JASF: Journal of Accounting and Strategic Finance

The Financial Implications of Carbon Transparency: Examining the Mediating Role of Emission Disclosure

Catur Kumala Dewi — 2025-06-17

Purpose: The purpose of this research is to examine the relationship between carbon emissions disclosure as an intervening variable between corporate governance, capital expenditures, and financial performance.

Method: Companies listed on the Indonesia Stock Exchange (IDX) that are involved in manufacturing are the primary focus of the study. The research employs a purposive sampling technique to select 16 organizations, resulting in 80 data observations spanning the period from 2019 to 2023. The correlations among variables are examined using path analysis, which is conducted with IBM SPSS Statistics 26.

Findings: Gender diversity on boards has a favorable effect on a company's bottom line, according to the study's results. The business's financial performance is negatively affected by the size of the audit committee. Carbon emissions disclosure, on the other hand, is unaffected by factors like board size, gender diversity, or audit committee size. Capital spending, board size, and disclosure of carbon emissions do not substantially affect the financial success of firms. Carbon emissions disclosure also does not mediate the relationship between boards' size, gender diversity, capital spending, audit committee size, and business financial performance.

Novelty/Value: This study provides insights into the limited role of carbon emissions disclosure as a mediator in corporate financial performance, highlighting the complex interactions between governance factors and sustainability reporting, especially on carbon emission disclosure.

Defining and Classifying Corporate Social Costs: An Initiative to Enrich the Thought of Accounting for CSR

Younis A. Battal Saleh — 2025-06-26

Purpose: This desk research aims to provide a clear and precise definition of the term "corporate social costs (CSCs)" from the perspective of accountants and to determine a set of standards by which CSCs may be separately identified from corporate economic cost (CECs).

Method: Rational thinking and logical reasoning are frequently used in theoretical studies that seek to advance and strengthen the theoretical framework of any major in the social sciences, including accounting and economics. Therefore, in order to accurately define and classify direct and indirect CSCs, the research adopts two different approaches: To define and classify indirect CSCs, the research adopted the "External Damage Approach Resulting from the Economic Activities of Companies." To define and classify direct CSCs, the research adopted the "Supporting Social Responsibilities Approach. "The characteristics of direct CSCs can be inferred by studying the nature of the obligation to incur these costs, the role they play, the impact they have, the justifications that justify them, the benefits they achieve, and the beneficiaries. Through the characteristics of direct CSCs, the criteria for distinguishing between CSCs and CECs can be determined.

Findings: This research is not merely about finding a new, more specific definition related to CSC and CEC, but has been able to establish a set of criteria to distinguish between CSC and CEC.

Novelty/Value: Because there aren't many publications in this area, this research is regarded as a contribution to the field of CSR accounting theory. The results of this research will improve businesses' capacity to truthfully report on their social performance. In terms of education, this research will clear up any confusion students might have on what CSCs mean.

Profit Sharing System in Islamic Banking Before, During, and After Covid-19 Pandemic, any Moderation?

Taudlikhul Afkar — 2025-06-30

Purpose: Explain the consistency of the implications of NPF on Profitability with Profit-sharing System of Islamic Banking through mudharabah financing and musharakah financing before, during, and after the Covid-19 pandemic.

Method: Quantitative approach is used in this study with. The number of observations is 14 Islamic banks in Indonesia. This study uses combined financial statement data time series from the Financial Services Authority (OJK) for the 2018-2024 period. The data analysis technique uses Moderating Regression Analysis (MRA) with the JAMOVI tool to further examine the contribution of NPF before, during, and after the covid-19 pandemic through Slope Analysis.

Findings: First finding explains that NPF before and after covid-19 pandemic weakened profitability through profit-sharing system with mudharabah financing, while NPF during the covid-19 pandemic did not weaken profitability. Second finding explains that NPF before and during the covid-19 pandemic did not weaken profitability, while NPF after the covid-19 pandemic weakened profitability through profit-sharing system with musharakah financing.

Novelty/Value: Originality of this study is the consistency of the implications of NPF moderation on the profitability of Islamic banks in Indonesia through profit-sharing system with different times, namely before, during, and after the Covid-19 pandemic, because there is not yet consistency in the statement of NPF's role in Islamic Banks before.

Behavioral Drivers of Capital Structure and Their Impact on MSE Performance: Evidence from Indonesia

Vebby Anwar — 2025-06-30

Purpose: This study explores how financial behavior influences capital structure decisions and, in turn, affects firm financial performance and sustainable business growth among micro and small enterprises (MSEs) in Indonesia. Drawing on behavioral finance theory, the study examines the effects of three antecedents, financial literacy, risk tolerance, and behavioral biases on capital structure decisions. Furthermore, it investigates the mediating roles of access to finance and financial planning behavior, and the outcome effect of financial performance on long-term business growth.

Method:Data was gathered from 420 MSE owner-managers across a variety of Indonesian sectors using a standardized questionnaire. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used to examine the data.

Findings: Results revealed that all three behavioral antecedents significantly influenced capital structure decisions. Capital structure, in turn, had both direct and indirect effects on firm financial performance, mediated through improved financial access and planning. Moreover, financial performance was found to positively influence sustainable business growth.

Novelty/Value:By relating behavioral characteristics to organizational outcomes and financial decision-making in the setting of an emerging economy, the study adds to the body of literature. Targeted financial education and behavioral interventions are necessary to improve financing results for MSEs, among other practical implications.

Use Big Theory Clarifies Financial Performance: The Role of Internal Mechanisms Control

Magda Siahaan — 2025-06-30

Purpose: This paper establishes the basic concepts, related work, and core propositions of implementing integrated Governance, Risk Management and Compliance (GRC), internal audit function, and financial performance through the perspective of the underlying grand theory.

Method: This paper uses literature-based analysis. First, it builds a conceptual argument by looking for the big theory, which is the leading theory that serves as the foundation for explaining and analyzing important phenomena in a field of science, which can underlie the integration of GRC, internal audit, and financial performance. It concludes with the predicted relationships of the three that can be seen through their application. Big theory is the leading theory that serves as the foundation for explaining and analyzing important phenomena in a field of science.

Findings: Based on underlying the big theory and the supporting concepts, it is proven that integrated GRC, internal audit, and financial performance are in one corridor of built relationships.

Novelty/Value: Integration of GRC, internal audit, and financial performance in one agency theory-based framework presents integrated relationships and new hypotheses, different from previous studies that separate these variables.

The Role of ESG and External Assurance in Firm Performance: External Assurance as a Moderator

Eduard Ary Binsar Naibaho — 2025-06-30

Purpose: This study seeks to assess the impact of Environmental, Social, and Governance (ESG) factors and External Assurance on Firm Performance, with External Assurance acting as a moderating variable in the ESG-Firm Performance relationship. This research is based on agency theory, which explains the potential conflict of interest between management and shareholders over sustainability spending.

Method: This research employs a quantitative methodology, utilizing panel data regression analysis. The sample consists of 120 publicly listed non-financial companies from ASEAN-5 countries over the period 2019–2023. Secondary data were obtained through a literature review from S&P Capital IQ and Thomson Reuters Eikon, and the sample was selected using a purposive sampling technique.

Findings: The study’s results indicate that ESG and External Assurance have a negative impact on Company Performance, as indicated by Tobin’s Q, with coefficient values of -0.013 and -0.214. However, neither does it show a significant influence when measured by ROA. Furthermore, External Assurance influences the relationship between ESG and Company Performance (Tobin’s Q) with a coefficient value of -0.002. Still, it does not affect the relationship when ROA is used as a measure of Firm Performance.

Novelty/Value: This study contributes to the current literature by providing empirical evidence on the moderating effect of External Assurance on the relationship between ESG and Firm Performance within the ASEAN-5 countries, incorporating two performance metrics.

Sustainable Capital Budgeting: Assessing Long-Term Effects Beyond Profitability

Nurfitriani Nurfitriani — 2025-06-30

Purpose: This research seeks to create and implement a multidimensional scoring mechanism for assessing sustainability initiatives across several sectors. The research aims to transcend conventional financial measurements by incorporating economic, environmental, social, and governance (EESG) factors, thereby providing a more comprehensive framework for project evaluation.

Method: This study employs a literature-based conceptual framework and a composite indicator methodology to create weighted score matrices for three separate case studies: a carbon retrofit program, a regional water infrastructure enhancement, and a circular packaging business. Each case is assessed using twelve indicators and displayed on radar charts to show performance profiles and strategic trade-offs.

Findings: The results indicate that each project excels in different areas, highlighting the need for evaluations to consider the situation. The carbon retrofit argument is strong in terms of the environment and governance, while the water infrastructure project is balanced and has a big social impact. The circular packaging project earns high marks for environmental innovation and community engagement, despite not generating as much revenue. Radar charts are a good way to show these profiles, which helps with clear decision-making and comparing different sectors.

Novelty/Value: This study advances theory by transforming EESG dimensions into a versatile, reproducible framework. In practice, it provides individuals involved in sustainability planning, investing, and policymaking with a tool to aid their decision-making. The model can be applied across various industries and locations, making it a versatile tool for open evaluation that focuses on driving positive change in line with global sustainability goals.

Financial Literacy, Religiosity, and MSME Compliance with Sharia Financing: Does Mental Accounting Matter?

Ai Netty Sumidartiny — 2025-06-30

Purpose: This study examines the effect of Sharia financial literacy and religiosity on micro, small, and medium enterprises’ (MSMEs) compliance with Sharia financing contracts. In particular, it explores the mediating role of mental accounting in shaping contract adherence.

Method: The research employed a quantitative survey design with 100 MSMEs under Perumda Pasar Jaya Jakarta that had participated in Sharia financing for at least one year. Data were collected through structured questionnaires and complemented with qualitative interviews. Structural Equation Modeling– Partial Least Squares (SEM-PLS) was applied to test direct and mediating effects.

Findings: The results demonstrate that both Sharia financial literacy and religiosity exert positive and significant effects on MSMEs’ compliance with Sharia financing contracts. However, the mediation analysis reveals that mental accounting does not significantly mediate these relationships, suggesting that while entrepreneurs understand and value Sharia principles, limited financial buffers and urgent liquidity needs prevent them from consistently applying structured accounting practices. Qualitative evidence confirms that many MSMEs mix business and personal funds, rely on fluctuating cash flow, and occasionally delay repayment despite strong religious motivation.

Novelty/Value: Unlike in conventional finance, where mental accounting is often framed as a cognitive bias, in Islamic finance, it can function as a constructive form of self-control. By separating accounts for obligatory payments, including zakah and debt repayment, MSMEs with relatively high religiosity treat financial discipline as part of their religious duty. At the same time, Islamic financing practices grounded in ukhuwah and maslahah provide flexibility when liquidity constraints occur, making mental accounting a unique and contextually embedded mechanism for SMEs.