ENVIRONMENTAL DISCLOSURE, EARNINGS RESPONSE COEFFICIENT, AND DOMINANT OWNER IN MANUFACTURING COMPANY IN INDONESIA

This study investigates the effect of environmental disclosure toward earnings response coefficient and the effect of dominant owner's voting-cash flow rights wedge toward relation of environmental disclosure and earnings response coefficient in manufacturing company in Indonesia. This study is crucial because investors needs has changed from profit oriented only to Triple-P Bottom Line which is Profit, Planet, and People. This condition makes some companies improve environmental disclosure as their sustainability reports. They did this for attracting investors to invest in their company. This is quantitative study using multiple linear regression. By using purposive sampling, we collected 161 annual reports of 115 manufacturing companies which are listed in Indonesia Stock Exchange as data. The result show that environmental disclosure positively affects earnings response coefficient. However, dominant owner's voting-cash flow wedge has negative impact toward the relation of environmental disclosure and earnings response coefficient. Therefore, this results offer evidence of the importance of environmental disclosure in sustainability reports of manufacturing company. However, the stakeholder of the company should think about dominant owner's voting-cash flow wedge because it can affect inverstors's trust. Contribution of this study is an effort of the company to report environmental disclosure carefully in order to attract the invertors.