The Effect of Environmental Performance, Leverage, and Liquidity on Financial Performance

Abstract

This study examines the effect of environmental performance, leverage, and liquidity on the financial performance of energy companies listed on the Indonesia Stock Exchange during the 2019–2024 period. The research was conducted to address the importance of understanding the factors influencing financial performance in the energy sector amid increasing environmental and financial challenges. This study employed a quantitative approach using secondary data obtained from annual reports, sustainability reports, and PROPER decree letters. The sample consisted of 15 energy companies selected through purposive sampling, and the data were analyzed using panel data regression. The findings indicate that environmental performance, leverage, liquidity, and financial performance fluctuated throughout the observation period. Simultaneously, environmental performance, leverage, and liquidity significantly affected financial performance. Partially, environmental performance and leverage showed no significant effect on financial performance, while liquidity had a positive effect on financial performance. These results highlight the importance of effective liquidity management in improving corporate financial performance and provide insights for energy companies in maintaining financial stability and competitiveness in a dynamic business environment.