<![CDATA[The increasing implementation of sustainability reporting has encouraged companies to improve transparency and accountability toward stakeholders. However, empirical evidence regarding its effect on firm value remains inconclusive, particularly concerning the mechanism through which sustainability reporting influences firm value in emerging markets. This study aims to examine the effect of sustainability reporting on firm value and investigate the mediating role of cost of capital in manufacturing companies listed on the Indonesia Stock Exchange during 2020–2024. This research employs a quantitative approach using secondary data obtained from annual reports, sustainability reports, and financial statements. The sample was selected through purposive sampling, and the data were analyzed using panel data regression with the Fixed Effect Model and Sobel test for mediation analysis. The findings reveal that sustainability reporting has a positive and significant effect on firm value, indicating that greater sustainability disclosure enhances investor confidence and market valuation. Furthermore, sustainability reporting has a negative and significant effect on the cost of capital, suggesting that higher disclosure reduces information asymmetry and perceived investment risk. The results also show that the cost of capital negatively and significantly affects firm value. In addition, the Sobel test confirms that the cost of capital significantly mediates the relationship between sustainability reporting and firm value. These findings indicate that sustainability reporting not only directly increases firm value but also indirectly enhances firm value by reducing the cost of capital. Therefore, sustainability reporting serves as an important strategic instrument for improving corporate transparency, financing efficiency, and long-term firm value.]]>
