The Effect of Environmental Management Accounting on Profitability, with Firm Size as a moderating variable at coal companies in Indonesia

Abstract

ABSTRACT : This study aims to examine and analyze the effect of Environmental Management Accounting, proxied by Eco-Efficiency, on Profitability, with Firm Size as a moderating variable. The main focus of this research is to understand how environmental management efficiency contributes to financial performance and how organizational scale influences this relationship in high environmental risk industrial sectors. The population of this study comprises energy and mining sector companies listed on the Indonesia Stock Exchange (IDX) for the 2020–2024 period. Using a purposive sampling method, a sample of 9 companies with a total of 45 observations over 5 years was obtained. The data analysis technique used is panel data regression with a Moderated Regression Analysis (MRA) model through the Fixed Effect Model (FEM) approach. The results show that Eco-Efficiency has a positive and significant effect on Profitability. This indicates that a company's ability to minimize environmental impact through resource efficiency can drive operational cost savings and increase profits. Conversely, Firm Size was found to have no direct effect on Profitability. A crucial finding in this study demonstrates that Firm Size acts as a negative moderator that weakens the effect of Eco-Efficiency on Profitability. This confirms the phenomenon of diseconomies of scale, where bureaucratic complexity and high compliance costs in large companies tend to erode the economic benefits of environmental efficiency practices. These results provide implications for the management of large companies to restructure administrative costs so that the implementation of green strategies can deliver optimal financial impact.