Keywords
Environmental capital expenditure
Indonesia
SDG 12
Trade exposure
Trade policy uncertainty
How to Cite
Abstract
This study examines how trade policy uncertainty affects firm value directly and indirectly through green investment, and how corporate governance conditions these relationships in an emerging market context. Using an unbalanced panel of 230 non financial firms listed on the Indonesia Stock Exchange over 2010–2024 (2,870 firm year observations), the analysis draws on secondary data from financial reports, Refinitiv ESG and governance databases, and the national PROPER environmental rating scheme. Trade policy uncertainty is measured using a newspaper-based trade policy uncertainty index combined with firm and industry level trade exposure indicators. Fixed effects panel regressions and dynamic system GMM are employed to address unobserved heterogeneity, persistence and potential endogeneity. The results indicate that trade policy uncertainty reduces firm value, while green investment and governance are positively associated with valuation. Trade policy uncertainty is positively related to green investment, and green investment partially mediates the negative effect of uncertainty on firm value. Corporate governance strengthens the sensitivity of green investment to trade policy uncertainty and mitigates the adverse impact of uncertainty on firm value. These patterns remain robust to alternative measures of firm value and environmental performance, as well as dynamic specifications. The findings highlight the role of green investment and governance as strategic adaptation mechanisms that help Indonesian firms preserve value under volatile trade conditions.
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