc y 100 % .
ycNycuycycayco yaycycyceycyc Dividend policy is a management decision to distribute a portion of profits to shareholders, rather than retaining those profits as retained earnings to be reinvested for capital gains (Pramurza, 2.
One indicator of dividend policy is the Dividend Payout Ratio (DPR).
The DPR is the ratio between a company's profits and the amount of dividends distributed by the company to investors (Anindya & Muzakir, 2.
DPR = yaycaycEa yaycnycycnyccyceycuycc ycEyceyc ycIEaycaycyce y 100 % .
yceycaycycuycnycuyciyc ycyyceyc ycEaycaycyce Path analysis is a data analysis method used in this study to analyse causal relationships .
ause and effec.
between variables.
The regression model in this study examines the effect of sustainability report disclosure (SRDI) and financial performance (ROA) on firm value (PBV) with dividend policy (DPR) as a mediating variable.
This analysis was conducted using SPSS The following are the structural equations in this study.
The regression formulas for Substructures 1 and 2 are:
Z = yca1 yu1 ycu1 yu2 ycu2 yuA1 .
Y = yca2 yu3 ycu1 yu4 ycu2 yu5 yc yuA2 .
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RESULTS AND DISCUSSION
The sample was determined using purposive sampling based on predetermined criteria.
Table 1 shows the findings.
Table 1 Determination of Research Sample Criteria Companies listed on the LQ45 Index 2023 Companies that did not distribute dividends during 2019-2023 Companies that use foreign currencies as their reporting currency Companies whose data was in error when accessed Companies that did not disclose sustainability reports and annual reports Total sample Number of years Number of observations Source: w.
id, 2025 Amount This study used 45 companies listed on the LQ45 index.
Based on the sample selection results, 21 company samples were obtained for the years 2019 to 2023.
The total number of observations during the 2019 to 2023 period was 105.
Sustainability Report Financial performance Dividend policy Firm value Valid N .
Source: Secondary data, 2025
Table 2 Descriptive Statistics Results Minimum
Maximum
0,12
0,95
0,07
16,68
9,85
110,58
8,22
Mean
0,4236
6,6141
57,2836
3,1290
Std.
Deviation 0,18694 4,43178 24,59281 2,02159 The mean values of the sustainability report, financial performance, dividend policy, and company value variables are higher than their standard deviations, indicating that the data for these variables are distributed close to their mean values with small deviations.
Table 3 Results of Normality Test for Structure 1 Unstandardized Residual Asymp.
Sig.
-taile.
Source: Secondary data, 2025
0,200
The two-sided Asymp.
sig test value of 0.
200 structure 1 is greater than the significance level of 0.
The test results show that the tested data is normally distributed.
Table 4 Results of Normality Test for Structure 2 Asymp.
Sig.
-taile.
Source: Secondary data, 2025 Unstandardized Residual 0,200 The two-sided Asymp.
sig test value of 0.
200 structure 2 is greater than the significance level of 0.
The test results show that the tested data is normally distributed.
Table 5 Results of Multicollinearity Test Structure 1
Model
Tolerance Sustainability Report
0,997
VIF
1,003
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0,997
1,003
The variables in Structure 1 of the multicollinearity test have tolerance values above 0.
and Variance Inflation Factor (VIF) values below 10.
00, so it can be concluded that there is no multicollinearity problem between the independent variables used in the model.
Table 6 Results of Multicollinearity Test Structure 2
Model
Tolerance Sustainability Report
0,995
Financial Performance 0,769 Dividend Policy 0,768 Source: Secondary data, 2025
VIF
1,005
1,300
1,302
The variables in Structure 1 of the multicollinearity test have tolerance values above 0.
and Variance Inflation Factor (VIF) values below 10.
00, so it can be concluded that there is no multicollinearity problem between the independent variables used in the model.
Table 7 Results of Heteroscedasticity Test Structure 1 Model 1 (Constan.
Sustainability Report Financial Performance Dependent Variable: Dividend Policy Source: Secondary data, 2025 Sig.
0,432
0,976
0,304
All independent variables in the structural heteroscedasticity test 1 showed significance values exceeding 0.
05, indicating that the data in this study did not experience Table 8 Results of Structural Heteroscedasticity Test 2 Model 1 (Constan.
Sustainability Report Financial Performance Dividend Policy Dependent Variable: Firm Value Source: Secondary data, 2025 Sig.
0,584
0,486
0,136
0,719
All independent variables in the structural heteroscedasticity test 2 showed significance values exceeding 0.
05, indicating that the data in this study did not experience Table 9 Results of Structural Autocorrelation Test 1 R Square Adjusted R Square Std.
Error of the Estimate DurbinWatson
0,481
0,232
0,217
0,19193
2,385
Predictors: (Constan.
Sustainability Report.
Financial Performance Dependent Variable: Dividend Policy Source: Secondary data, 2025 The autocorrelation test yielded a Durbin-Watson (DW) value of 2,385.
Based on a sample size of 105 .
= .
and 2 independent variables .
= .
, the lower bound .
L) is 1,7209 and the upper bound .
U) is 1,6433, resulting in a value of 4 Ae dU equal to 2,3567.
The Durbin- 4144 | P a g e https://dinastipub.
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Watson value obtained is greater than dU and 4 Ae dU, so it can be concluded that the model shows autocorrelation according to the Durbin-Watson test.
To overcome autocorrelation in the regression model, one approach that can be used is the runs test method.
Table 10 Results of the Structure 1 Runs Test Autocorrelation Test Unstandardized Residual Test Value 0,01829 Cases < Test Value Cases >= Test Value Total Cases Number of Runs 1,668 Asymp.
Sig.
-taile.
0,095 Source: Secondary data, 2025 After the model was adjusted using the runs test, the Asymp.
sig 2-tailed structure 1 test value of 0.
095 was greater than the significance level of 0.
The test results showed that the data passed the autocorrelation test.
Table 11 Results of Structural Autocorrelation Test 2 R Square Adjusted R Std.
Error of the Durbin-Watson Square Estimate 0,679 0,461 0,445 0,21804 2,455 Predictors: (Constan.
Kebijakan Dividen.
Financial Performance.
Sustainability Report Dependent Variable: Firm Value Source: Secondary data, 2025 The autocorrelation test yielded a Durbin-Watson (DW) value of 2,455.
Based on a sample size of 105 .
= .
and 3 independent variables .
= .
, the lower bound .
L) is 1,7402 and the upper bound .
U) is 1,6237, resulting in a value of 4 Ae dU equal to 2,3763.
The DurbinWatson value obtained is greater than dU and 4 Ae dU, so it can be concluded that the model shows autocorrelation according to the Durbin-Watson test.
To overcome autocorrelation in the regression model, one approach that can be used is the runs test method.
Table 10 Results of the Structural Autocorrelation Test 2 Runs Test Unstandardized Residual Test Value 0,000285 Cases < Test Value Cases >= Test Value Total Cases Number of Runs 1,864 Asymp.
Sig.
-taile.
0,062 Source: Secondary data, 2025 After the model was adjusted using the runs test, the Asymp.
sig 2-tailed structure 1 test value of 0.
062 was greater than the significance level of 0.
The test results showed that the data passed the autocorrelation test.
Model (Constan.
Table 11 Substructure 1 Regression Analysis Test Unstandardized Standardized Coefficients Coefficients Std.
Error
0,919
0,401
Sig.
2,292
0,024
Beta 4145 | P a g e https://dinastipub.
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Sustainability Report
0,153
Financial Performance 0,348 Dependent Variable: Dividend Policy Source: Secondary data, 2025
0,340
0,063
0,039
0,478
0,451
5,495
0,653
0,000
Based on Table 11, it can be seen that the sustainability report variable has a significance level of 0.
653 > 0.
05, so it can be concluded that the sustainability report variable does not affect dividend policy.
The financial performance variable has a significance level of 0.
000 < 0.
05, it can be concluded that the financial performance variable has an effect on dividend policy.
Model Table 12 Substructure 2 Regression Analysis Test Unstandardized Standardized Coefficients Coefficients (Constan.
2,812 Sustainability Report
-2,286
Financial Performance 0,422 Dividend Policy 0,268 Dependent Variable: Firm Value Source: Secondary data, 2025 Std.
Error
Beta
0,467
0,386
0,082
0,112
-0,434
0,429
0,198
Sig.
6,022
-5,921
5,155
2,380
0,000
0,000
0,000
0,019
Based on Table 12, it can be seen that the sustainability report variable has a significance level of 0.
000 < 0.
The B value shows -2.
It can be concluded that the sustainability report variable has a negative effect on company value.
The financial performance variable has a significance level of 0.
000, where 0.
000 < 0.
05, indicating that the financial performance variable has an effect on company value.
The dividend policy variable has a significance level 019, where 0.
019 < 0.
05, indicating that the dividend policy has a positive effect on company value.
Table 13 Determination Coefficient Test for Structure 1 Adjusted Std.
Error R Square R Square of the Estimate 0,481 0,232 0,217 0,19193 Predictors: (Constan.
Sustainability Report.
Financial Performance DurbinWatson
2,385
Dependent Variable: Dividend Policy Source: Secondary data, 2025 Analysis of the coefficient of determination Structure 1 yielded an Adjusted R Square value of 0.
217, which means that the sustainability report and financial performance variables 7% of the information regarding dividend policy.
The remaining 78.
3% is explained by other factors not examined in this study.
Table 14 Determination Coefficient Test for Structure 2 R Square Adjusted R Square Std.
Error of the Estimate Durbin-Watson 0,679a 0,461 0,445 0,21804 2,455 Predictors: (Constan.
Sustainability Report.
Financial performance.
Dividend Policy Dependent Variable: Firm Value Source: Secondary data, 2025 Analysis of the coefficient of determination yielded an Adjusted R Square value of 0.
which means that the sustainability report and financial performance variables provide 44.
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of the information regarding company value.
The remaining 55.
5% is explained by other factors not examined in this study.
Results of Structural Model Feasibility Testing 1
Model
Sum of Squares Mean Square 1 Regression 1,134 0,567 15,388 Residual 3,757 0,037 Total
4,891
Dependent Variable: Dividend Policy Predictors: (Constan.
Financial performance.
Sustainability Report.
Financial Performance Source: Secondary data, 2025 Sig.
0,000
The significance value of 0.
000 is less than 0.
There is a combined effect between the independent variables and the dependent variable, and the model used in this study is suitable for further analysis.
Results of Structural Model Feasibility Testing 2
Model
Sum of Squares Mean Square 1 Regression 4,111 1,370 28,821 Residual 4,802 0,048 Total
8,913
Dependent Variable: Firm Value Predictors: (Constan.
Dividend Policy.
Financial performance.
Sustainability Report Sumber : Data sekunder diolah, 2025 Sig.
0,000
The significance value of 0.
000 is less than 0.
There is a combined effect between the independent variables and the dependent variable, and the model used in this study is suitable for further analysis.
Statistical Calculation of Structure Test 1 0,153 ycU 0,268 = 0,4422 Oo.
,2682 0,3402 ) .
,1532 0,1122 ) The Z value in the structure test 1 statistics shows that 0.
409 is less than 1.
96, indicating that the dividend policy variable is unable to mediate the relationship between the sustainability report variable and firm value.
Statistical Calculation of Structure Test 2 0,348 ycU 0,268 = 2,196 Oo.
,2682 0,0632 ) .
,3482 0,1122 ) The Z value in the Structure Test 2 statistics can be stated as 2.
196 > 1.
96, so that the dividend policy variable is able to mediate the relationship between financial performance variables and company value.
CONCLUSION
The test results show that sustainability reports do not have a significant effect on dividend policy, with a coefficient of 0.
153 and significance of 0.
653 (> 0.
, so H1 is rejected.
This indicates that investors prioritise financial performance over non-financial sustainability information.
According to stakeholder theory, sustainability reports are a form of corporate responsibility to stakeholders and should increase trust and encourage dividend distribution.
However, these results show that 4147 | P a g e https://dinastipub.
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sustainability aspects are not yet a primary consideration in dividend policy.
These findings are in line with the research of Tjandra & Yopie, .
and Supriyadi et al, .
The test results show that projected financial performance measured by ROA has a significant positive effect on dividend policy, with a coefficient of 0.
348 and significance of 0.
000 (< 0.
The higher the ROA, the greater the company's ability to pay dividends, as high profits are the primary indicator of dividend payments.
According to signalling theory, dividend payments reflect good performance and serve as a positive signal to investors.
This finding supports the research of Meirawati et al.
Prasetyoningrum et al.
, and Zakaria .
that financial performance has a positive effect on dividend policy.
The test results show that sustainability reports have a significant negative effect on firm value, with a coefficient of -2.
286 and significance of 0.
000 (< 0.
This indicates that the more sustainability disclosures there are, the more firm value may decrease due to improper management.
According to stakeholder theory, poor-quality or merely symbolic disclosures can lead to negative perceptions and distrust among stakeholders.
Excessive transparency without corresponding implementation can expose the company's weaknesses.
These findings align with the research of Susianto & Wirakusuma, .
, and Seth & Mahenthiran .
The test results show that financial performance, proxied by ROA, has a significant positive effect on firm value, with a coefficient of 0.
422 and significance of 0.
000 (< 0.
This indicates that financial performance is the primary factor investors consider when evaluating a company's prospects.
According to signalling theory, good financial information sends a positive signal to investors about the efficiency and sustainability of a company's profits.
High financial performance increases a company's attractiveness to investors.
These findings are in line with the research of Febriana et al.
Lestari, .
, and Novianti et al.
The test results show that the dividend policy proxied by the Dividend Payout Ratio (DPR) has a significant positive effect on firm value, with a coefficient of 0.
268 and significance of 0.
019 (< 0.
This means that the higher the dividends distributed, the greater the firm value.
According to signalling theory, dividends reflect financial stability and good prospects, as well as reducing information asymmetry between management and investors.
Investors respond positively to companies that consistently pay dividends because they are considered to indicate healthy financial performance.
This finding is consistent with the research of Fatmawati et al.
Chasiotin et al.
, and Seth & Mahenthiran .
The Sobel test results indicate that dividend policy does not mediate the effect of sustainability reports on firm value (Z = 0.
4422 < 1.
, thus rejecting H6.
This suggests that sustainability aspects have not yet become a basis for dividend determination.
Dividends do not function as a channel for sustainability communication, indicating that sustainability reports are still symbolic and not yet This finding supports the research of Danyswara & Hartono .
The Sobel test results show that dividend policy partially mediates the effect of financial performance on firm value (Z = 2.
196 > 1.
, so H7 is accepted.
This means that ROA not only has a direct effect on company value, but also an indirect effect through dividend policy.
In line with signalling theory, dividends serve as a tool for management to send positive signals to investors, reduce information asymmetry, and enhance market perception.
These findings support the research of Idrus & Anwar .
and Lestari .
REFERENCES