Eco-Innovation on the Cost of Equity and Financial Performance: The Moderating Role of Ownership Structure

Abstract

This study aims to examine the effect of eco-innovation on the 
cost of equity and financial performance moderated by ownership 
structure. This study uses quantitative methods, and data is 
analyzed using panel data analysis with Eviews. Samples obtained 
were 237 companies from companies listed on the Indonesia Stock 
Exchange period 2017-2020. The results show eco-innovation 
does not affect the cost of equity because the issue of eco
innovation has not become a crucial issue in public; eco
innovation hurts financial performance because of significant 
expenses for implementation. Ownership structure does not 
affect eco-innovation, meaning shareholders cannot intervene in 
the implementation of eco-innovation. Ownership structure 
(managerial, family, institutional, foreign) harms the cost of equity 
while ownership structure (government) has a positive impact on 
the cost of equity. Ownership structure has a negative effect on 
financial performance because of conflict of interest between 
shareholders and management, ownership structure does not 
moderate the relationship between eco-innovation and cost of 
equity or financial performance because the ownership structure 
in this research tends not to change. The implications are 
addressed to investors, company, and future researchers. The 
implications also need government support in socializing the 
importance of eco-innovation so investors are more observant in 
investing. The ownership structure consists of managerial, 
institutional, family, government, and foreign ownership 
structures, which are used as moderating variables and 
independent variables. The five types of ownership structures are 
examined at once.