Environmental Performance, Corporate Governance and Company Performance: An Optimal Option for Firm’s Value

The era of globalization brings a very rapid development of countries around the world; this development has affected almost every sector of life, especially in the economic and industrial sectors. Industry is growing rapidly; thus, new companies are growing. Globalization era made development in almost all fields, especially the industrial sector. Each company in the fulfillment of its goals to increase the firm’s value might take an extreme way that can damage the environment. Furthermore, the operation of the company also requires implementing a new paradigm in the management of a business, namely the principle of good corporate governance (GCG). The purpose of this research is to determine the influence of the environmental performance (EP) and GCG mechanism on firm value (FV) with company performance (CP) as an intervening variable. The manufacturing companies selected for this study are from the 2010-2013 list of Indonesia Stock Exchange (PROPER participants) which includes 14 companies with purposive sampling techniques. The data used was secondary data from the company's annual report and the announcements of the Ministry of Environment from the Indonesia Stock Exchange website (www.idx.co.id), as well as the official website of the ministry (www.menlh.go.id). The path analysis approach was used for this research. The results showed that CP is not a mediating variable between EP and FV. CP as an intervening variable could not mediate EP, the concentration of ownership (CO), and the effectiveness of the audit committee (EAC) on FV. The study concluded that partially EP, CO, and EAC do not have an effect on CP, while the independent commissioner (IC) has a significant positive effect on CP. Partially EP, CO, IC, and EAC do not have an effect on FV. Moreover, CP, as an intervening variable, has a direct significant positive effect on FV.