THE EFFECT OF MEDIA COVERAGE ON ENVIRONMENTAL

DISLCOSURE ON LISTED COMPANY 2014-2016 PERIOD

(Undergraduate Thesis)

By

DEONESIA LIBERTY G.

ECONOMICS AND BUSINESS FACULTY

UNIVERSITY OF LAMPUNG

BANDAR LAMPUNG

2019

ABSTRACT

THE EFFECT OF MEDIA COVERAGE ON ENVIRONMENTAL DISCLOSURE ON

LISTED COMPANY 2014-2016 PERIOD

By

Deonesia Liberty G.

This study aims to analyze the effect of media coverage on environmental disclosure on

sustainability report by using content analysis method. The empirical approach followed in

the study involved listed companies on BEI who issued sustainability report from 2014-2016

period. The result shows all of variables independent which are media coverage and negative

media coverage does not have positive effect on environmental disclosure.

Keywords: Media Coverage, Environmental Disclosure, Finnancial Report,

Sustainability Report.

THE EFFECT OF MEDIA COVERAGE ON ENVIRONMENTAL

DISCLOSURE ON LISTED COMPANY 2014-2016 PERIOD

By

DEONESIA LIBERTY G.

(An Undergraduate Thesis)

Submitted for Partial Fulfilment of The Requirements

For The Bachelor of Economics

In

Accounting Department

Faculty of Economics and Business, University of Lampung

ECONOMICS AND BUSINESS FACULTY

UNIVERSITY OF LAMPUNG

BANDAR LAMPUNG

2019

BIOGRAPHY

The author was born in Bandar Lampung on October 09th

, 1996 with full name

Deonesia Liberty Gildamurti as the older child of 2 siblings. Her father’s name is

Mr. Paulus Dwi Septyo P. and her mother’s name is Mrs. Maria Regina Rini R.

The younger sister’s name Virgilia Rajendra Ganeshamurti. The author completed

her kindergarten education at Taman Kanak-Kanak (TK) Xaverius Way Halim in

2002, continoued and graduated from SD Xaverius 3 Bandar Lampung in 2008.

Took the junior high school education in SMP Xaverius 4 Bandar Lampung, and

graduated in 2011. The author completed the senior high school education in

SMA Xaverius Bandar Lampung, and graduated in 2014.

After graduated from senior high school, she continued her study in University of

Lampung with accounting majority. In second year she selected to be part of

International Class, and got the scholarships by JASSO (Japan Student Service

Organization) to joined the Asian Cooperative Program (ACP) in Japan that was

run by Kansai University of Internastional Studies (KUIS) Japan and University

Utara Malaysia (UUM) in 2016.

During the university life, she joined AIESEC (Association Internationale des

Etudiants en Sciences Economiques et Commerciales). Built an organizational

career from staff to be manager, and became an organizing committee in many

project such as national seminar called Youth Can Do 2.0. Untill she being elected

to be vice president of Incoming Exchange Program in 2017. She learned how to

do a team work, supplied and manage the human resources within the

organization, and did her best to fulfilling the needs of organizations.

DEDICATION

Puji Syukur

Praise be to Allah Bapa for all the grace, blessings and grace so great to the

author.

I dedicate this thesis to:

My dear parents, Mr. Paulus Dwi Septyo P. and Mrs. Maria Regina Rini R.

Incomparable thanks to Papa and Mama who always give endless prayer, useful

advice, strength in all conditions, and always give support for my ideals. May God

always provide protection in the world and in the Hereafter for my beloved

mother and father.

My dear sister, Virgilia Rajendra Ganeshamurti.

Thank you for all motivations, the joy, laughter, love, understanding and support

for me.

My whole family and friends who always give encouragement, prayer, and

endless support.

My Almamater, University of Lampung.

MOTTO

“He gives power to the weak and strength to the powerless”

(Isaiah 40:29)

“Progress is made by treal and failure; the failures are generally a hundred times

more numerous than the successes; yet they are usually left unchronicled”

(William Ramsay)

“If you keep doubting about yourself, then how are you going to survive in this

world? Look at the mirror and tell yourself that you are doing well”

(Kang Young Hyun)

“Don’t compare your life to others. There’s no comparison between the sun and

the moon, they shine when it’s their time”

(Deonesia Liberty G.)

ACKNOWLEDGEMENT

Puji Syukur, praise the presence of Allah SWT who has bestowed his grace and

guidance so that the writer can complete the thesis with the title “ The Effect of

Media Coverage on Environmental Disclosure on Listed Company 2014-2016" as

one of the obligations to obtain a Bachelor of Economics degree at the

Accounting Department Faculty of Economics and Business University of

Lampung.

On this occasion the authors would like to thank all those who have provided

guidance, support, and assistance during the process of preparation and

completion of this thesis. In particular, the authors would like to thank:

1. Prof. Dr. H. Satria Bangsawan, S.E., M.Si. as the Dean of Faculty of

Economics and Business University of Lampung.

2. Dr. Farichah, S.E., M.Si., Akt. as Chairman of Accounting Department

Faculty of Economics and Business University of Lampung

3. Mrs. YuztityaAsmaranti, S.E., M.Si., Akt. as the Secretary of Accounting

Department Faculty of Economics and Business University of Lampung.

4. Prof. Dr. Lindrianasari, S.E., M.Si., Akt. as Chief Examier who always

have time to provide great suggestions and advices, motivates the author to

finish the undergraduate thesis.

5. Mrs. Susi Sarumpaet, S.E., M.B.A., Akt., Ph.D as Chief Advisor for the

willingness to give time, guidance, direction, input with patience during

the process of completion of this thesis.

6. Mrs. Dewi Sukmasari, S.E., M.Si., CA. as Co-Advisor for the willingness

to give time, direction, motivation with patience during the process of

completion of this thesis.

7. Dr. Tri Joko Prasetyo, S.E., M.Si., Akt., Dr. Agrianti Komalasari, S.E.,

M.Si., Akt. And Dr. Usep Syaifudin, S.E., M.AK. who has provided a lot

of help, direction and advice in the process the author goes through in the

Pendadaran exam.

8. All Mr / Mrs Lecturers and employees in the Accounting Department for

knowledge, learning, support and services and assistances that has been

provided.

9. Both of my beloved parents Mr. Paulus Dwi Septyo Prajarto and Mrs.

Maria Regina Rini R. who have given the most sincere love, endless

prayer, support and advice in the achievement of my ideals. Thank you for

all the never ending faiths and infinite love.

10. My dearest sister, Virgilia Rajendra Ganeshamurti. Thank you for all the

motivations, love, understanding, prayer, and laughter all this time since

we were kids.

11. My big family, who cannot be mentioned one by one. Thank you for your

prayers, support, motivation and advice given.

12. My Dearest Kurnia Dessy, Niken Angraini, Intan Crusita, Ajeng Eka,

Rebhecca Paramitha, Riska Juliana, Rosa Ramadhani, Regita Dewi. Thank

you for your willingness to pray, companion, encourage, entertain, and

help the process of completion of this thesis. Thanks for every joke,

happy, tears, and emotion. And thank you for changing me to a better

person. You guys are special.

13. My Operose team, Hani Taqiyakin, Fahremi, Olinda, Bismo Jiwo, Andwi

Natasa. Thank you so much guys, for all of the things you gave to me, the

sweet memories. It’s so priceful.

14. My EB team, Vandea Rizky, Kurnia Dessy, Devi Yahya, Murtika Sari,

Adriani, Ayu Budi, Ratih Dinar. Thank you so much for did a great job

together, we made it.

15. My Aloha Team, Isabella, Abi Benjamin, Alvira Chairunnisa, Clodina

Dacosta, Nyiayu Vannisa, Rainy Altinci, Ratih Dinar, Febby. Thank you

so much, you tought me a lot

16. All my AIESEC mates, Cindy Caroline, Rachma Utari, Nr. Khairani,

Devita, Kurnia Indy, Rori M., Nizar Syahputra that couldn’t be maention

one by one. Thank you so much, you tought me a lot.

17. Nabella Ananta, Avelino Novanda, Chrisella Elynda, Yohanes, Devin, Adi

Pranata, Edbert Darius, Gretta Gracesia, Hendrik, Josa Wijaya, Kevin

Holianti, Hediati, Nadya Puspa my junior high school buddies. Thank you

so much for being loyal to me until now, love you guys.

18. My friends Sekar Arum, Probo Sutejo, Tia Utari, Intan Wulandari, Lupita

Indah. Thank you so much for your cooperation when we were in Japan.

We have a sweet memories there, wish we could go to Japan again.

19. My accounting friends, Reggy Indrawan, Iqbal, Indra, Bella, Reka,

Nabilla, Winda, Syaharani, Dicky, Arini Mega, Mutiara, Katrine, Ninda,

Rachel, Tika, Ismatul Umi, Bipa, Dani, Soni, Hafin, Aryo Bimo, Elsa,

Lidyasari. Thank you for all the support, prayer, passion, motivation, and

cheerfulness during the lecture.

20. My International-Class 2014 of Accounting’s friends, Sekar Arun, Dhissa

Miranthi, Fanisya Alya, Amirul M, thank you for all your supports.

The last, for all the help and support, the authors would like to say thank you, may

you all get a reply from Allah SWT. The author realizes there are still many

shortcomings in the process of writing this thesis; the authors expect a criticism or

suggestion that can help the author in improving to be better.

Thus, hopefully this paper can provide benefits for those who read it.

Bandar Lampung, May 25th

, 2019

Author,

Deonesia Liberty G.

TABLE OF CONTENTS

Page

COVER PAGE........................................................................................................ i

ABSTRACT ......................................................................................................... ii

TITLE PAGE ........................................................................................................ iii

APPROVING PAGE ............................................................................................ iv

ADMITTING PAGE ............................................................................................. v

STUDENT THESIS STATEMENT .................................................................... vi

BIOGRAPHY ...................................................................................................... vii

DEDICATION ...................................................................................................... ix

MOTTO......... ......................................................................................................... x

ACKNOWLEDGEMENT ................................................................................... xi

LIST OF CONTENT ......................................................................................... xvii

LIST OF TABLE ................................................................................................. xx

LIST OF FIGURE .............................................................................................. xxi

LIST OF APPENDIX ........................................................................................ xxii

CHAPTER I PRELIMINARY

1.1 Background ...................................................................................................... 1

1.2 Problem Formulation ....................................................................................... 4

1.3 Research Purpose ............................................................................................. 5

1.4 Benefits of Research ........................................................................................ 5

CHAPTER II LITERATURE REVIEW

2.1 Theoretical Basis .............................................................................................. 6

2.1.1 Legitimacy Theory ............................................................................... 6

2.1.2 Agency Theory ..................................................................................... 7

2.1.3 Stakeholder Theory ............................................................................... 8

2.1.4 Disclosure ............................................................................................. 9

2.1.5 Environmental Disclosure .................................................................. 10

2.1.6 Global Reporting Initiative ................................................................. 11

2.1.7 Media Coverage .................................................................................. 12

2.1.8 Company Size ..................................................................................... 12

2.1.9 Profitability ......................................................................................... 13

2.1.10 Leverage ............................................................................................. 14

2.2 Previous Research ......................................................................................... 15

2.3 Research Framework ..................................................................................... 18

2.4 Hypothesis Formulation ................................................................................ 20

2.4.1 The Effect of Media Coverage on Environmental Disclosure ...............

............................................................................................................ 20

2.4.2 The Effect of Negative Media Coverage on Environmental Disclosure

............................................................................................................ 21

CHAPTER III RESEARCH METHOD

3.1 Population and Sample .................................................................................. 22

3.1.1 Population ........................................................................................... 22

3.1.2 Sample ................................................................................................ 22

3.2 Types and Data Source .................................................................................. 22

3.3 Operational Variable ...................................................................................... 23

3.3.1 Dependent Variable ............................................................................ 23

3.3.2 Independent Variables ........................................................................ 26

3.3.3 Control Variable ................................................................................. 28

3.4 Data Analysis Method .................................................................................... 29

3.4.1 Descriptive Statistic Analysis ............................................................. 29

3.4.2 Classic Assumption Test .................................................................... 29

3.4.2.1 Normality Test ....................................................................... 29

3.4.2.2 Multicolinerarity Test ............................................................ 30

3.4.2.3 Heteroscedasticity Test .......................................................... 30

3.4.2.4 Autocorrelation Test .............................................................. 30

3.4.3 Multiple Regression Test .................................................................... 31

CHAPTER IV RESEARCH RESULT AND DISCUSSION

4.1 Population and Sample .................................................................................. 34

4.2 Descriptive Statistic ....................................................................................... 35

4.2.1 Exist Media ......................................................................................... 35

4.2.2 Positive Media .................................................................................... 35

4.2.3 Negative Media ................................................................................... 36

4.2.4 Neutral Media ..................................................................................... 36

4.2.5 Firm Size............................................................................................. 36

4.2.6 Return on Asset .................................................................................. 36

4.2.7 Leverage ............................................................................................. 37

4.2.8 Environmental Disclosure .................................................................. 37

4.3 Classic Assumption Test ................................................................................ 37

4.3.1 Normality Test .................................................................................... 37

4.3.2 Multicollinearity Test ......................................................................... 39

4.3.3 Heteroscedasticity Test ....................................................................... 42

4.3.4 Autocorrelation Test ........................................................................... 43

4.3 Hypothesis Testing ........................................................................................ 45

4.4.1 Coefficient of Determination (R2) ....................................................... 46

4.4.2 Simultaneous Significance Test (Statistic F Test) .............................. 48

4.4.3 Individual Parameter Significant Test (Statistic T Test) .................... 49

4.5 Result and Analysis Discussion..................................................................... 51

4.5.1 Environmental Disclosure and Media Exist ....................................... 51

4.5.2 Negative Media Coverage and Environmental Disclosure ................. 53

CHAPTER V CONCLUSIONS AND RECOMMENDATION

5.1 Conclusions .................................................................................................... 54

5.2 Limitation of Research ................................................................................... 55

5.3 Suggestions .................................................................................................... 55

REFERENCES

APPENDIX

LIST OF TABLE

Table Page

Table 2.1 Emphirical Studies of Environmental Disclosure .............................. 15

Table 4.1 Research Sample Companies Listed on IDX ..................................... 34

Table 4.2 Descriptive Statistic ............................................................................ 35

Table 4.3 Multicollinearity Test Regression Model 1 ........................................ 40

Table 4.4 Multicollinearity Test Regression Model 2 ........................................ 41

Table 4.5 Autocorrelation Test Regression Model 1 .......................................... 44

Table 4.6 Autocorrelation Test Regression Model ............................................ 45

Table 4.7 Coefficient Determination Test Result Regression Model 1

............. .............................................................................................. 47

Table 4.8 Coefficient Determination Test Result Regression Model 2

............. .............................................................................................. 47

Table 4.9 Statistic F Test Result Regression Model 1 ........................................ 48

Table 4.10 Statistic F Test Result Regression Model 2 ........................................ 49

Table 4.11 Statistic T Test Result Regression Model 1 ........................................ 49

Table 4.12 Statistic T Test Result Regression Model 2 ........................................ 50

LIST OF FIGURE

Figure Page

Figure 2.1 Research Framework............................................................................ 19

Figure 3.1 Environmental Disclosure Index .......................................................... 24

Figure 4.1 Normality Test Result Regression Model 1 ......................................... 38

Figure 4.2 Normality Test Result Regression Model 1 ......................................... 39

Figure 4.3 Heteroscwdasticity Test Result Regression Model 1 ........................... 42

Figure 4.4 Heteroscwdasticity Test Result Regression Model 1 ........................... 43

LIST OF APPENDIX

Appendix

Appendix 1 : List of Environmental Disclosure Index

Appendix 2 : List of Company Issued Sustainability Report 2014-2016

Appendix 3 : List of Media Exist Score

Appendix 4 : List of Company’s Size Score

Appendix 5 : List of Company’s ROA Score

Appendix 6 : List of Company’s Leverage Score

Appendix 7 : List of Company’s Environmental Disclosure Score Index

Appendix 8 : Descriptive Statistic Result

Appendix 9 : Normality Test

Appendix 10 : Multicollinearity Test Result

Appendix 11 : Heteroscedasticity Test Result

Appendix 12 : Autocorellation Test Result

Appendix 13 : Coefficient Determination Test Result

Appendix 14 : Statistic F Test

Appendix 15 : Statistic T Test

1

CHAPTER I

PRELIMINARY

1.1 Background

Global warming has become a public issue that is being taken care of at this time.

Attention are caused due to the occurrence of climate changes that has led to the

emergence of a variety of rules to save the environment. In the world of business

regulation which aims to save the environment has also been presented globally.

The companies are contribute in the field of economy, but also help to solve

problems related to the risks and threats of sustainability in the sphere of social

relations and the environment.

The daily quoted from www.mongabay.co.id (environmental news sites) in April

2018, WALHI (Wahana Lingkungan Indonesia) stated that there has been

monopoly activities in the management of natural resources resulting in

Indonesia. The monopoly activity of the natural resources that are not

environmental friendly impact on loss of public access against a source of

livelihood. WALHI also noted there are 302 Agrarian environment and conflict

occurs during 2017, as well as 163 people in the criminalization in 13 provinces,

namely West Sumatera, Aceh, Riau, Jambi, Bengkulu, Lampung, Jakarta, West

2

Java, Central Java, East Java, East Kalimantan, Sulawesi South, and Papua. This

situation makes Government asked the company to make a report of social

responsibility to reduce the environmental damage that has occurred.

Environmental accounting is one of the elements that contribute to corporate

governance. The use of environmental accounting concept for companies

encourage the ability to minimize the environmental problems faced.

Environmental accounting can assist companies to improve the efficiency of the

management by conducting research activities from the viewpoint of

environmental costs and benefits. Environmental accounting can be used to

manage and communicate with the community to increase the amount of relevant

information that was created for the stakeholders who need it. The companies

need to disclose information on the accounting reports at the end of the year.

A range of guidelines on environmental disclosures have been applied in various

countries include ; The Securities and Exchange Commision (SEC) in the United

State published the requirements regarding business risk and the climate

exchange, United State Environmental Protection Agency (US EPA) published

Toxic Release Inventory (TPI) (EPA 2013) data, the Global Reporting Initiative

(GRI) issued guidelines on reporting of environmental disclosure, and

International Organization for Standarization (ISO) set the ISO 14001

environmental management system. Indonesia has had laws regulating the

environment. Constitution No.40 year 2007 article 74 paragrraph 1 sets the

company’s obligations in the exercise of social and environmental responsibility

3

in the conduct of its business. Articles 66 paragraph 2 c requires all corporation to

report on the implemntation of social and environmental responsibility in the

financial statements.

The company has a commitment to maintain environmental sustainability around

the dwelling community that made the company's area of operation.

Environmental disclosure is a voluntary disclosure. This means companies have

the freedom to make or not a sustainability report. Sustainability report is the

practice to measure and disclose the company activities aims to support

sustainable development also used to describe the reporting of economic,

environmental and social impact. Sustainability report is also used by government

institutions to make an assessment of the top performing companies on the

environment in every reporting organization. ISRA (Indonesia Sustainability

Report Award) revealed that in 2005 it was only one company that makes reports

on social and environmental responsibility . Until to 2012 there are 40 companies

that have made social responsibility report. This increase is line with the legal

basis from the Government that requires company to disclose their environmental

and social responsibility report.

Companies need to show the reputation that complies with the expectations of the

public to acquire a legitimacy. Communities assess the good or the bad reputation

of a company through the media. Media can create public awareness to legitimize

financial status and performance of the company. In addition, the company need

to take charge of environmental sustainability and the community around the

4

place of the company operate. Companies that have a bad image will reveal more

information to improve news coverage in the media. Through the report on

sustainability, the company can display performance of economic, social, and

environmental issues that will affect their image . The media acts as a projection

to describe some aspects of the firm and examine relationships with

environmental disclosure (ED).

Research conducted by Prasetiani (2014) stated that the media coverage

significantly affects the quality of the disclosure, which coincided with media

research Rupley (2012). According to Rupley (2012) negative publicity can lead

to changes in the overall strategy for corporate environmental disclosure. But

research is not in line with the Solikhah et al., (2016) claims that media coverage

had no effect on the quality of the environment . This research uses the company

size, profitability, and leverage it as a control variable. The control variables

required as controllers so that influence the dependent variable against the

independent variable is not affected other factors not examined. This research

took samples of the companies that publishes sustainability report listed in BEI in

2014-2016. This research contrasts with previous studies because it uses variables

and periods of the study are different. Based on the above description, the tittle of

this research is “The Effect of Media Coverage on Environmental Disclosure

on Listed Company 2014-2016 Periods”

1.2 Problem Formulation

This research will examine about the effect of media coverage on environmental

disclosure. The research questions formulated;

5

Is there any effect of media coverage on evironmental disclosure ?

1.3 Research Purpose

The objective of this research is ;

To test and obtain empirical evidence on the effect of media coverage on

environmental disclosure.

1.4 Benefit of Research

As for the uses which can be obtained from this study;

1. For stakeholders, provide a new discourse to consider in making decisions that

are not glued to the monetary measurement

2. For the company, contribute thoughts about the importance of disclosure in

the annual report of the environmental companies or in separate reports from

annual report (sustainability report) and as a consideration to create the

company's policy enhance the awareness of the environment and corporate

responsibility.

3. For the community, provide the stimulus as a social control for corporate

behavior and increase public awareness of the rights that must be obtained

4. Contribute to the development of management accounting in particular

accounting value because it examines the influence of media coverage effect

to the evironmental disclosure in the annual report or sustainability report.

6

CHAPTER II

LITERATURE REVIEW

2.1 Theoritical Basis

2.1.1 Legitimacy Theory

Legitimacy is a common perception or assumption that the actions of an entity,

and in some systems or socially constructed norms, values, benefits (Suchman,

1995). The company will announce voulntarily any achievements seen in

accordance with the expectations of the public. There is a social contract that

exists between the company and the community. The company ensures that its

operations comply with the restrictions and social norms, obtain the consent of the

public that it's legitimate business activities. The expectations created by the

public will not be permanent, the company must always responds to the

environment in which it operates.

Companies need to take actions including give information about environmental

disclosures related to stakeholders by disclosure, so that companies can gain

legitimacy from the surrounding environment. Companies will consistently

evaluate when conduct the operation. Environmental reporting is done by the

voluntarily as a form of corporate response in the face of social pressure.

Stakeholders also expect the actions taken by the company legitimacy through

7

disclosure so they can have some knowledge about the company's environmental

problems (Rupley et al., 2012). This information that will affect the decisions

taken by stakeholders. Company managers will trying to attract stakeholders to

take a role as supplier of vital resource required to make company survive, then

managers will pursue strategies to ensure the sustainability of the resources owned

(Deegan, 2002).

2.1.2 Agency Theory

Agency theory is the assumption that explains the relationship between the

principal and the agent in the business. Agency theory is concerned with solving

problems that may occur in the agency relationship because the target does not

match or have a different level of aversion towards risk. The most common agent

relationships in finance occurred between the shareholders (the principal) and

executives of the company (the agent). According to Anthony and Govindarajan

in Siagian (2011:10), the concepts of agency theory is the relationship between

the perpetrator and contractual agents. Contractual relationship that exists between

a principal and an agent is created because the information have to be delivered.

Agents are being hired to perform tasks related to the interests of the principles

and delegate authority to make decisions.

The submission of information that exists between principal and agent can give an

asymmetry of information. This information asymmetry will cause a conflict. This

conflict occurs because the principle has a minimum knowledge about the

company and the agent interacts directly with the company's activity so that an

agent has a more complete information about the company, managed by them.

8

These agents have a tendency to commit fraud to meet his personal interests. To

reduce conflict, companies can conduct disclosure. Shareholders (the principle)

can be asked to do the disclosure including environmental matters.

Disclosure of information about the environment plays an important role to reduce

an asymmetry information, which pose a potential conflict of interest between the

company's shareholders. Disclosure of environmental has a goal to build a

positive image to the company so as to gain the attention of the community. The

existence of this concept is company should persuade shareholders that company

can mange corporate governance properly. This action aims to reduce potentially

fraud to reach personal interest. Corporate environmental disclosure is a signal

that can distract shareholders from earnings manipulation.

2.1.3 Stakeholder Theory

Stakeholder theory says that the company as an entity not only operates for the

benefit of their own but rather must provide benefits to stakeholders such as

shareholders, creditors, Governments and communities. The existence of a firm is

strongly influenced by the support provided by the stakeholders surrounding the

company. Stakeholders can control and have the ability to affects the use of

economic resources that are used by the company. This theory emphasizes that

corporate accountability not just economic or financial performance.

The company considered a stakeholder if has three attributes namely power,

legitimacy, and interests (Rudito, 2004). Deegan (2004) said that stakeholders

have the right to obtain information concerning the activities of enterprises which

can affect decision making by them. Stakeholders also have the choice to use or

9

not the information provided by the company. Environmental disclosure disclosed

by company as on of information not just focus on financial statement.

Environmental disclosures made by the company is a strategy to fulfill the desires

of stakeholders. It because of the better environmental disclosures made by the

company, then the stakeholders will gain a higher satisfaction so it can support

companies in conducting operational activities and increase performance in

achieving profits.

2.1.4 Disclosure

The disclosure is the delivery of information. This information provides a more

complete explanation about the financial position, operating results, corporate

policies, and financial health (Siegel and Shim, 1994). The information disclosed

in the financial statements consist of quantitative information and qualitative

information that can be used by users of the report. Disclosure of information in

the financial statements can be divided into two; mandatory disclosure and

voluntary disclosure. Mandatory disclosure is a disclosure that is required in the

financial statements while the voluntary disclosure is no disclosure, in other words

the company has freedom to report or not the information to the public.

The company did a voluntary disclosure to boost credibility because through

broader disclosure, companies can reach out and help investors to know

company’s business strategy. The company will conduct disclosure beyond what

was required, as it will lower the cost of capital and compete competitively with

other companies.In this study, environmental disclosure included in voluntary

disclosure because companies are not required to create a sustainability report,

10

which contained information on the social, economic and environmental

performance of a the company.

2.1.5 Environmental Disclosure

Disclosure when linked to financial statements means to give the data and

information in a clear and can describe exactly the economic circumstances that

influence the results of the company operation. Environmental information (EI)

must help the society and firms to recognize the impact on the environment of

business decisions (Milne and Patten, 2001; Kuk et al., 2005). The disclosure of

the information contained in the financial statements of the company shall be used

for economic decision-making and does not confuse the users of the financial

statements (Chariri Elbaradei and,2000). The purpose of disclosure is to enliven

the present information necessary to achieve the purpose of financial reporting

and to serve a variety of parties that require such financial statements. According

to Sudaryanto (2011) companies have a tendency to disclose all information that

exists inside in order to keep its existence.

Environmental disclosure is the disclosure of information on environmental

management activities in the past, present, and future (Bethelot, 2002). This

information can be obtained by various means such as quantitative statement, the

form of financial statements and footnotes. Environmental disclosure include

things like the operation cost to facilitate pollution control equipment then and

now. Disclosure of environmental action are also related to a specific incident or

pollution such as emissions, toxic waste, and oil spills (Al Tuwaijri, et al., (2004).

PSAK No. 1 in Indonesia shows that the company is given the freedom to express

11

or not environmental information in financial reports. Although including

disclosure on a voluntary basis, but the awareness of companies to disclose

information activities a line with the awareness of Corporate Social

Responsibility (Sudaryanto,2011)

2.1.6 Global Reporting Intiative (GRI)

Global Reporting Intiative is an organization that provides a framework that can

be adopted by all types of organizations throughout the world. GRI Sustainability

Reporting Framework developed to measure the performance of companies in the

field of economic, environmental, social, and governance. Thus, framework

developed by the GRI is more transparent and thorough so it can build the trust of

stakeholders. Purpose of the GRI is to make companies, investors, Governments,

and public can understand more about the process of improvement to achieve the

sustainability.

GRI standard disclosures have sustained so the information can be disclosed in

identification are relevant and material to the users of the financial statements.

Some of the standards developed by GRI disclosure are ;

a. Strategy and Profile; disclose to introduce the company, such as profile,

strategy, and governance.

b. Management approach ; disclose bring up a topic to understand the

organization more spesific.

c. Performance indicator ; indicators that bring up the information about

economy performance, the environment and social enterprises that can be

compared.

12

2.1.7 Media Coverage

Media coverage can be used to build a public opinion regarding the activity

reported. The media made by the community as a controller for the company in

performing its business activities in accordance with legitimacy. The community

requires the media to inform how important environmental issues. According to

Deegan, et al., (2002) media coverage beginning with the importance of the issue

in the opinion of the community for the negative issues, as for media coverage,

positive and important issues for the public seems increasingly together. Brosius

and Kepplinger (1990) found that the intensity of the media coverage will take

effect on the community, although it is not yet clear what is required by the media

coverage. The results of the research conducted by the Dearing and Rogers (1996)

stated that the negative issues are considered society as something important. This

shows that media coverage with a negative issues have an impact for the

community greater than positive issues. The presence of these negative issues will

lose legitimacy in the eyes of public company.

Companies need to provide information to the public about the actions, activities,

and operations that are performed to gain legitimacy. Legitimacy is seen as a form

of interaction between the company's stakeholders. Media coverage information

will give impact on the legitimacy of a company. By reporting the entire activity

of the company on the web or in a particular news portal, the company will have a

reputation to rise (Staden,2011)

2.1.8 Company Size

13

Larger companies have access to a wider variety of sources to obtain funding so

that it will obtain a loan from a lender with ease. The larger company have more

chance to win the competition and survive in an industry. According to Hackston

and Milne (1996) stated that the size of the company can be determined from the

number of employees, total assets, total sales, or ranking index. The company's

size can affect the extensive disclosure of information in the financial statements.

Generally the larger companies will reveal more information than small

companies. Size of company can increase investor confidence, because a larger

company then known by the public and the investors will be increasingly easy to

obtain information about the company. Size can be shown through the company's

total assets which can affects the extent of environmental disclosure.

2.1.9 Profitability

Profitability is a ratio that can be used to measure the return on investment of an

enterprise. This ratio illustrates the effectiveness of management as a whole is

described with great small profitability gained in relation to the sale or

investment. The higher ratio of the profitability describes the ability of the high

gain by company. The company shows a comparison between the profitability of

earnings with assets or capital used to generate those profits, in other words the

higher company profitability will be increase the greater disclosure done by

company (Hidayat, 2002)

Donovan and Gibson (2000) stated that based on the legitimacy theory, one

argument between profitability and the level of responsibility when companies

14

have a higher rate of profit, the company (management) assumes no need to report

things that can interfere with information about the company's financial success.

Some kind of ratio of profitability according to Hanafi (2009) divided into three

namely; Return on Assets (ROA), Return on Equity (ROE), the Net Profit Margin

(NPM). This research uses only ROA to measure the level of company

profitability in the environmental disclosure. ROA is a form of profitability ratios

that can be used to measure the ability of funds invested in the assets used in the

operations of the company to turn a profit. According to Anthony and

Govindarajan (2002) argues for the ROA is the company's financial ratios related

to aspects of earnings and profitability. The larger ROA, owned by the company

the more efficient use of assets by the company to operate so that it can enlarge

profits. The great profit will attract investors because the company has a high rate

of return.

2.1.10 Leverage

The level of debt is a comparison between the proportion of total debt with equity.

This ratio indicates the company's ability in the form of capital that can be used to

satisfy the entire obligation of the company. The greater debt levels show the

company's capital is largely financed from debt. So the creditors were demand the

presence of information to guarantee the debts that have been given to the

company. Jensen and Meckling (1976) suggested there is potential for transfer

wealth from the debtholders to shareholders and company manager against debt

so high that raise the cost of the Agency are also high.

15

Leverage is used instead to finance company assets, capital, as well as bearing the

brunt of remains but also to gain income. Ratio of liquidity aims to find out the

position of the other party liability against the company, assessing the balance

between fixed assets with capital, and knowing the magnitude of the influence of

the company's debt against the management of the assets. This ratio can be seen

how far the company financed debt or outsiders with the power company.

Companies that have a high leverage ratio will do social disclosure more broadly.

2.2 Previous Reserach

Here are the results of several similar studies that made the study materials are:

Table 2.1 Empirical Studies of Environment Disclosure

Researcher Title Variable Analysis

Method

Result

Susi

Sarumpaet

(2005)

The

Relationship

Between

Environmental

Performance

and Financial

Performance

of Indonesian

Company

Dependent :

Environmental

Performance

Independent :

Financial

Performance

Regressio

n Analysis

The study revealed

while financial

performance is not

significantly

associated with

environmental

performance,

company size, stock

listing and ISO 14001

are significantly

associated with

environmental

performance. This

finding also indicates

that the government

environmental rating

is highly consistent

with international

environmenatal

certification.

16

Peter M.

Clarkson,

Yue Li,

Gordon D.

Richardson,

Florin P.

Vasvari

(2006)

Revisiting The

Relation

Between

Environmental

Performance

And

Environmental

Disclosure :

An Empirical

Analysis

Dependent :

Environmental

Performance

Independent :

Financial

Performance

Content

Analysis,

multivariat

ed

regression

There is a positives

association between

environmental

performance, and the

extent of discretionary

environment

disclosure. The result

is consistent with the

predictions of the

economics based

voluntary disclosure

theory.

Lindrianasa

ri (2007)

Hubungan

Antara Kinerja

Lingkungan

Dan Kualitas

Pengungkapan

Lingkungan

Dengan

Kinerja

Ekonomi

Perusahaan Di

Indonesia

Dependent :

environmental

performance

Independent :

environmental

disclosure,

financial

performance

Multiple

regression

The environmental

performance is

positively and

significantly with

environmenatl

disclosure and also

economic

performance (debt to

equity ratio/DER,

Export, Ownership,

Margin and Age) is

positively associated

with environmental

performance and

environmental

disclosure but this

study found

insufficient statiscal to

accept second and

third hypothesis.

Dion van

de

Burgwal,

Rui Jose

Oliveira

Vieira

(2014)

Environmental

Disclosure

Determinants

in Dutch

Listed

Companies

Dependent :

Environmental

disclosure

Independent :

Company Size,

Industrial

Membership,

Profitability

Scorecard

content

analysis

This statistical tests

proved that the size of

the company and the

industry's influential

membership

significantly and

positively related to

the degree of

environmental

disclosure.These

17

results are consistent

with previous studies.

However, profitability

was not associated

with statistically

significant level of

environmental

disclosure.This may

be due to the impact

of the financial crisis

that arose in the year

2007/2008

Nurani

Prasetiani

(2014)

Pengaruh

Media dan

Struktur

Corporate

Governance

Terhadap

Kualitas

Environmental

Disclosure

Dependent :

Environmental

Dislosure

Quality

Independent :

Media

Coverage,

Corporate

Governance

Structure

Multiple

regression

Media coverage,

Board of

Commissioners,

independent, gender

diversity, the size of

the Board of

Commissioners of the

positive effect of the

quality of

environmental

disclosure, while the

negative effect of

institutional

ownership

significantly.

Febri Zaini

Aulia,

Linda

Agustina

(2015)

Pengaruh

karakteristik

perusahaan,

kinerja

lingkungan,

dan liputan

media terhadap

environmental

disclosure

Dependent :

Environmental

disclosure

Independent :

Characteristics

of the

company,

environmental

performance,

media

coverage

Multiple

regression

The test results

showed that the

company's size,

profitability,

environmental

performance and

significantly

influential media

coverage against

environmental

disclosure, but

leverage doesn't

influence on

environmental

disclosure

Badingatus Pengaruh Dependent : Multiple The industry's

18

Solikhah,

Arga

Mustika

Winarsih

(2016)

Liputan Media,

Kepekaan

Industri, dan

Struktur Tata

Kelola

Perusahaan

Terhadap

Kualitas

Pengungkapan

Lingkungan

Environmental

Dislosure

Quality

Independent :

Coverage of

the Media

Industry, the

sensitivity, the

structure and

corporate

governance

regression sensitivity, multiple

directorship, the size

of the Board of

Commissioners, the

size of the company,

and the positive effect

of the quality of ROA

disclosure

environment.Research

results also showed

negative influence

from the independent

Commissioner against

disclosure of

environmental

quality.The study also

provides evidence that

media coverage,

gender, diversity and

international

ownership has no

effect on quality of

environmental

disclosure.

2.3 Research Framework

This study uses environmental disclosure as the dependent variable that is the

variable that becomes the center of research. Media coverage is treated as

independent variables in this study. Company size, profitability, and leverage

become control variables in this study. Disclosure of environmental in this study

is described in three theories namely legitimacy theory, agency theory, and

stakeholder theory.

The social contract between the company and the local community makes the

company should pay attention to values and social norms in the conduct of

19

operations (theory of legitimacy). As a form of social contract fulfillment, the

company must disclose comprehensive information including information

environment as a corporate responsibility towards its stakeholders, namely the

community. Based on the stakeholder theory, the company operates not only have

a personal interest in profit but must provide benefits to stakeholders. Disclosure

of information on the environment can be used as a form of corporate

responsibility that the company does not only focus on personal interests.

According to agency theory, one way to reduce information asymmetry by

signaling to the principle of environmental disclosure so that the company can

increase shareholder confidence in its transparency

Figure 2.1

Research Framework

Environmental Media

Environmental Disclosure

MEDIA _ EXIST

POS_MEDIA

NEG_MEDIA

NEUT_MEDIA

Control Variable

SIZE

ROA

LEV

H1a(+)

H1b(±)

20

2.4 Hipothesis Formulation

2.4.1 The Influence of Media Coverage on Environmental Disclosure

Ashforth and Gibbs (1990) states that the legitimacy of the company can be

obtained with a variety of ways including by conducting communication with on

stakeholders. Sustainability report which contained three aspects namely financial,

social, and environment can be used as external attributes that can be used by

companies to influence the views of the community. This communication is in

line with legitimacy theory stating that the interaction of the company and its

stakeholders can reduce risk and build long-term stability by meeting the

expectations of stakeholders.

The media coverage that exists in the middle of the community more or less affect

the views of society in assessing something. The media will build public

awareness of the importance of corporate social responsibility. Similarly, the

existence of media coverage about the environment where a company operates.

Rupley (2012) stated that the media coverage about the environment influence the

environmental disclosures made by the company. Brosius and Kepplinger (1990)

also suggested that the intensity of the media coverage about certain issues

affecting voluntary disclosures made by the company. The information contained

in the media coverage may under the reputation of a company. The reputation can

be either good or bad corresponds to the information that is reported.

Based on that background, the first hypothesis in this research is;

H1a ; The media coverage positively affects environmental disclosure.

21

2.4.2 The influence of Negative Media Coverage on Environmental

Disclosure

Media information regarding certain issues can affect a company's reputation,

both positive as well as negative issues. This also had an impact on voluntary

disclosures made by the company. Rupley (2012) shows that there is a positive

relationship between negative media coverage and environmental disclosure.

Deegan et al., (2002) stated in his work that, negative issues about the

environment will affect and impact on the community greater than positive issues.

This happens because the public feels the company has broken the social contract

in accordance with the explanation of the theory of legitimacy. Negative media

coverage will make the company's reputation being bad, so it will be offset by the

disclosure of a better environment. To get the confidence back of the public

companies need to do a better environmental disclosure so that the negative issues

that are covered by the media does not appear in the middle of the community.

The company would appear more transparent and establish a good reputation in

public perception.

Based on this background, the second hypothesis in this study is;

H1b ; Negative media coverage positively affects environmental disclosure

22

CHAPTER III

RESEARCH METHOD

3.1 Population dan Sample

3.1.1 Population

The population in this research are the companies listed in BEI in 2014, 2015,

and 2016. These data are able to represent the condition of financial statement

listed company in Indonesia.

3.1.2 Sample

This research used to purposive sampling method to determine sample. Purposive

sampling is the selection of samples that meet a certain criteria. The criteria used

are:

1. Company listed in BEI 2014-2016

2. The company publishes annual report and sustainiability report on the

company's website.

3.2 Types and Data Sources

The type of data in this study are secondary data. In this research the secondary

data were obtained from www.idx.co.id and the official website of the company in

the form of annual report and sustainability report. Supporting data used in this

23

research in the form of official news portal such as; KOMPAS, Antara News,

WALHI, news on the company's official website, and Indonesia Sustainability

Report Award (ISRA). Data collection methods used in this study is content

analysis. The method of collecting research data through observation techniques

and analysis of their contents or messages from a text, content of various

writings, or document, then classified into several categories or groups depending

on the criteria that have been set.

3.3 Operational Variable

3.3.1 Dependent Variable

1. Environmental Disclosure

Before measuring the environmental disclosure, first looking for a sample of the

company that publishes the financial report and sustainability report in the

company's official website. After getting a sample in accordance with the criteria,

then conducted an analysis of the content to categorize the components that can

support environmental disclosure. Environmental disclosure is abbreviated into

ED. ED is the information disclosed in the company's annual report and

sustainability report related to the environmental activities of the company.The

index used in this research was Clarkson (2006) and as many as 45 GRI guideline

items. This index is used to measure the broad environmental disclosures made by

the company. The index items are classified in two categories; hard and soft

disclosure.

Hard disclosure can be used to assure stakeholders that the company has a

commitment to environmental performance. Hard disclosure focusing on the

24

company's ability in governance, management system relating to the shield cover

environment, corporate credibility in environmental disclosure, conservation

efforts and disclosure relating loads with the environment. While soft diclosure

reveal about the vision and strategy of the company. Furthermore, the soft

disclosure can be used to assess the environmental profile of the company's

disclosure and disclosure of environmental initiatives including employee

training, response to environmental accidents, and involvement in providing

scholarships and donate to the community.

Figure 3.1

Environmental Disclosure Index

Hard Disclosure Items

A1) Governance Structure and Management Systems

1. Existence of a Department for pollution control and/or management

positions for env. management

2. Existence of an Environmental and/or a Public Issues Committee in the

board

3. Existence of terms and conditions applicable to suppliers and/or customers

regarding env. practices

4. Stakeholder involvement in setting corporate environmental policies

5. Implementation of ISO14001 at the plant and/or firm level

6. Executive compensation is linked to environmental performance

A2) Credibility

1. Adoption of GRI sustainability reporting guidelines or provision of a

CERES report

2. Independent verification/assurance about environmental information

disclosed in the EP report/Web

3. Periodic independent verifications/audits on environmental performance

and/or systems

4. Certification of environmental programs by independent agencies

5. Product Certification with respect to environmental impact

6. External Environmental Performance Awards and/or inclusion in a

Sustainability Index

7. Stakeholder involvement in the environmental disclosure process

8. Participation in voluntary environmental initiatives endorsed by EPA or

25

Department of Energy

9. Participation in industry specific associations/initiatives to improve

environmental practices

10. Participation in other environmental organizations/assoc. to improve

environmental practices (if not awarded under 8 or 9 above)

A3) Environmental Performance Indicators (EPI)

1. EPI on energy use and/or energy efficiency

2. EPI on water use and/or water use efficiency

3. EPI on green house gas emissions

4. EPI on other air emissions

5. EPI on TRI (land, water, air)

6. EPI on other discharges, releases and/or spills (not TRI)

7. EPI on waste generation and/or management (recycling, re-use, reducing,

treatment and disposal)

8. EPI on land and resources use, biodiversity and conservation

9. EPI on environmental impacts of products and services

10. EPI on compliance performance (e.g. exceedances, reportable incidents)

A4) Environmental Spending

1. Summary of dollar savings arising from environment initiatives to the

company

2. Amount spent on technologies, R&D and/or innovations to enhance

environ. perf. and/or efficiency

3. Amount spent on fines related to environmental issues

Soft Disclosure Items

A5) Vision and Strategy Claims

1. CEO statement on environmental performance in letter to shareholders

and/or stakeholders

2. A statement of corporate environmental policy, values and principles,

environ. codes of conduct

3. A statement about formal management systems regarding environmental

risk and performance

4. A statement that the firm undertakes periodic reviews and evaluations of

its environ. performance

5. A statement of measurable goals in terms of future env. performance (if

not awarded under A3)

6. A statement about specific environmental innovations and/or new

technologies

A6) Environmental Profile

1. A statement about the firm’s compliance (or lack thereof) with specific

environmental standards

2. An overview of environmental impact of the industry

3. An overview of how the business operations and/or products and services

26

impact the environment.

4. An overview of corporate environmental performance relative to industry

peers

A7) Environmental Initiatives

1. A substantive description of employee training in environmental

management and operations

2. Existence of response plans in case of environmental accidents

3. Internal Environmental Awards

4. Internal Environmental Audits

5. Internal certification of environmental programs

6. Community involvement and/or donations related to environ. (if not

awarded under A1.4 or A2.7 )

Measurement of Environmental disclosures by categorizing these components. A

value of 0 is given to indicate that there is no information about the component in

the sustainability report. A value of 1 is given to indicate that there is an

information about the component in the sustainability report.

3.3.2 Independent Variable

1. Media Coverage

The media is used as a gauge for environmental legitimacy. A proxy that is used

in the form of newspapers that published online both in the official website of the

company or the national media portal.Media sources used include KOMPAS,

WALHI national, Republika. Keywords used to find the news disclosure are;

"environment", "waste", "pollution", "sustainable", "GRI", and "CSR". There are

two models used in identifying articles.

Model 1 is measure by counting whethere there is any media coverage about one

company’s environmenyal news. By using content analysis method, the

environmental news are divide into three categories. There are positive, negative,

and neutral. The variable EXIST_MED will be measure by using Coefficient of

Janis and Fadner (Janis and Fadnes, 1995). Coefficient of Janis and Fadner is used

27

to measure the degreee of partiality of newspaper for a particular object. This

formula can be applied by counting certain words from content news. This

coefficient value is -1.0 to 1.0. Positive article has a higher value than negative

will given 1.0 and when negative articles has higher value of positive article will

given -1.0. The Coefficient of Janis and Fadner is measured as follows;

1. If the positive media are more than negative media;

The sentence is said to be positive is the news sentence does not have a

denial and is supported by facts. It can affect readers toward positive

direction. Positive media coverage also make reader to support and willing

to work with company. In this case, we use;

2. If negative media are more than positive media;

The sentence is negative when there is presence of the word “no” or “not”.

It can effect readers to take contrary actions and unwilling to work with

company. In this case, we use;

3. If positive media is the same as negative media;

The formula used when the number of positive media is equal to negative

media. It denoted by 0

e ; the number of positive environmental articles

c ; the number of negative environmental articles

28

t ; the number of e and c

Model 2 is measure by classifying the media coverage into three categories. They

are positive, negative, and neutral. The variables POS_MED, NEG_MED.,

NEUT_MED will given a number according to news found. Similiar with model

1, the news clasiffication using the positive and negative sentence. The news said

to be neutal if news sentence does not contain any sentiments and only declare

about fact. Neutral news does not affect readers to take an actions.

3.3.3 Control Variable

1. Company Size

In this study, the size of the company described the scale of the company aimed at

the value of the total assets in the balance sheet at the end of year. The size

company made the control variable to find out the size of the potential influence

on the amount of environmental disclosure, the index used as measured by the

natural log of the total assets of the company be consistent (Williams, 2001).

2. Profitability

Profitability is the ability of the company to generate profits within a specified

time.In this study of profitability considered variable control because the greater

the level of profitability it will be the greater disclosure of who carried out the

company.ROA ratio is used as a measure of the profitability of the company. The

larger the ROA, owned by the company, the more efficient use of assets by the

company to operate so that it can enlarge profits.

29

3. Leverage

Leverage represents the proportion of the use of debt to finance investment

company. The higher the level the higher the leverage the company's reliance on

debt so that the larger the risks faced and investors will demand a higher profit.In

this study, the leverage is measured by using the debt to equity ratio long-term.the

control variable as leverage because investors wanted the higher profit will insist

on disclosure of financial statements of the company.

3.4 Data Analysis Method

3.4.1 Descriptive Statistic Analysis

Descriptive statistics give descriptive or description of data seen from mean,

standard deviation, variance, maximum, minimum, sum, range, kurtosis and

skewness (Ghozali, 2016). Descriptive statistical test in research is used to

describe the existing data in this study which consists of environmental disclosure

and media coverage. The measurements in this study consist of minimum,

maximum, mean, and standard deviation.

3.4.2. Classic Assumption Test

3.4.2.1 Normality Test

30

Normality test is a test to determine the normality (normal or not) residual

research data. If the residual is not normally distributed, the regression test to

observe the significance of the independent variable to the dependent variable can

not be applied. The way to detect whether the residual is normally distributed is

by P-P plot analysis. Normal distribution will form a straight line diagonal, and

ploting the residual data will be compared with the diagonal line. If the residual

data distribution is normal, then the line representing the real data will follow its

diagonal line.

3.4.2.2 Multicollinearity Test

Multicolinearity test aims to test whether the regression model found a correlation

between independent variables (independent). Multicolinearity in this study is

seen from the tolerance value and the opposite of variance inflation factor (VIF).

In this research multicollinearity test seen from tolerance and variance inflation

factor (VIF) which if have tolerance value ≥ 0,05 or equal to VIF ≤ 5 mean that

model is free from multicolinearity.

3.4.2.3 Heteroscedasticity Test

Heteroscedasticity test aims to test whether in the regression model there is a

variance inequality of the residual one observation to another observation. If the

variance of the residual one observation to another observation remains, it is

called heteroscedasticity test. Detection of whether or not heteroscedasticity done

by looking at whether there is a particular pattern on the scatterplot chart. By

analyzing certain patterns, such as points that exist form a certain pattern that

regular (wavy, widened and then narrowed), then induced has happened

31

heteroscedasticity. If there is no clear pattern, as well as the points spread out

above and below the number 0 on the Y axis, there is no heteroscedasticity.

3.4.2.4 Autocorrelation Test

To detect the presence or absence of autocorrelation by using test run test. If there

is no correlation between residuals then it is said that residuals are random or

random. Run test is used to see whether residual data occurs randomly or not

(systematic) (Ghozali, 2016).

Decision making in test run test:

• If the value of Asymp. Sig. (2-tailed) is smaller <from 0.05 then there is the

symptoms of autocorrelation.

• If the value of Asymp. Sig. (2-tailed)> greater than 0.05 then there is no

autocorrelation symptoms.

3.4.3 Multiple Reggresion Test

Multiple regression method was chosen because this study examines indepent

variables that number more than one dependent variable. The multiple regression

model is used to determine the most significant indepent variables and to test the

significant influence of the independent variables on the dependent variable. The

formulation of this model of analysis are;

a. Model Regresi 1: The effect of media covergae on environmental

disclosure

ED = β0 + β1 EXIST_MED + β2 Size + β3 ROA + β4 LEV + ε

32

b. Model Regresi 2: The effect of negative media coverage on environmental

disclosure

ED = β0 + β1 POS_MED + β2 NEG_MED + β3 NEUT_MED + β4 Size +

β5 ROA + β6 LEV + ε

Notation ;

β0 : Constanta

β : Coeffisien regression

ED : Environmental Disclosure

EXIST_MED : Media coverage exist

POS_MED ; Positive media coverage

NEG_MED : Negative media covergae

NEUT_MED : Neutral media coverage

Size : Company Size

Lev : Th level of corporate debt

ROA : The level of profitability of the company

ε : Error

Regression analysis was used to test the hypothesis in this. The test used in this

analysis is a test of the determination of the coefficient (R2), the simultaneous

significance tests (test statistic F), and a test of the significance of individual

parameters (test statistic t).

1. Coefficient of Determination Test (R2)

The coefficient of determination (R2) is used to measure how much the ability of

the model in explaining the variation in the dependent variable. The value of the

coefficient of determination is between zero and one. The value of R2 that small

means the ability of independent variables in explaining variation in the

33

independent variables is very limited.A value that approximates the one means of

independent variables provide almost all of the information needed to predict the

variation in the dependent variable.Therefore, many researchers advocate the

adjusted R2 values to use at the time of mengeveluasi where the best regression

model.Unlike R2, adjusted R2 value can go up or down if one independent

variable is added into the model (Ghozali, 2016).

2. Simultaneous Significance Test (Test Statistic F)

Test statistic F basically indicate whether all independent variables included in the

model have the influence of the dependent variables against together (Ghozali,

2016).Way to find out is to compare the value of F F value count table.When F

count greater than the value of table F, then accepted alternative hypothesis means

that all independent variables are jointly and significantly affect the dependent

variable.Besides, it can also be seen based on probability. If the probability (of

significance) is less than 0.05 (α) then the independent variable simultaneously

(simultaneous) effect on the dependent variable.

3. Individual Parameter Significant Test (Test Statistic t)

The test statistic t in this research is to determine the significance of independent

variable coefficient to predict the dependent variable.Significance levels used in

this study was 0.05. Rejection or acceptance of the hypothesis is done with the

following criteria:

1. If the value of significance (sig) is greater than 0.05 then the hypothesis is

rejected.

2. If the significance value (sig) is smaller than 0.05 then the hypothesis can

not rejected.

54

CHAPTER V

CONCLUSION AND RECOMMENDATION

5.1 Conclusion

This study aims to determine the effect of media coverage on environmental

disclosure on registered companies that publish sustainability reports for the 2014-

2016 period. Based on the results of the study, it can be concluded as follows:

1. Based on the first hypothesis, the media coverage is not approved in

environmental disclosures. This shows that media coverage in the community

cannot influence the environmental disclosures disclosed by the company.

2. Based on the second hypothesis shows that negative media disclosure has no

effect on environmental disclosure. This shows the poor media coverage in

the community does not affect the environmental disclosures disclosed by the

company.

3. Profitability proxied by Return on Assets as a control variable in this study

does not affect the company to publish sustainability reports, while the other

control variables, namely company size and leverage affect the company to

publish financial statements.

55

5.2 Limitations of Research

The limitations in this study are as follows:

1. This study uses independent variables which only have a low effect on the

dependent variable. That is, many other supporting factors outside the

variables in this study.

2. This research has an element of subjectivity in determining the index of

environmental disclosure and measuring the type of media coverage.

5.3 Suggestion

In future research there are several things that need to be considered,

including the following:

1. Further research to expand the company's sample and add other online media

sources that publish environmental disclosure as to minimize the element of

subjectivity.

2. It is recommended for further research to use another proxy of the variables

used in order to produce a high influence on the dependent variable.

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