Company Age, Environmental Performance, and Financial Performance of Indonesia–Malaysia Manufacturing Companies

Abstract

This research investigates how firm age and environmental performance influence the financial performance of manufacturing firms listed in Indonesia and Malaysia over the 2021–2025 period, with Return on Assets (ROA) used as the proxy for financial performance. A panel data regression approach with a purposive sampling method was applied, and the Hausman test identified the Fixed Effect Model as the most appropriate estimation technique. Diagnostic checks confirm that the model satisfies normal distribution, is free of multicollinearity, and shows no autocorrelation, though heteroscedasticity was detected and corrected using robust standard errors clustered at the firm level. Finding show that environmental performance does not have a major impact.affect financial performance, while firm age has a significant negative impact influence on financial performance. These results are interpreted using Legitimacy Theory, which views environmental initiatives as a means of compliance rather than a short-term profit motive, and Firm Life Cycle Theory, which links older firms to organizational inertia and rigid structures that diminish profitability. This research offers comparative evidence on the links between environmental performance and financial outcomes.performance,as well as the relationship between firm age and financial performance.drawn from two manufacturing markets in ASEAN.