HOW RENEWABLE ENERGY DRIVES FIRM VALUE IN INDONESIA'S ENERGYSECTOR: CARBON EMISSION MEDIATION AND GREEN INVESTMENTMODERATION

Abstract

This study examines the effect of renewable energy on firm value with carbon emission as a mediating
variable and green investment as a moderating variable among energy sector companies listed on the
Indonesia Stock Exchange. Using a quantitative panel data approach, the study applies fixed-effects
regression analysis to a sample of 38 companies over the 2022–2024 period, yielding 114 firm-year
observations. Data were collected from annual reports and sustainability reports, with firm value
proxied by Tobin's Q and robustness confirmed using Price-to-Book Value. The findings reveal that
renewable energy negatively and significantly affects carbon emission, carbon emission negatively and
significantly affects firm value, and renewable energy positively and significantly affects firm value
directly. Carbon emission is confirmed as a partial mediator in the renewable energy–firm value
relationship, as evidenced by significant Sobel-Goodman test results. Green investment positively
moderates the effect of renewable energy on firm value, indicating that firms combining renewable
energy adoption with greater environmental capital expenditure achieve stronger market valuation
outcomes. All findings remain consistent under alternative firm value measurement. Grounded in
stakeholder theory and signaling theory, this study contributes an integrated moderated mediation
framework to the environmental finance literature and provides empirical evidence that renewable
energy and green investment function as complementary strategic assets in creating firm value within
Indonesia's energy transition context.