Purpose – The purpose of this study is to examine
the effect of carbon accounting and financial
performance of Indonesian firm. Carbon emission
on accounting is one of the voluntary disclosures
made by companies. The author studies the
character of audit quality and firm size in carbon
accounting on financial performance.
Design/methodology/approach – Firms reporting
emission data based on Carbon Disclosure Project
(CDP) and PROPER report are considered for
empirical analysis and Indonesian company data
has been collected for the period 2018 to 2022.
This study uses Partial Least Square models. The
results were also examined for the potential role
of firm size and audit quality using a moderation
model.
Findings – Results indicate that disclosure of
carbon emissions and environmental
performance has a significant negative influence
on financial performance with a significance level
less than 5%. This research also finds that firm size
can strengthen the negative influence of carbon
accounting on financial performance with a
significance less than 10%. On the other hand,
audit quality weakens the negative influence of
carbon emissions disclosure on financial
performance. However, for financial
performance, the role of audit quality is less
significant.
Originality/value – This study expands existing
studies on financial performance in the context of
sustainability and also in the context of carbon
accounting, where carbon accounting disclosure is
something that companies voluntarily undertake.
This study explains the character of audit quality
in relation to external guarantor which can
influence the influence of carbon accounting on
financial performance. In addition, it will answer
whether companies that have large assets can
influence financial performance in relation to
carbon accounting.
