Sustainability report, financial performance and investor reaction: A partial least square perspective of Indonesian public companies

The purpose of this study was to examine the effect of financial performance on investor reaction with a sustainability report as the mediating variable. The sample was drawn from 34 Indonesian companies that disclosed a corporate sustainability report. Partial Least Square (PLS) was used to analyze direct and indirect effects. The results showed that financial performance (measured by profitability and leverage) have positive and negative effects on investor reaction. In addition, the sustainability report, which is corporate social responsibility disclosure, mediates the relationship of financial performance and investor reaction. This means that investors in the Indonesian capital market pay attention to a company's actions concerning social activities disclosed in a sustainability report. Otherwise, the greatest attention is still on the financial performance.