The Impact of Current Ratio, Debt to Equity Ratio, and Return on Assets on Sustainability Reporting: Empirical Evidence from LQ45 Companies

Research Aims: The purpose of this study is to examine the effect of financial aspects on sustainability reporting by conducting an empirical analysis of companies included in the LQ45 index. Design/methodology/approach: The annual data were analysed through a quantile regression model. Research Findings: The results of the study show that Current Ratio (CR) and Debt to Equity Ratio (DER) have a negative and significant effect on the Sustainability Report (SR). In contrast, Return on Assets (ROA) has a positive and significant effect on Sustainability Reporting (SR). Theoretical Contribution/Originality: This finding are consistent with the teories of trade- off, financial constraints, agency, pecking order, legitimacy, and stakeholders, which explain how financial factors influence a company’s sustainability strategy. The quantile regression model used in this study indicates that financial variables contribute significantly in explaining the variation in sustainability disclosure, with a Pseudo R-squared value of 57.81 percent. This suggests that financial factors play an important role in determining the extent to which companies disclose their sustainability reports. Research limitation and implication: This study is limited to a number of companies accessible to the researcher and constrained by the research implementation period. The study highlights the need for companies to balance their financial strategies with sustainability policies, not only to maintain financial stability but also to enhance transparency and accountability to stakeholders