From Control Systems to Capital Structure: How Management and Environmental Control Packages Shape Leverage Decisions and Dual Performance in Indonesian Listed Coal Miners

Firms in carbon-intensive industries face rising sustainability pressures that increasingly shape financing conditions and performance outcomes. This study examines whether management control systems (MCS) and environmental management control systems (EMCS), conceptualized as control packages, influence capital structure decisions (leverage) and, in turn, dual performance (financial and environmental) among Indonesian listed coal-mining firms. Using a census of 28 firms and survey-based measures analyzed with PLS-SEM, we test direct and mediated relationships among MCS, EMCS, leverage, and performance. The results show that both MCS and EMCS positively affect leverage decisions. Leverage, in turn, has a strong positive effect on overall firm performance. EMCS also exhibits a significant direct effect on performance, whereas the direct effect of MCS on performance is not significant. Mediation analysis indicates that leverage fully mediates the MCS–performance relationship and partially mediates the EMCS–performance relationship. These findings suggest that, in a carbon-intensive setting, control packages contribute to sustainability-relevant outcomes primarily by improving the quality of financing choices that enable sustained investment and risk management. The study highlights leverage as a key financial mechanism linking sustainability governance to performance and offers implications for integrating environmental controls into budgeting and capital-structure policy to support transition readiness.