Abstract
Green innovation is increasingly important for enhancing corporate competitiveness and market value through improved environmental performance. This study examines the mediating role of profitability in the relationship between green innovation and market value among companies listed on the Indonesia Stock Exchange. Using a quantitative approach with Structural Equation Modeling, the analysis evaluates both direct and indirect effects among the key variables. The results show that green innovation has a positive and significant effect on profitability, and profitability positively and significantly influences market value. The findings further indicate that green innovation directly and significantly enhances market value, suggesting that the market positively values firms’ environmental innovation initiatives. However, profitability does not mediate the relationship between green innovation and market value, implying that investors respond to green innovation independently of short-term financial performance. This study underscores the strategic importance of green innovation as a determinant of firm value in an emerging-market context and highlights its role as a credible market signal, even when its benefits are not fully captured through profitability.