THE EFFECT OF CLIMATE RISK DISCLOSURE ON FIRM VALUE: THE MODERATING ROLE OF CAPITAL ADEQUACY IN INDONESIAN BANKS

Afifah Kusuma Wardani

Abstract


Climate change is increasingly recognized as a source of financial risk that can affect the banking sector through physical and transition risks. This study examines the effect of Climate Risk Disclosure on firm value and investigates the moderating role of the Capital Adequacy Ratio (CAR) in Indonesian banking companies. The study employs a quantitative approach using secondary data from banks listed on the Indonesia Stock Exchange during 2024–2025. The sample was selected using purposive sampling and produced 78 observations after outlier treatment. Climate Risk Disclosure was measured using an index based on 11 TCFD disclosure recommendations, while firm value was proxied by Price to Book Value (PBV). Multiple linear regression and Moderated Regression Analysis were applied, with Firm Size, Return on Assets, Non-Performing Loan, and Loan to Deposit Ratio included as control variables. The results indicate that Climate Risk Disclosure affects firm value, whereas CAR does not moderate this relationship. The study suggests improving the quality and standardization of climate-risk disclosure and extending the observation period and research objects in future studies.

Keywords: climate risk disclosure, firm value, capital adequacy ratio, banking, TCFD


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References


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