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THE EFFECT OF MEDIA COVERAGE ON ENVIRONMENTAL
DISLCOSURE ON LISTED COMPANY 2014-2016 PERIOD
(Undergraduate Thesis)
By
DEONESIA LIBERTY G.
ECONOMICS AND BUSINESS FACULTY
UNIVERSITY OF LAMPUNG
BANDAR LAMPUNG
2019
ABSTRACT
THE EFFECT OF MEDIA COVERAGE ON ENVIRONMENTAL DISCLOSURE ON
LISTED COMPANY 2014-2016 PERIOD
By
Deonesia Liberty G.
This study aims to analyze the effect of media coverage on environmental disclosure on
sustainability report by using content analysis method. The empirical approach followed in
the study involved listed companies on BEI who issued sustainability report from 2014-2016
period. The result shows all of variables independent which are media coverage and negative
media coverage does not have positive effect on environmental disclosure.
Keywords: Media Coverage, Environmental Disclosure, Finnancial Report,
Sustainability Report.
THE EFFECT OF MEDIA COVERAGE ON ENVIRONMENTAL
DISCLOSURE ON LISTED COMPANY 2014-2016 PERIOD
By
DEONESIA LIBERTY G.
(An Undergraduate Thesis)
Submitted for Partial Fulfilment of The Requirements
For The Bachelor of Economics
In
Accounting Department
Faculty of Economics and Business, University of Lampung
ECONOMICS AND BUSINESS FACULTY
UNIVERSITY OF LAMPUNG
BANDAR LAMPUNG
2019
BIOGRAPHY
The author was born in Bandar Lampung on October 09th
, 1996 with full name
Deonesia Liberty Gildamurti as the older child of 2 siblings. Her father’s name is
Mr. Paulus Dwi Septyo P. and her mother’s name is Mrs. Maria Regina Rini R.
The younger sister’s name Virgilia Rajendra Ganeshamurti. The author completed
her kindergarten education at Taman Kanak-Kanak (TK) Xaverius Way Halim in
2002, continoued and graduated from SD Xaverius 3 Bandar Lampung in 2008.
Took the junior high school education in SMP Xaverius 4 Bandar Lampung, and
graduated in 2011. The author completed the senior high school education in
SMA Xaverius Bandar Lampung, and graduated in 2014.
After graduated from senior high school, she continued her study in University of
Lampung with accounting majority. In second year she selected to be part of
International Class, and got the scholarships by JASSO (Japan Student Service
Organization) to joined the Asian Cooperative Program (ACP) in Japan that was
run by Kansai University of Internastional Studies (KUIS) Japan and University
Utara Malaysia (UUM) in 2016.
During the university life, she joined AIESEC (Association Internationale des
Etudiants en Sciences Economiques et Commerciales). Built an organizational
career from staff to be manager, and became an organizing committee in many
project such as national seminar called Youth Can Do 2.0. Untill she being elected
to be vice president of Incoming Exchange Program in 2017. She learned how to
do a team work, supplied and manage the human resources within the
organization, and did her best to fulfilling the needs of organizations.
DEDICATION
Puji Syukur
Praise be to Allah Bapa for all the grace, blessings and grace so great to the
author.
I dedicate this thesis to:
My dear parents, Mr. Paulus Dwi Septyo P. and Mrs. Maria Regina Rini R.
Incomparable thanks to Papa and Mama who always give endless prayer, useful
advice, strength in all conditions, and always give support for my ideals. May God
always provide protection in the world and in the Hereafter for my beloved
mother and father.
My dear sister, Virgilia Rajendra Ganeshamurti.
Thank you for all motivations, the joy, laughter, love, understanding and support
for me.
My whole family and friends who always give encouragement, prayer, and
endless support.
My Almamater, University of Lampung.
MOTTO
“He gives power to the weak and strength to the powerless”
(Isaiah 40:29)
“Progress is made by treal and failure; the failures are generally a hundred times
more numerous than the successes; yet they are usually left unchronicled”
(William Ramsay)
“If you keep doubting about yourself, then how are you going to survive in this
world? Look at the mirror and tell yourself that you are doing well”
(Kang Young Hyun)
“Don’t compare your life to others. There’s no comparison between the sun and
the moon, they shine when it’s their time”
(Deonesia Liberty G.)
ACKNOWLEDGEMENT
Puji Syukur, praise the presence of Allah SWT who has bestowed his grace and
guidance so that the writer can complete the thesis with the title “ The Effect of
Media Coverage on Environmental Disclosure on Listed Company 2014-2016" as
one of the obligations to obtain a Bachelor of Economics degree at the
Accounting Department Faculty of Economics and Business University of
Lampung.
On this occasion the authors would like to thank all those who have provided
guidance, support, and assistance during the process of preparation and
completion of this thesis. In particular, the authors would like to thank:
1. Prof. Dr. H. Satria Bangsawan, S.E., M.Si. as the Dean of Faculty of
Economics and Business University of Lampung.
2. Dr. Farichah, S.E., M.Si., Akt. as Chairman of Accounting Department
Faculty of Economics and Business University of Lampung
3. Mrs. YuztityaAsmaranti, S.E., M.Si., Akt. as the Secretary of Accounting
Department Faculty of Economics and Business University of Lampung.
4. Prof. Dr. Lindrianasari, S.E., M.Si., Akt. as Chief Examier who always
have time to provide great suggestions and advices, motivates the author to
finish the undergraduate thesis.
5. Mrs. Susi Sarumpaet, S.E., M.B.A., Akt., Ph.D as Chief Advisor for the
willingness to give time, guidance, direction, input with patience during
the process of completion of this thesis.
6. Mrs. Dewi Sukmasari, S.E., M.Si., CA. as Co-Advisor for the willingness
to give time, direction, motivation with patience during the process of
completion of this thesis.
7. Dr. Tri Joko Prasetyo, S.E., M.Si., Akt., Dr. Agrianti Komalasari, S.E.,
M.Si., Akt. And Dr. Usep Syaifudin, S.E., M.AK. who has provided a lot
of help, direction and advice in the process the author goes through in the
Pendadaran exam.
8. All Mr / Mrs Lecturers and employees in the Accounting Department for
knowledge, learning, support and services and assistances that has been
provided.
9. Both of my beloved parents Mr. Paulus Dwi Septyo Prajarto and Mrs.
Maria Regina Rini R. who have given the most sincere love, endless
prayer, support and advice in the achievement of my ideals. Thank you for
all the never ending faiths and infinite love.
10. My dearest sister, Virgilia Rajendra Ganeshamurti. Thank you for all the
motivations, love, understanding, prayer, and laughter all this time since
we were kids.
11. My big family, who cannot be mentioned one by one. Thank you for your
prayers, support, motivation and advice given.
12. My Dearest Kurnia Dessy, Niken Angraini, Intan Crusita, Ajeng Eka,
Rebhecca Paramitha, Riska Juliana, Rosa Ramadhani, Regita Dewi. Thank
you for your willingness to pray, companion, encourage, entertain, and
help the process of completion of this thesis. Thanks for every joke,
happy, tears, and emotion. And thank you for changing me to a better
person. You guys are special.
13. My Operose team, Hani Taqiyakin, Fahremi, Olinda, Bismo Jiwo, Andwi
Natasa. Thank you so much guys, for all of the things you gave to me, the
sweet memories. It’s so priceful.
14. My EB team, Vandea Rizky, Kurnia Dessy, Devi Yahya, Murtika Sari,
Adriani, Ayu Budi, Ratih Dinar. Thank you so much for did a great job
together, we made it.
15. My Aloha Team, Isabella, Abi Benjamin, Alvira Chairunnisa, Clodina
Dacosta, Nyiayu Vannisa, Rainy Altinci, Ratih Dinar, Febby. Thank you
so much, you tought me a lot
16. All my AIESEC mates, Cindy Caroline, Rachma Utari, Nr. Khairani,
Devita, Kurnia Indy, Rori M., Nizar Syahputra that couldn’t be maention
one by one. Thank you so much, you tought me a lot.
17. Nabella Ananta, Avelino Novanda, Chrisella Elynda, Yohanes, Devin, Adi
Pranata, Edbert Darius, Gretta Gracesia, Hendrik, Josa Wijaya, Kevin
Holianti, Hediati, Nadya Puspa my junior high school buddies. Thank you
so much for being loyal to me until now, love you guys.
18. My friends Sekar Arum, Probo Sutejo, Tia Utari, Intan Wulandari, Lupita
Indah. Thank you so much for your cooperation when we were in Japan.
We have a sweet memories there, wish we could go to Japan again.
19. My accounting friends, Reggy Indrawan, Iqbal, Indra, Bella, Reka,
Nabilla, Winda, Syaharani, Dicky, Arini Mega, Mutiara, Katrine, Ninda,
Rachel, Tika, Ismatul Umi, Bipa, Dani, Soni, Hafin, Aryo Bimo, Elsa,
Lidyasari. Thank you for all the support, prayer, passion, motivation, and
cheerfulness during the lecture.
20. My International-Class 2014 of Accounting’s friends, Sekar Arun, Dhissa
Miranthi, Fanisya Alya, Amirul M, thank you for all your supports.
The last, for all the help and support, the authors would like to say thank you, may
you all get a reply from Allah SWT. The author realizes there are still many
shortcomings in the process of writing this thesis; the authors expect a criticism or
suggestion that can help the author in improving to be better.
Thus, hopefully this paper can provide benefits for those who read it.
Bandar Lampung, May 25th
, 2019
Author,
Deonesia Liberty G.
TABLE OF CONTENTS
Page
COVER PAGE........................................................................................................ i
ABSTRACT ......................................................................................................... ii
TITLE PAGE ........................................................................................................ iii
APPROVING PAGE ............................................................................................ iv
ADMITTING PAGE ............................................................................................. v
STUDENT THESIS STATEMENT .................................................................... vi
BIOGRAPHY ...................................................................................................... vii
DEDICATION ...................................................................................................... ix
MOTTO......... ......................................................................................................... x
ACKNOWLEDGEMENT ................................................................................... xi
LIST OF CONTENT ......................................................................................... xvii
LIST OF TABLE ................................................................................................. xx
LIST OF FIGURE .............................................................................................. xxi
LIST OF APPENDIX ........................................................................................ xxii
CHAPTER I PRELIMINARY
1.1 Background ...................................................................................................... 1
1.2 Problem Formulation ....................................................................................... 4
1.3 Research Purpose ............................................................................................. 5
1.4 Benefits of Research ........................................................................................ 5
CHAPTER II LITERATURE REVIEW
2.1 Theoretical Basis .............................................................................................. 6
2.1.1 Legitimacy Theory ............................................................................... 6
2.1.2 Agency Theory ..................................................................................... 7
2.1.3 Stakeholder Theory ............................................................................... 8
2.1.4 Disclosure ............................................................................................. 9
2.1.5 Environmental Disclosure .................................................................. 10
2.1.6 Global Reporting Initiative ................................................................. 11
2.1.7 Media Coverage .................................................................................. 12
2.1.8 Company Size ..................................................................................... 12
2.1.9 Profitability ......................................................................................... 13
2.1.10 Leverage ............................................................................................. 14
2.2 Previous Research ......................................................................................... 15
2.3 Research Framework ..................................................................................... 18
2.4 Hypothesis Formulation ................................................................................ 20
2.4.1 The Effect of Media Coverage on Environmental Disclosure ...............
............................................................................................................ 20
2.4.2 The Effect of Negative Media Coverage on Environmental Disclosure
............................................................................................................ 21
CHAPTER III RESEARCH METHOD
3.1 Population and Sample .................................................................................. 22
3.1.1 Population ........................................................................................... 22
3.1.2 Sample ................................................................................................ 22
3.2 Types and Data Source .................................................................................. 22
3.3 Operational Variable ...................................................................................... 23
3.3.1 Dependent Variable ............................................................................ 23
3.3.2 Independent Variables ........................................................................ 26
3.3.3 Control Variable ................................................................................. 28
3.4 Data Analysis Method .................................................................................... 29
3.4.1 Descriptive Statistic Analysis ............................................................. 29
3.4.2 Classic Assumption Test .................................................................... 29
3.4.2.1 Normality Test ....................................................................... 29
3.4.2.2 Multicolinerarity Test ............................................................ 30
3.4.2.3 Heteroscedasticity Test .......................................................... 30
3.4.2.4 Autocorrelation Test .............................................................. 30
3.4.3 Multiple Regression Test .................................................................... 31
CHAPTER IV RESEARCH RESULT AND DISCUSSION
4.1 Population and Sample .................................................................................. 34
4.2 Descriptive Statistic ....................................................................................... 35
4.2.1 Exist Media ......................................................................................... 35
4.2.2 Positive Media .................................................................................... 35
4.2.3 Negative Media ................................................................................... 36
4.2.4 Neutral Media ..................................................................................... 36
4.2.5 Firm Size............................................................................................. 36
4.2.6 Return on Asset .................................................................................. 36
4.2.7 Leverage ............................................................................................. 37
4.2.8 Environmental Disclosure .................................................................. 37
4.3 Classic Assumption Test ................................................................................ 37
4.3.1 Normality Test .................................................................................... 37
4.3.2 Multicollinearity Test ......................................................................... 39
4.3.3 Heteroscedasticity Test ....................................................................... 42
4.3.4 Autocorrelation Test ........................................................................... 43
4.3 Hypothesis Testing ........................................................................................ 45
4.4.1 Coefficient of Determination (R2) ....................................................... 46
4.4.2 Simultaneous Significance Test (Statistic F Test) .............................. 48
4.4.3 Individual Parameter Significant Test (Statistic T Test) .................... 49
4.5 Result and Analysis Discussion..................................................................... 51
4.5.1 Environmental Disclosure and Media Exist ....................................... 51
4.5.2 Negative Media Coverage and Environmental Disclosure ................. 53
CHAPTER V CONCLUSIONS AND RECOMMENDATION
5.1 Conclusions .................................................................................................... 54
5.2 Limitation of Research ................................................................................... 55
5.3 Suggestions .................................................................................................... 55
REFERENCES
APPENDIX
LIST OF TABLE
Table Page
Table 2.1 Emphirical Studies of Environmental Disclosure .............................. 15
Table 4.1 Research Sample Companies Listed on IDX ..................................... 34
Table 4.2 Descriptive Statistic ............................................................................ 35
Table 4.3 Multicollinearity Test Regression Model 1 ........................................ 40
Table 4.4 Multicollinearity Test Regression Model 2 ........................................ 41
Table 4.5 Autocorrelation Test Regression Model 1 .......................................... 44
Table 4.6 Autocorrelation Test Regression Model ............................................ 45
Table 4.7 Coefficient Determination Test Result Regression Model 1
............. .............................................................................................. 47
Table 4.8 Coefficient Determination Test Result Regression Model 2
............. .............................................................................................. 47
Table 4.9 Statistic F Test Result Regression Model 1 ........................................ 48
Table 4.10 Statistic F Test Result Regression Model 2 ........................................ 49
Table 4.11 Statistic T Test Result Regression Model 1 ........................................ 49
Table 4.12 Statistic T Test Result Regression Model 2 ........................................ 50
LIST OF FIGURE
Figure Page
Figure 2.1 Research Framework............................................................................ 19
Figure 3.1 Environmental Disclosure Index .......................................................... 24
Figure 4.1 Normality Test Result Regression Model 1 ......................................... 38
Figure 4.2 Normality Test Result Regression Model 1 ......................................... 39
Figure 4.3 Heteroscwdasticity Test Result Regression Model 1 ........................... 42
Figure 4.4 Heteroscwdasticity Test Result Regression Model 1 ........................... 43
LIST OF APPENDIX
Appendix
Appendix 1 : List of Environmental Disclosure Index
Appendix 2 : List of Company Issued Sustainability Report 2014-2016
Appendix 3 : List of Media Exist Score
Appendix 4 : List of Company’s Size Score
Appendix 5 : List of Company’s ROA Score
Appendix 6 : List of Company’s Leverage Score
Appendix 7 : List of Company’s Environmental Disclosure Score Index
Appendix 8 : Descriptive Statistic Result
Appendix 9 : Normality Test
Appendix 10 : Multicollinearity Test Result
Appendix 11 : Heteroscedasticity Test Result
Appendix 12 : Autocorellation Test Result
Appendix 13 : Coefficient Determination Test Result
Appendix 14 : Statistic F Test
Appendix 15 : Statistic T Test
1
CHAPTER I
PRELIMINARY
1.1 Background
Global warming has become a public issue that is being taken care of at this time.
Attention are caused due to the occurrence of climate changes that has led to the
emergence of a variety of rules to save the environment. In the world of business
regulation which aims to save the environment has also been presented globally.
The companies are contribute in the field of economy, but also help to solve
problems related to the risks and threats of sustainability in the sphere of social
relations and the environment.
The daily quoted from www.mongabay.co.id (environmental news sites) in April
2018, WALHI (Wahana Lingkungan Indonesia) stated that there has been
monopoly activities in the management of natural resources resulting in
Indonesia. The monopoly activity of the natural resources that are not
environmental friendly impact on loss of public access against a source of
livelihood. WALHI also noted there are 302 Agrarian environment and conflict
occurs during 2017, as well as 163 people in the criminalization in 13 provinces,
namely West Sumatera, Aceh, Riau, Jambi, Bengkulu, Lampung, Jakarta, West
2
Java, Central Java, East Java, East Kalimantan, Sulawesi South, and Papua. This
situation makes Government asked the company to make a report of social
responsibility to reduce the environmental damage that has occurred.
Environmental accounting is one of the elements that contribute to corporate
governance. The use of environmental accounting concept for companies
encourage the ability to minimize the environmental problems faced.
Environmental accounting can assist companies to improve the efficiency of the
management by conducting research activities from the viewpoint of
environmental costs and benefits. Environmental accounting can be used to
manage and communicate with the community to increase the amount of relevant
information that was created for the stakeholders who need it. The companies
need to disclose information on the accounting reports at the end of the year.
A range of guidelines on environmental disclosures have been applied in various
countries include ; The Securities and Exchange Commision (SEC) in the United
State published the requirements regarding business risk and the climate
exchange, United State Environmental Protection Agency (US EPA) published
Toxic Release Inventory (TPI) (EPA 2013) data, the Global Reporting Initiative
(GRI) issued guidelines on reporting of environmental disclosure, and
International Organization for Standarization (ISO) set the ISO 14001
environmental management system. Indonesia has had laws regulating the
environment. Constitution No.40 year 2007 article 74 paragrraph 1 sets the
company’s obligations in the exercise of social and environmental responsibility
3
in the conduct of its business. Articles 66 paragraph 2 c requires all corporation to
report on the implemntation of social and environmental responsibility in the
financial statements.
The company has a commitment to maintain environmental sustainability around
the dwelling community that made the company's area of operation.
Environmental disclosure is a voluntary disclosure. This means companies have
the freedom to make or not a sustainability report. Sustainability report is the
practice to measure and disclose the company activities aims to support
sustainable development also used to describe the reporting of economic,
environmental and social impact. Sustainability report is also used by government
institutions to make an assessment of the top performing companies on the
environment in every reporting organization. ISRA (Indonesia Sustainability
Report Award) revealed that in 2005 it was only one company that makes reports
on social and environmental responsibility . Until to 2012 there are 40 companies
that have made social responsibility report. This increase is line with the legal
basis from the Government that requires company to disclose their environmental
and social responsibility report.
Companies need to show the reputation that complies with the expectations of the
public to acquire a legitimacy. Communities assess the good or the bad reputation
of a company through the media. Media can create public awareness to legitimize
financial status and performance of the company. In addition, the company need
to take charge of environmental sustainability and the community around the
4
place of the company operate. Companies that have a bad image will reveal more
information to improve news coverage in the media. Through the report on
sustainability, the company can display performance of economic, social, and
environmental issues that will affect their image . The media acts as a projection
to describe some aspects of the firm and examine relationships with
environmental disclosure (ED).
Research conducted by Prasetiani (2014) stated that the media coverage
significantly affects the quality of the disclosure, which coincided with media
research Rupley (2012). According to Rupley (2012) negative publicity can lead
to changes in the overall strategy for corporate environmental disclosure. But
research is not in line with the Solikhah et al., (2016) claims that media coverage
had no effect on the quality of the environment . This research uses the company
size, profitability, and leverage it as a control variable. The control variables
required as controllers so that influence the dependent variable against the
independent variable is not affected other factors not examined. This research
took samples of the companies that publishes sustainability report listed in BEI in
2014-2016. This research contrasts with previous studies because it uses variables
and periods of the study are different. Based on the above description, the tittle of
this research is “The Effect of Media Coverage on Environmental Disclosure
on Listed Company 2014-2016 Periods”
1.2 Problem Formulation
This research will examine about the effect of media coverage on environmental
disclosure. The research questions formulated;
5
Is there any effect of media coverage on evironmental disclosure ?
1.3 Research Purpose
The objective of this research is ;
To test and obtain empirical evidence on the effect of media coverage on
environmental disclosure.
1.4 Benefit of Research
As for the uses which can be obtained from this study;
1. For stakeholders, provide a new discourse to consider in making decisions that
are not glued to the monetary measurement
2. For the company, contribute thoughts about the importance of disclosure in
the annual report of the environmental companies or in separate reports from
annual report (sustainability report) and as a consideration to create the
company's policy enhance the awareness of the environment and corporate
responsibility.
3. For the community, provide the stimulus as a social control for corporate
behavior and increase public awareness of the rights that must be obtained
4. Contribute to the development of management accounting in particular
accounting value because it examines the influence of media coverage effect
to the evironmental disclosure in the annual report or sustainability report.
6
CHAPTER II
LITERATURE REVIEW
2.1 Theoritical Basis
2.1.1 Legitimacy Theory
Legitimacy is a common perception or assumption that the actions of an entity,
and in some systems or socially constructed norms, values, benefits (Suchman,
1995). The company will announce voulntarily any achievements seen in
accordance with the expectations of the public. There is a social contract that
exists between the company and the community. The company ensures that its
operations comply with the restrictions and social norms, obtain the consent of the
public that it's legitimate business activities. The expectations created by the
public will not be permanent, the company must always responds to the
environment in which it operates.
Companies need to take actions including give information about environmental
disclosures related to stakeholders by disclosure, so that companies can gain
legitimacy from the surrounding environment. Companies will consistently
evaluate when conduct the operation. Environmental reporting is done by the
voluntarily as a form of corporate response in the face of social pressure.
Stakeholders also expect the actions taken by the company legitimacy through
7
disclosure so they can have some knowledge about the company's environmental
problems (Rupley et al., 2012). This information that will affect the decisions
taken by stakeholders. Company managers will trying to attract stakeholders to
take a role as supplier of vital resource required to make company survive, then
managers will pursue strategies to ensure the sustainability of the resources owned
(Deegan, 2002).
2.1.2 Agency Theory
Agency theory is the assumption that explains the relationship between the
principal and the agent in the business. Agency theory is concerned with solving
problems that may occur in the agency relationship because the target does not
match or have a different level of aversion towards risk. The most common agent
relationships in finance occurred between the shareholders (the principal) and
executives of the company (the agent). According to Anthony and Govindarajan
in Siagian (2011:10), the concepts of agency theory is the relationship between
the perpetrator and contractual agents. Contractual relationship that exists between
a principal and an agent is created because the information have to be delivered.
Agents are being hired to perform tasks related to the interests of the principles
and delegate authority to make decisions.
The submission of information that exists between principal and agent can give an
asymmetry of information. This information asymmetry will cause a conflict. This
conflict occurs because the principle has a minimum knowledge about the
company and the agent interacts directly with the company's activity so that an
agent has a more complete information about the company, managed by them.
8
These agents have a tendency to commit fraud to meet his personal interests. To
reduce conflict, companies can conduct disclosure. Shareholders (the principle)
can be asked to do the disclosure including environmental matters.
Disclosure of information about the environment plays an important role to reduce
an asymmetry information, which pose a potential conflict of interest between the
company's shareholders. Disclosure of environmental has a goal to build a
positive image to the company so as to gain the attention of the community. The
existence of this concept is company should persuade shareholders that company
can mange corporate governance properly. This action aims to reduce potentially
fraud to reach personal interest. Corporate environmental disclosure is a signal
that can distract shareholders from earnings manipulation.
2.1.3 Stakeholder Theory
Stakeholder theory says that the company as an entity not only operates for the
benefit of their own but rather must provide benefits to stakeholders such as
shareholders, creditors, Governments and communities. The existence of a firm is
strongly influenced by the support provided by the stakeholders surrounding the
company. Stakeholders can control and have the ability to affects the use of
economic resources that are used by the company. This theory emphasizes that
corporate accountability not just economic or financial performance.
The company considered a stakeholder if has three attributes namely power,
legitimacy, and interests (Rudito, 2004). Deegan (2004) said that stakeholders
have the right to obtain information concerning the activities of enterprises which
can affect decision making by them. Stakeholders also have the choice to use or
9
not the information provided by the company. Environmental disclosure disclosed
by company as on of information not just focus on financial statement.
Environmental disclosures made by the company is a strategy to fulfill the desires
of stakeholders. It because of the better environmental disclosures made by the
company, then the stakeholders will gain a higher satisfaction so it can support
companies in conducting operational activities and increase performance in
achieving profits.
2.1.4 Disclosure
The disclosure is the delivery of information. This information provides a more
complete explanation about the financial position, operating results, corporate
policies, and financial health (Siegel and Shim, 1994). The information disclosed
in the financial statements consist of quantitative information and qualitative
information that can be used by users of the report. Disclosure of information in
the financial statements can be divided into two; mandatory disclosure and
voluntary disclosure. Mandatory disclosure is a disclosure that is required in the
financial statements while the voluntary disclosure is no disclosure, in other words
the company has freedom to report or not the information to the public.
The company did a voluntary disclosure to boost credibility because through
broader disclosure, companies can reach out and help investors to know
company’s business strategy. The company will conduct disclosure beyond what
was required, as it will lower the cost of capital and compete competitively with
other companies.In this study, environmental disclosure included in voluntary
disclosure because companies are not required to create a sustainability report,
10
which contained information on the social, economic and environmental
performance of a the company.
2.1.5 Environmental Disclosure
Disclosure when linked to financial statements means to give the data and
information in a clear and can describe exactly the economic circumstances that
influence the results of the company operation. Environmental information (EI)
must help the society and firms to recognize the impact on the environment of
business decisions (Milne and Patten, 2001; Kuk et al., 2005). The disclosure of
the information contained in the financial statements of the company shall be used
for economic decision-making and does not confuse the users of the financial
statements (Chariri Elbaradei and,2000). The purpose of disclosure is to enliven
the present information necessary to achieve the purpose of financial reporting
and to serve a variety of parties that require such financial statements. According
to Sudaryanto (2011) companies have a tendency to disclose all information that
exists inside in order to keep its existence.
Environmental disclosure is the disclosure of information on environmental
management activities in the past, present, and future (Bethelot, 2002). This
information can be obtained by various means such as quantitative statement, the
form of financial statements and footnotes. Environmental disclosure include
things like the operation cost to facilitate pollution control equipment then and
now. Disclosure of environmental action are also related to a specific incident or
pollution such as emissions, toxic waste, and oil spills (Al Tuwaijri, et al., (2004).
PSAK No. 1 in Indonesia shows that the company is given the freedom to express
11
or not environmental information in financial reports. Although including
disclosure on a voluntary basis, but the awareness of companies to disclose
information activities a line with the awareness of Corporate Social
Responsibility (Sudaryanto,2011)
2.1.6 Global Reporting Intiative (GRI)
Global Reporting Intiative is an organization that provides a framework that can
be adopted by all types of organizations throughout the world. GRI Sustainability
Reporting Framework developed to measure the performance of companies in the
field of economic, environmental, social, and governance. Thus, framework
developed by the GRI is more transparent and thorough so it can build the trust of
stakeholders. Purpose of the GRI is to make companies, investors, Governments,
and public can understand more about the process of improvement to achieve the
sustainability.
GRI standard disclosures have sustained so the information can be disclosed in
identification are relevant and material to the users of the financial statements.
Some of the standards developed by GRI disclosure are ;
a. Strategy and Profile; disclose to introduce the company, such as profile,
strategy, and governance.
b. Management approach ; disclose bring up a topic to understand the
organization more spesific.
c. Performance indicator ; indicators that bring up the information about
economy performance, the environment and social enterprises that can be
compared.
12
2.1.7 Media Coverage
Media coverage can be used to build a public opinion regarding the activity
reported. The media made by the community as a controller for the company in
performing its business activities in accordance with legitimacy. The community
requires the media to inform how important environmental issues. According to
Deegan, et al., (2002) media coverage beginning with the importance of the issue
in the opinion of the community for the negative issues, as for media coverage,
positive and important issues for the public seems increasingly together. Brosius
and Kepplinger (1990) found that the intensity of the media coverage will take
effect on the community, although it is not yet clear what is required by the media
coverage. The results of the research conducted by the Dearing and Rogers (1996)
stated that the negative issues are considered society as something important. This
shows that media coverage with a negative issues have an impact for the
community greater than positive issues. The presence of these negative issues will
lose legitimacy in the eyes of public company.
Companies need to provide information to the public about the actions, activities,
and operations that are performed to gain legitimacy. Legitimacy is seen as a form
of interaction between the company's stakeholders. Media coverage information
will give impact on the legitimacy of a company. By reporting the entire activity
of the company on the web or in a particular news portal, the company will have a
reputation to rise (Staden,2011)
2.1.8 Company Size
13
Larger companies have access to a wider variety of sources to obtain funding so
that it will obtain a loan from a lender with ease. The larger company have more
chance to win the competition and survive in an industry. According to Hackston
and Milne (1996) stated that the size of the company can be determined from the
number of employees, total assets, total sales, or ranking index. The company's
size can affect the extensive disclosure of information in the financial statements.
Generally the larger companies will reveal more information than small
companies. Size of company can increase investor confidence, because a larger
company then known by the public and the investors will be increasingly easy to
obtain information about the company. Size can be shown through the company's
total assets which can affects the extent of environmental disclosure.
2.1.9 Profitability
Profitability is a ratio that can be used to measure the return on investment of an
enterprise. This ratio illustrates the effectiveness of management as a whole is
described with great small profitability gained in relation to the sale or
investment. The higher ratio of the profitability describes the ability of the high
gain by company. The company shows a comparison between the profitability of
earnings with assets or capital used to generate those profits, in other words the
higher company profitability will be increase the greater disclosure done by
company (Hidayat, 2002)
Donovan and Gibson (2000) stated that based on the legitimacy theory, one
argument between profitability and the level of responsibility when companies
14
have a higher rate of profit, the company (management) assumes no need to report
things that can interfere with information about the company's financial success.
Some kind of ratio of profitability according to Hanafi (2009) divided into three
namely; Return on Assets (ROA), Return on Equity (ROE), the Net Profit Margin
(NPM). This research uses only ROA to measure the level of company
profitability in the environmental disclosure. ROA is a form of profitability ratios
that can be used to measure the ability of funds invested in the assets used in the
operations of the company to turn a profit. According to Anthony and
Govindarajan (2002) argues for the ROA is the company's financial ratios related
to aspects of earnings and profitability. The larger ROA, owned by the company
the more efficient use of assets by the company to operate so that it can enlarge
profits. The great profit will attract investors because the company has a high rate
of return.
2.1.10 Leverage
The level of debt is a comparison between the proportion of total debt with equity.
This ratio indicates the company's ability in the form of capital that can be used to
satisfy the entire obligation of the company. The greater debt levels show the
company's capital is largely financed from debt. So the creditors were demand the
presence of information to guarantee the debts that have been given to the
company. Jensen and Meckling (1976) suggested there is potential for transfer
wealth from the debtholders to shareholders and company manager against debt
so high that raise the cost of the Agency are also high.
15
Leverage is used instead to finance company assets, capital, as well as bearing the
brunt of remains but also to gain income. Ratio of liquidity aims to find out the
position of the other party liability against the company, assessing the balance
between fixed assets with capital, and knowing the magnitude of the influence of
the company's debt against the management of the assets. This ratio can be seen
how far the company financed debt or outsiders with the power company.
Companies that have a high leverage ratio will do social disclosure more broadly.
2.2 Previous Reserach
Here are the results of several similar studies that made the study materials are:
Table 2.1 Empirical Studies of Environment Disclosure
Researcher Title Variable Analysis
Method
Result
Susi
Sarumpaet
(2005)
The
Relationship
Between
Environmental
Performance
and Financial
Performance
of Indonesian
Company
Dependent :
Environmental
Performance
Independent :
Financial
Performance
Regressio
n Analysis
The study revealed
while financial
performance is not
significantly
associated with
environmental
performance,
company size, stock
listing and ISO 14001
are significantly
associated with
environmental
performance. This
finding also indicates
that the government
environmental rating
is highly consistent
with international
environmenatal
certification.
16
Peter M.
Clarkson,
Yue Li,
Gordon D.
Richardson,
Florin P.
Vasvari
(2006)
Revisiting The
Relation
Between
Environmental
Performance
And
Environmental
Disclosure :
An Empirical
Analysis
Dependent :
Environmental
Performance
Independent :
Financial
Performance
Content
Analysis,
multivariat
ed
regression
There is a positives
association between
environmental
performance, and the
extent of discretionary
environment
disclosure. The result
is consistent with the
predictions of the
economics based
voluntary disclosure
theory.
Lindrianasa
ri (2007)
Hubungan
Antara Kinerja
Lingkungan
Dan Kualitas
Pengungkapan
Lingkungan
Dengan
Kinerja
Ekonomi
Perusahaan Di
Indonesia
Dependent :
environmental
performance
Independent :
environmental
disclosure,
financial
performance
Multiple
regression
The environmental
performance is
positively and
significantly with
environmenatl
disclosure and also
economic
performance (debt to
equity ratio/DER,
Export, Ownership,
Margin and Age) is
positively associated
with environmental
performance and
environmental
disclosure but this
study found
insufficient statiscal to
accept second and
third hypothesis.
Dion van
de
Burgwal,
Rui Jose
Oliveira
Vieira
(2014)
Environmental
Disclosure
Determinants
in Dutch
Listed
Companies
Dependent :
Environmental
disclosure
Independent :
Company Size,
Industrial
Membership,
Profitability
Scorecard
content
analysis
This statistical tests
proved that the size of
the company and the
industry's influential
membership
significantly and
positively related to
the degree of
environmental
disclosure.These
17
results are consistent
with previous studies.
However, profitability
was not associated
with statistically
significant level of
environmental
disclosure.This may
be due to the impact
of the financial crisis
that arose in the year
2007/2008
Nurani
Prasetiani
(2014)
Pengaruh
Media dan
Struktur
Corporate
Governance
Terhadap
Kualitas
Environmental
Disclosure
Dependent :
Environmental
Dislosure
Quality
Independent :
Media
Coverage,
Corporate
Governance
Structure
Multiple
regression
Media coverage,
Board of
Commissioners,
independent, gender
diversity, the size of
the Board of
Commissioners of the
positive effect of the
quality of
environmental
disclosure, while the
negative effect of
institutional
ownership
significantly.
Febri Zaini
Aulia,
Linda
Agustina
(2015)
Pengaruh
karakteristik
perusahaan,
kinerja
lingkungan,
dan liputan
media terhadap
environmental
disclosure
Dependent :
Environmental
disclosure
Independent :
Characteristics
of the
company,
environmental
performance,
media
coverage
Multiple
regression
The test results
showed that the
company's size,
profitability,
environmental
performance and
significantly
influential media
coverage against
environmental
disclosure, but
leverage doesn't
influence on
environmental
disclosure
Badingatus Pengaruh Dependent : Multiple The industry's
18
Solikhah,
Arga
Mustika
Winarsih
(2016)
Liputan Media,
Kepekaan
Industri, dan
Struktur Tata
Kelola
Perusahaan
Terhadap
Kualitas
Pengungkapan
Lingkungan
Environmental
Dislosure
Quality
Independent :
Coverage of
the Media
Industry, the
sensitivity, the
structure and
corporate
governance
regression sensitivity, multiple
directorship, the size
of the Board of
Commissioners, the
size of the company,
and the positive effect
of the quality of ROA
disclosure
environment.Research
results also showed
negative influence
from the independent
Commissioner against
disclosure of
environmental
quality.The study also
provides evidence that
media coverage,
gender, diversity and
international
ownership has no
effect on quality of
environmental
disclosure.
2.3 Research Framework
This study uses environmental disclosure as the dependent variable that is the
variable that becomes the center of research. Media coverage is treated as
independent variables in this study. Company size, profitability, and leverage
become control variables in this study. Disclosure of environmental in this study
is described in three theories namely legitimacy theory, agency theory, and
stakeholder theory.
The social contract between the company and the local community makes the
company should pay attention to values and social norms in the conduct of
19
operations (theory of legitimacy). As a form of social contract fulfillment, the
company must disclose comprehensive information including information
environment as a corporate responsibility towards its stakeholders, namely the
community. Based on the stakeholder theory, the company operates not only have
a personal interest in profit but must provide benefits to stakeholders. Disclosure
of information on the environment can be used as a form of corporate
responsibility that the company does not only focus on personal interests.
According to agency theory, one way to reduce information asymmetry by
signaling to the principle of environmental disclosure so that the company can
increase shareholder confidence in its transparency
Figure 2.1
Research Framework
Environmental Media
Environmental Disclosure
MEDIA _ EXIST
POS_MEDIA
NEG_MEDIA
NEUT_MEDIA
Control Variable
SIZE
ROA
LEV
H1a(+)
H1b(±)
20
2.4 Hipothesis Formulation
2.4.1 The Influence of Media Coverage on Environmental Disclosure
Ashforth and Gibbs (1990) states that the legitimacy of the company can be
obtained with a variety of ways including by conducting communication with on
stakeholders. Sustainability report which contained three aspects namely financial,
social, and environment can be used as external attributes that can be used by
companies to influence the views of the community. This communication is in
line with legitimacy theory stating that the interaction of the company and its
stakeholders can reduce risk and build long-term stability by meeting the
expectations of stakeholders.
The media coverage that exists in the middle of the community more or less affect
the views of society in assessing something. The media will build public
awareness of the importance of corporate social responsibility. Similarly, the
existence of media coverage about the environment where a company operates.
Rupley (2012) stated that the media coverage about the environment influence the
environmental disclosures made by the company. Brosius and Kepplinger (1990)
also suggested that the intensity of the media coverage about certain issues
affecting voluntary disclosures made by the company. The information contained
in the media coverage may under the reputation of a company. The reputation can
be either good or bad corresponds to the information that is reported.
Based on that background, the first hypothesis in this research is;
H1a ; The media coverage positively affects environmental disclosure.
21
2.4.2 The influence of Negative Media Coverage on Environmental
Disclosure
Media information regarding certain issues can affect a company's reputation,
both positive as well as negative issues. This also had an impact on voluntary
disclosures made by the company. Rupley (2012) shows that there is a positive
relationship between negative media coverage and environmental disclosure.
Deegan et al., (2002) stated in his work that, negative issues about the
environment will affect and impact on the community greater than positive issues.
This happens because the public feels the company has broken the social contract
in accordance with the explanation of the theory of legitimacy. Negative media
coverage will make the company's reputation being bad, so it will be offset by the
disclosure of a better environment. To get the confidence back of the public
companies need to do a better environmental disclosure so that the negative issues
that are covered by the media does not appear in the middle of the community.
The company would appear more transparent and establish a good reputation in
public perception.
Based on this background, the second hypothesis in this study is;
H1b ; Negative media coverage positively affects environmental disclosure
22
CHAPTER III
RESEARCH METHOD
3.1 Population dan Sample
3.1.1 Population
The population in this research are the companies listed in BEI in 2014, 2015,
and 2016. These data are able to represent the condition of financial statement
listed company in Indonesia.
3.1.2 Sample
This research used to purposive sampling method to determine sample. Purposive
sampling is the selection of samples that meet a certain criteria. The criteria used
are:
1. Company listed in BEI 2014-2016
2. The company publishes annual report and sustainiability report on the
company's website.
3.2 Types and Data Sources
The type of data in this study are secondary data. In this research the secondary
data were obtained from www.idx.co.id and the official website of the company in
the form of annual report and sustainability report. Supporting data used in this
23
research in the form of official news portal such as; KOMPAS, Antara News,
WALHI, news on the company's official website, and Indonesia Sustainability
Report Award (ISRA). Data collection methods used in this study is content
analysis. The method of collecting research data through observation techniques
and analysis of their contents or messages from a text, content of various
writings, or document, then classified into several categories or groups depending
on the criteria that have been set.
3.3 Operational Variable
3.3.1 Dependent Variable
1. Environmental Disclosure
Before measuring the environmental disclosure, first looking for a sample of the
company that publishes the financial report and sustainability report in the
company's official website. After getting a sample in accordance with the criteria,
then conducted an analysis of the content to categorize the components that can
support environmental disclosure. Environmental disclosure is abbreviated into
ED. ED is the information disclosed in the company's annual report and
sustainability report related to the environmental activities of the company.The
index used in this research was Clarkson (2006) and as many as 45 GRI guideline
items. This index is used to measure the broad environmental disclosures made by
the company. The index items are classified in two categories; hard and soft
disclosure.
Hard disclosure can be used to assure stakeholders that the company has a
commitment to environmental performance. Hard disclosure focusing on the
24
company's ability in governance, management system relating to the shield cover
environment, corporate credibility in environmental disclosure, conservation
efforts and disclosure relating loads with the environment. While soft diclosure
reveal about the vision and strategy of the company. Furthermore, the soft
disclosure can be used to assess the environmental profile of the company's
disclosure and disclosure of environmental initiatives including employee
training, response to environmental accidents, and involvement in providing
scholarships and donate to the community.
Figure 3.1
Environmental Disclosure Index
Hard Disclosure Items
A1) Governance Structure and Management Systems
1. Existence of a Department for pollution control and/or management
positions for env. management
2. Existence of an Environmental and/or a Public Issues Committee in the
board
3. Existence of terms and conditions applicable to suppliers and/or customers
regarding env. practices
4. Stakeholder involvement in setting corporate environmental policies
5. Implementation of ISO14001 at the plant and/or firm level
6. Executive compensation is linked to environmental performance
A2) Credibility
1. Adoption of GRI sustainability reporting guidelines or provision of a
CERES report
2. Independent verification/assurance about environmental information
disclosed in the EP report/Web
3. Periodic independent verifications/audits on environmental performance
and/or systems
4. Certification of environmental programs by independent agencies
5. Product Certification with respect to environmental impact
6. External Environmental Performance Awards and/or inclusion in a
Sustainability Index
7. Stakeholder involvement in the environmental disclosure process
8. Participation in voluntary environmental initiatives endorsed by EPA or
25
Department of Energy
9. Participation in industry specific associations/initiatives to improve
environmental practices
10. Participation in other environmental organizations/assoc. to improve
environmental practices (if not awarded under 8 or 9 above)
A3) Environmental Performance Indicators (EPI)
1. EPI on energy use and/or energy efficiency
2. EPI on water use and/or water use efficiency
3. EPI on green house gas emissions
4. EPI on other air emissions
5. EPI on TRI (land, water, air)
6. EPI on other discharges, releases and/or spills (not TRI)
7. EPI on waste generation and/or management (recycling, re-use, reducing,
treatment and disposal)
8. EPI on land and resources use, biodiversity and conservation
9. EPI on environmental impacts of products and services
10. EPI on compliance performance (e.g. exceedances, reportable incidents)
A4) Environmental Spending
1. Summary of dollar savings arising from environment initiatives to the
company
2. Amount spent on technologies, R&D and/or innovations to enhance
environ. perf. and/or efficiency
3. Amount spent on fines related to environmental issues
Soft Disclosure Items
A5) Vision and Strategy Claims
1. CEO statement on environmental performance in letter to shareholders
and/or stakeholders
2. A statement of corporate environmental policy, values and principles,
environ. codes of conduct
3. A statement about formal management systems regarding environmental
risk and performance
4. A statement that the firm undertakes periodic reviews and evaluations of
its environ. performance
5. A statement of measurable goals in terms of future env. performance (if
not awarded under A3)
6. A statement about specific environmental innovations and/or new
technologies
A6) Environmental Profile
1. A statement about the firm’s compliance (or lack thereof) with specific
environmental standards
2. An overview of environmental impact of the industry
3. An overview of how the business operations and/or products and services
26
impact the environment.
4. An overview of corporate environmental performance relative to industry
peers
A7) Environmental Initiatives
1. A substantive description of employee training in environmental
management and operations
2. Existence of response plans in case of environmental accidents
3. Internal Environmental Awards
4. Internal Environmental Audits
5. Internal certification of environmental programs
6. Community involvement and/or donations related to environ. (if not
awarded under A1.4 or A2.7 )
Measurement of Environmental disclosures by categorizing these components. A
value of 0 is given to indicate that there is no information about the component in
the sustainability report. A value of 1 is given to indicate that there is an
information about the component in the sustainability report.
3.3.2 Independent Variable
1. Media Coverage
The media is used as a gauge for environmental legitimacy. A proxy that is used
in the form of newspapers that published online both in the official website of the
company or the national media portal.Media sources used include KOMPAS,
WALHI national, Republika. Keywords used to find the news disclosure are;
"environment", "waste", "pollution", "sustainable", "GRI", and "CSR". There are
two models used in identifying articles.
Model 1 is measure by counting whethere there is any media coverage about one
company’s environmenyal news. By using content analysis method, the
environmental news are divide into three categories. There are positive, negative,
and neutral. The variable EXIST_MED will be measure by using Coefficient of
Janis and Fadner (Janis and Fadnes, 1995). Coefficient of Janis and Fadner is used
27
to measure the degreee of partiality of newspaper for a particular object. This
formula can be applied by counting certain words from content news. This
coefficient value is -1.0 to 1.0. Positive article has a higher value than negative
will given 1.0 and when negative articles has higher value of positive article will
given -1.0. The Coefficient of Janis and Fadner is measured as follows;
1. If the positive media are more than negative media;
The sentence is said to be positive is the news sentence does not have a
denial and is supported by facts. It can affect readers toward positive
direction. Positive media coverage also make reader to support and willing
to work with company. In this case, we use;
2. If negative media are more than positive media;
The sentence is negative when there is presence of the word “no” or “not”.
It can effect readers to take contrary actions and unwilling to work with
company. In this case, we use;
3. If positive media is the same as negative media;
The formula used when the number of positive media is equal to negative
media. It denoted by 0
e ; the number of positive environmental articles
c ; the number of negative environmental articles
28
t ; the number of e and c
Model 2 is measure by classifying the media coverage into three categories. They
are positive, negative, and neutral. The variables POS_MED, NEG_MED.,
NEUT_MED will given a number according to news found. Similiar with model
1, the news clasiffication using the positive and negative sentence. The news said
to be neutal if news sentence does not contain any sentiments and only declare
about fact. Neutral news does not affect readers to take an actions.
3.3.3 Control Variable
1. Company Size
In this study, the size of the company described the scale of the company aimed at
the value of the total assets in the balance sheet at the end of year. The size
company made the control variable to find out the size of the potential influence
on the amount of environmental disclosure, the index used as measured by the
natural log of the total assets of the company be consistent (Williams, 2001).
2. Profitability
Profitability is the ability of the company to generate profits within a specified
time.In this study of profitability considered variable control because the greater
the level of profitability it will be the greater disclosure of who carried out the
company.ROA ratio is used as a measure of the profitability of the company. The
larger the ROA, owned by the company, the more efficient use of assets by the
company to operate so that it can enlarge profits.
29
3. Leverage
Leverage represents the proportion of the use of debt to finance investment
company. The higher the level the higher the leverage the company's reliance on
debt so that the larger the risks faced and investors will demand a higher profit.In
this study, the leverage is measured by using the debt to equity ratio long-term.the
control variable as leverage because investors wanted the higher profit will insist
on disclosure of financial statements of the company.
3.4 Data Analysis Method
3.4.1 Descriptive Statistic Analysis
Descriptive statistics give descriptive or description of data seen from mean,
standard deviation, variance, maximum, minimum, sum, range, kurtosis and
skewness (Ghozali, 2016). Descriptive statistical test in research is used to
describe the existing data in this study which consists of environmental disclosure
and media coverage. The measurements in this study consist of minimum,
maximum, mean, and standard deviation.
3.4.2. Classic Assumption Test
3.4.2.1 Normality Test
30
Normality test is a test to determine the normality (normal or not) residual
research data. If the residual is not normally distributed, the regression test to
observe the significance of the independent variable to the dependent variable can
not be applied. The way to detect whether the residual is normally distributed is
by P-P plot analysis. Normal distribution will form a straight line diagonal, and
ploting the residual data will be compared with the diagonal line. If the residual
data distribution is normal, then the line representing the real data will follow its
diagonal line.
3.4.2.2 Multicollinearity Test
Multicolinearity test aims to test whether the regression model found a correlation
between independent variables (independent). Multicolinearity in this study is
seen from the tolerance value and the opposite of variance inflation factor (VIF).
In this research multicollinearity test seen from tolerance and variance inflation
factor (VIF) which if have tolerance value ≥ 0,05 or equal to VIF ≤ 5 mean that
model is free from multicolinearity.
3.4.2.3 Heteroscedasticity Test
Heteroscedasticity test aims to test whether in the regression model there is a
variance inequality of the residual one observation to another observation. If the
variance of the residual one observation to another observation remains, it is
called heteroscedasticity test. Detection of whether or not heteroscedasticity done
by looking at whether there is a particular pattern on the scatterplot chart. By
analyzing certain patterns, such as points that exist form a certain pattern that
regular (wavy, widened and then narrowed), then induced has happened
31
heteroscedasticity. If there is no clear pattern, as well as the points spread out
above and below the number 0 on the Y axis, there is no heteroscedasticity.
3.4.2.4 Autocorrelation Test
To detect the presence or absence of autocorrelation by using test run test. If there
is no correlation between residuals then it is said that residuals are random or
random. Run test is used to see whether residual data occurs randomly or not
(systematic) (Ghozali, 2016).
Decision making in test run test:
• If the value of Asymp. Sig. (2-tailed) is smaller <from 0.05 then there is the
symptoms of autocorrelation.
• If the value of Asymp. Sig. (2-tailed)> greater than 0.05 then there is no
autocorrelation symptoms.
3.4.3 Multiple Reggresion Test
Multiple regression method was chosen because this study examines indepent
variables that number more than one dependent variable. The multiple regression
model is used to determine the most significant indepent variables and to test the
significant influence of the independent variables on the dependent variable. The
formulation of this model of analysis are;
a. Model Regresi 1: The effect of media covergae on environmental
disclosure
ED = β0 + β1 EXIST_MED + β2 Size + β3 ROA + β4 LEV + ε
32
b. Model Regresi 2: The effect of negative media coverage on environmental
disclosure
ED = β0 + β1 POS_MED + β2 NEG_MED + β3 NEUT_MED + β4 Size +
β5 ROA + β6 LEV + ε
Notation ;
β0 : Constanta
β : Coeffisien regression
ED : Environmental Disclosure
EXIST_MED : Media coverage exist
POS_MED ; Positive media coverage
NEG_MED : Negative media covergae
NEUT_MED : Neutral media coverage
Size : Company Size
Lev : Th level of corporate debt
ROA : The level of profitability of the company
ε : Error
Regression analysis was used to test the hypothesis in this. The test used in this
analysis is a test of the determination of the coefficient (R2), the simultaneous
significance tests (test statistic F), and a test of the significance of individual
parameters (test statistic t).
1. Coefficient of Determination Test (R2)
The coefficient of determination (R2) is used to measure how much the ability of
the model in explaining the variation in the dependent variable. The value of the
coefficient of determination is between zero and one. The value of R2 that small
means the ability of independent variables in explaining variation in the
33
independent variables is very limited.A value that approximates the one means of
independent variables provide almost all of the information needed to predict the
variation in the dependent variable.Therefore, many researchers advocate the
adjusted R2 values to use at the time of mengeveluasi where the best regression
model.Unlike R2, adjusted R2 value can go up or down if one independent
variable is added into the model (Ghozali, 2016).
2. Simultaneous Significance Test (Test Statistic F)
Test statistic F basically indicate whether all independent variables included in the
model have the influence of the dependent variables against together (Ghozali,
2016).Way to find out is to compare the value of F F value count table.When F
count greater than the value of table F, then accepted alternative hypothesis means
that all independent variables are jointly and significantly affect the dependent
variable.Besides, it can also be seen based on probability. If the probability (of
significance) is less than 0.05 (α) then the independent variable simultaneously
(simultaneous) effect on the dependent variable.
3. Individual Parameter Significant Test (Test Statistic t)
The test statistic t in this research is to determine the significance of independent
variable coefficient to predict the dependent variable.Significance levels used in
this study was 0.05. Rejection or acceptance of the hypothesis is done with the
following criteria:
1. If the value of significance (sig) is greater than 0.05 then the hypothesis is
rejected.
2. If the significance value (sig) is smaller than 0.05 then the hypothesis can
not rejected.
54
CHAPTER V
CONCLUSION AND RECOMMENDATION
5.1 Conclusion
This study aims to determine the effect of media coverage on environmental
disclosure on registered companies that publish sustainability reports for the 2014-
2016 period. Based on the results of the study, it can be concluded as follows:
1. Based on the first hypothesis, the media coverage is not approved in
environmental disclosures. This shows that media coverage in the community
cannot influence the environmental disclosures disclosed by the company.
2. Based on the second hypothesis shows that negative media disclosure has no
effect on environmental disclosure. This shows the poor media coverage in
the community does not affect the environmental disclosures disclosed by the
company.
3. Profitability proxied by Return on Assets as a control variable in this study
does not affect the company to publish sustainability reports, while the other
control variables, namely company size and leverage affect the company to
publish financial statements.
55
5.2 Limitations of Research
The limitations in this study are as follows:
1. This study uses independent variables which only have a low effect on the
dependent variable. That is, many other supporting factors outside the
variables in this study.
2. This research has an element of subjectivity in determining the index of
environmental disclosure and measuring the type of media coverage.
5.3 Suggestion
In future research there are several things that need to be considered,
including the following:
1. Further research to expand the company's sample and add other online media
sources that publish environmental disclosure as to minimize the element of
subjectivity.
2. It is recommended for further research to use another proxy of the variables
used in order to produce a high influence on the dependent variable.
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