Green Accounting and Environmental Performance Through Material Flow Cost Accounting

Abstract

This study examines the effect of green accounting on the environmental performance of Indonesian manufacturing companies, with Material Flow Cost Accounting (MFCA) as a mediating variable. Previous studies have reported inconsistent findings and have rarely examined MFCA as a mediator in emerging-market manufacturing contexts. Using secondary data from 28 manufacturing companies listed on the Indonesia Stock Exchange during 2021–2024 (112 firm-year observations), this study employs Partial Least Squares Structural Equation Modeling (PLS-SEM) with WarpPLS. The results indicate that green accounting has a positive and significant effect on environmental performance, both directly and indirectly through MFCA, confirming MFCA's mediating role. These findings suggest that integrating green accounting with MFCA can strengthen corporate environmental performance and sustainability practices. This study contributes by providing empirical evidence from Indonesian manufacturing firms and integrating Legitimacy Theory and Stakeholder Theory to explain the mediating role of MFCA in enhancing the relationship between green accounting and environmental performance.