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Trade Policy Uncertainty, Green Investment and Governance: Evidence from Indonesian Listed Firms

Hasanuddin Islamic Financial & Institutions · Vol. UME (2026) · pp. 1–21

Published
2026-06-11
Publisher
Faculty of Economics and Business, Hasanuddin University
Language
en
License
creativecommons.org/licenses/by/4.0

Abstract

This study examines how trade policy uncertainty affects firm value directly and indirectly through green investment, and how corporate governance conditions these relationships in an emerging market context. Using an unbalanced panel of 230 non financial firms listed on the Indonesia Stock Exchange over 2010–2024 (2,870 firm year observations), the analysis draws on secondary data from financial reports, Refinitiv ESG and governance databases, and the national PROPER environmental rating scheme. Trade policy uncertainty is measured using a newspaper-based trade policy uncertainty index combined with firm and industry level trade exposure indicators. Fixed effects panel regressions and dynamic system GMM are employed to address unobserved heterogeneity, persistence and potential endogeneity. The results indicate that trade policy uncertainty reduces firm value, while green investment and governance are positively associated with valuation. Trade policy uncertainty is positively related to green investment, and green investment partially mediates the negative effect of uncertainty on firm value. Corporate governance strengthens the sensitivity of green investment to trade policy uncertainty and mitigates the adverse impact of uncertainty on firm value. These patterns remain robust to alternative measures of firm value and environmental performance, as well as dynamic specifications. The findings highlight the role of green investment and governance as strategic adaptation mechanisms that help Indonesian firms preserve value under volatile trade conditions.

Keywords

Collaboration network of the authors

12 authors · 39 co-authorship links

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Co-authorOrganisationJoint articles
Ahmad DaniAffiliation unknown2
Muhammad FurqanAffiliation unknown2
Aidan Athaullah MuhammadAffiliation unknown2
Sheren ReginaAffiliation unknown2
Fahmi Ariz Dharmawan AmbaAffiliation unknown2
Ahmad Falah Arifin AdamAffiliation unknown2
Nur AsniAffiliation unknown2
NurkarmilaAffiliation unknown2
Wutthinan YangsirikunAffiliation unknown2

Affiliations come from OpenAlex; journal OAI-PMH metadata carries none. Authors without an OpenAlex ID are matched by name, which can merge or split people.

Metadata source: OAI-PMH (metadata jurnal) https://journal.unhas.ac.id/index.php/hifi/oai, first harvested 5 Nov 2026, last seen 8 Nov 2026.
Original metadata (oai_dc) 
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	<dc:title xml:lang="en">Trade Policy Uncertainty, Green Investment and Governance: Evidence from Indonesian Listed Firms</dc:title>
	<dc:creator xml:lang="en">Sallehhuddin, Arlyn Sofea</dc:creator>
	<dc:creator xml:lang="en">Yusuf, Sugiarti</dc:creator>
	<dc:creator xml:lang="en">Rasydan, Anis Raihana Ahmad Mubin</dc:creator>
	<dc:subject xml:lang="en">Corporate governance</dc:subject>
	<dc:subject xml:lang="en">Environmental capital expenditure</dc:subject>
	<dc:subject xml:lang="en">Indonesia</dc:subject>
	<dc:subject xml:lang="en">SDG 12</dc:subject>
	<dc:subject xml:lang="en">Trade exposure</dc:subject>
	<dc:subject xml:lang="en">Trade policy uncertainty</dc:subject>
	<dc:description xml:lang="en">This study examines how trade policy uncertainty affects firm value directly and indirectly through green investment, and how corporate governance conditions these relationships in an emerging market context. Using an unbalanced panel of 230 non financial firms listed on the Indonesia Stock Exchange over 2010–2024 (2,870 firm year observations), the analysis draws on secondary data from financial reports, Refinitiv ESG and governance databases, and the national PROPER environmental rating scheme. Trade policy uncertainty is measured using a newspaper-based trade policy uncertainty index combined with firm and industry level trade exposure indicators. Fixed effects panel regressions and dynamic system GMM are employed to address unobserved heterogeneity, persistence and potential endogeneity. The results indicate that trade policy uncertainty reduces firm value, while green investment and governance are positively associated with valuation. Trade policy uncertainty is positively related to green investment, and green investment partially mediates the negative effect of uncertainty on firm value. Corporate governance strengthens the sensitivity of green investment to trade policy uncertainty and mitigates the adverse impact of uncertainty on firm value. These patterns remain robust to alternative measures of firm value and environmental performance, as well as dynamic specifications. The findings highlight the role of green investment and governance as strategic adaptation mechanisms that help Indonesian firms preserve value under volatile trade conditions.</dc:description>
	<dc:publisher xml:lang="en">Faculty of Economics and Business, Hasanuddin University</dc:publisher>
	<dc:date>2026-06-11</dc:date>
	<dc:type>info:eu-repo/semantics/article</dc:type>
	<dc:type>info:eu-repo/semantics/publishedVersion</dc:type>
	<dc:type xml:lang="en">Peer-reviewed Article</dc:type>
	<dc:format>application/pdf</dc:format>
	<dc:identifier>https://journal.unhas.ac.id/index.php/hifi/article/view/54600</dc:identifier>
	<dc:source xml:lang="en">Hasanuddin Islamic Financial &amp; Institutions; VOLUME 1 NUMBER 1, 2026; 1-21</dc:source>
	<dc:language>en</dc:language>
	<dc:relation>https://journal.unhas.ac.id/index.php/hifi/article/view/54600/15127</dc:relation>
	<dc:rights xml:lang="en">Copyright (c) 2026 Hasanuddin Islamic Finance &amp; Institution</dc:rights>
	<dc:rights xml:lang="en">https://creativecommons.org/licenses/by/4.0</dc:rights>
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