The Influence of Working Capital Management, Sustainable Investment, and Environmental Performance on Profitability and Firm Value in the Textile Industry

Nimas Galuh Phitaloka; Mulyanto Nugroho; Nekky Rahmiyati

doi:10.55927/jsih.v4i2.293

Authors

Nimas Galuh Phitaloka Universitas 17 Agustus 1945 Surabaya
Mulyanto Nugroho Universitas 17 Agustus 1945 Surabaya
Nekky Rahmiyati Universitas 17 Agustus 1945 Surabaya

DOI:

https://doi.org/10.55927/jsih.v4i2.293

Keywords:

Working Capital Management, Sustainable Investment, Environmental Performance, Profitability, Firm Value

Abstract

The integration of environmental sustainability and financial performance has become a growing concern in emerging economies, particularly within resource-intensive sectors such as the textile industry. This study investigates how working capital management, sustainable investment, and environmental performance affect firm profitability and firm value. It also examines the mediating role of profitability in these relationships. A quantitative research design was employed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The sample consisted of 15 textile companies listed on the Indonesia Stock Exchange (IDX) from 2018 to 2023. Data were collected from audited financial statements and sustainability reports. Variables include working capital management, sustainable investment, environmental performance, profitability (measured by ROA), and firm value (measured by Tobin’s Q). The empirical results reveal that working capital management and sustainable investment have no significant effect on either profitability or firm value. Environmental performance negatively and significantly impacts profitability but positively influences firm value. Moreover, profitability does not significantly affect firm value and does not mediate the relationship between the independent variables and firm value.

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