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p-Index From 2021 - 2026
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All Journal COUNT: Journal of Accounting, Business and Management
Fadhla Khanifa
Accounting Department, Universitas Pembangunan Nasional ‘Veteran’ Yogyakarta
Economics, Econometrics & Finance

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MARKET RESPONSE DICHOTOMY: HOW CARBON DISCLOSURE SHAPES THE COST OF CAPITAL IN ENERGY AND BASIC MATERIALS SECTORS Dwiyanjana Santyo Nugroho; Fadhla Khanifa
Count : Journal of Accounting, Business and Management Vol. 4 No. 1 (2026): July: COUNT: Journal of Accounting, Business and Management
Publisher : CV. Fahr Publishing

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.61677/count.v4i1.952

Abstract

Environmental degradation from industrial activities has led to a significant increase in CO2 emissions, prompting stakeholders to demand higher corporate environmental commitment. Consequently, transparent carbon reporting has become a critical factor influencing investment decisions and corporate financing costs. This study aims to analyze the impact of carbon disclosure on the cost of capital within the Energy and Basic Materials sectors and to empirically test for significant differences in market responses between these two carbon-intensive industries. Using a quantitative approach and panel data analysis, this research examines 42 companies (168 observations) listed on the stock exchange from 2021 to 2024. Regression models (Fixed Effect for Energy and Random Effect for Basic Materials) were employed, alongside interact ion term analysis to identify cross-sectoral differences. Findings reveal that carbon disclosure significantly increases the cost of capital in the Energy sector, suggesting that investors perceive transparency as a signal of high transition risk. Conversely, carbon disclosure has no significant effect in the Basic Materials sector, where the cost of capital is primarily driven by leverage and governance. Interaction analysis further confirms a marginal difference (p=0.064) in market mechanisms between sectors. This study concludes that capital markets do not respond uniformly to carbon information; rather, sectoral characteristics dictate whether transparency is viewed as a risk signal or remains secondary to traditional financial fundamentals.
Co-Authors Dwiyanjana Santyo Nugroho