Does CSR and earning management mediate GCG on corporate performance?

Miftaqul Hidah; Ida Bagus Panji Sedana

doi:10.21744/irjmis.v8n5.1920

Authors

Miftaqul Hidah
miftaqulhidah96@gmail.com
Faculty of Economics and Business, Udayana University, Denpasar, Indonesia
Ida Bagus Panji Sedana Faculty of Economics and Business, Udayana University, Denpasar, Indonesia

Keywords:

corporate performance, CSR, earning management, GCG

Abstract

GCG is a system used to direct, manage company activities, determine business goals, and achieve the company's vision and mission. The purpose of this study is to analyze the role of CSR and earning management in mediating the influence of GCG on corporate performance. The population of this study is manufacturing companies on the Indonesia Stock Exchange in 2016-2019. The sample used is 8 manufacturing companies that publish annual reports and sustainability reports for 2016-2019. This study uses path analysis techniques with SPSS Version 24. The results of the study found that GCG has a positive effect on corporate performance, CSR hurts corporate performance, and GCG also has a positive effect on CSR. CSR can mediate the relationship of GCG to corporate performance. However, the research also found that GCG has no effect on earning management, earnings management has no effect on corporate performance, and earning management is unable to mediate the relationship between GCG and corporate performance.

Downloads

Download data is not yet available.

References

Aida, R. N., & Rahmawati, E. (2015). Pengaruh modal intelektual dan pengungkapannya terhadap nilai perusahaan: Efek intervening kinerja perusahaan. Journal of Accounting and Investment, 16(2), 96-109.

Ajina, A., & Habib, A. (2017). Examining the relationship between earning management and market liquidity. Research in International Business and Finance, 42, 1164-1172. https://doi.org/10.1016/j.ribaf.2017.07.054

Al Mubarak, M., & Hamdan, A. (2016). The impact of corporate governance on market capitalization: Evidence from Bahrain Bourse. Corporate Ownership and Control, 13(3), 120-129.

Alexander, G. J., & Buchholz, R. A. (1978). Corporate social responsibility and stock market performance. Academy of Management journal, 21(3), 479-486.

Ariyani, R. D., & Gunawan, J. (2014). Pengaruh Pengungkapan Good Corporate Governance Dan Corporate Social Responsibility terhadap Kinerja Perusahaan Perbankan. Jurnal Magister Akuntansi Trisakti, 1(2), 181-198.

Aupperle, K. E., Carroll, A. B., & Hatfield, J. D. (1985). An empirical examination of the relationship between corporate social responsibility and profitability. Academy of management Journal, 28(2), 446-463.

Bauman, C. W., & Skitka, L. J. (2012). Corporate social responsibility as a source of employee satisfaction. Research in organizational Behavior, 32, 63-86. https://doi.org/10.1016/j.riob.2012.11.002

Chandrasegaram, R., Rahimansa, M. R., Rahman, S. K., Abdullah, S., & Mat, N. N. (2013). Impact of audit committee characteristics on earnings management in Malaysian public listed companies. International Journal of Finance and Accounting, 2(2), 114-119.

Chi, C. W., Hung, K., Cheng, H. W., & Lieu, P. T. (2015). Family firms and earnings management in Taiwan: Influence of corporate governance. International Review of Economics & Finance, 36, 88-98. https://doi.org/10.1016/j.iref.2014.11.009

Chijoke-Mgbame, A. M., Mgbame, C. O., Akintoye, S., & Ohalehi, P. (2019). The role of corporate governance on CSR disclosure and firm performance in a voluntary environment. Corporate Governance: The International Journal of Business in Society.

Ching, C. P., Teh, B. H., San, O. T., & Hoe, H. Y. (2015). The Relationship among Audit Quality, Earnings Management, and Financial Performance of Malaysian Public Listed Companies. International Journal of Economics & Management, 9(1).

Claessens, S., & Yurtoglu, B. B. (2012). Corporate governance and development: An update.

Daily, C. M., & Dalton, D. R. (1992). The relationship between governance structure and corporate performance in entrepreneurial firms. Journal of Business Venturing, 7(5), 375-386. https://doi.org/10.1016/0883-9026(92)90014-I

Deegan, C. (2002). Introduction: The legitimising effect of social and environmental disclosures–a theoretical foundation. Accounting, Auditing & Accountability Journal.

Dillon, J. T. (1984). Research on questioning and discussion. Educational leadership, 42(3), 50-56.

Djamilah, S., & Surenggono, S. (2017). Corporate Social Responsibility Sebagai Variabel Pemediasi Pengaruh Good Corporate Governance Terhadap Kinerja Keuangan. AKRUAL: Jurnal Akuntansi, 9(1), 41-53.

Falck, O., & Heblich, S. (2007). Corporate social responsibility: Doing well by doing good. Business horizons, 50(3), 247-254. https://doi.org/10.1016/j.bushor.2006.12.002

Freeman, R. B., & Medoff, J. L. (1984). What do unions do. Indus. & Lab. Rel. Rev., 38, 244.

Friza, T., & Tanjung, F. (2016). An Analysis Of The Third Year Students’ability In Translating News Item Text From English Into Indonesian. Abstract of Undergraduate, Faculty of Education, Bung Hatta University, 5(1).

Garas, S., & ElMassah, S. (2018). Corporate governance and corporate social responsibility disclosures: The case of GCC countries. Critical perspectives on international business.

Garson, G. D. (2012). Testing statistical assumptions. Asheboro, NC: Statistical Associates Publishing.

Griffin, J. J., & Mahon, J. F. (1997). The corporate social performance and corporate financial performance debate: Twenty-five years of incomparable research. Business & society, 36(1), 5-31.

H. C., Lin, I. C., & Lai, C. F. (2009). The effects of corporate governance on firm performance. Changua: National Changua University of Eductaion.

Hamdan, A. M. M., & Al Mubarak, M. M. S. (2017). The impact of board independence on accounting-based performance: Evidence from Saudi Arabia and Bahrain. Journal of Economic and Administrative Sciences.

Healy, P. M., & Wahlen, J. M. (1999). A review of the earnings management literature and its implications for standard setting. Accounting horizons, 13(4), 365-383.

Hermiyetti, H., & Manik, E. N. (2013). The influence of good corporate governance mechanism on earnings management: empirical study in Indonesian stock exchange listed company for periods of 2006-2010. Indonesian Capital Market Review.

Indriani, I. A. D., Rahayu, M., & Hadiwidjojo, D. (2019). The influence of environmental knowledge on green purchase intention the role of attitude as mediating variable. International Journal of Multicultural and Multireligious Understanding, 6(2), 627-635.

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of financial economics, 3(4), 305-360. https://doi.org/10.1016/0304-405X(76)90026-X

Johari, N. H., Saleh, N. M., Jaffar, R., & Hassan, M. S. (2009). The influence of board independence, competency and ownership on earnings management in Malaysia. The influence of board independence, competency and ownership on earnings management in Malaysia. International Journal of Economics and Management, 2 (2), 281-306.

Kabir, R., & Thai, H. M. (2017). Does corporate governance shape the relationship between corporate social responsibility and financial performance?. Pacific Accounting Review.

Khan, I., & Zahid, S. N. (2020). The impact of Shari’ah and corporate governance on Islamic banks performance: evidence from Asia. International Journal of Islamic and Middle Eastern Finance and Management.

Klein, A. (2002). Audit committee, board of director characteristics, and earnings management. Journal of accounting and economics, 33(3), 375-400. https://doi.org/10.1016/S0165-4101(02)00059-9

Kurniati, S. (2019). Stock returns and financial performance as mediation variables in the influence of good corporate governance on corporate value. Corporate Governance: The International Journal of Business in Society.

Mahrani, M., & Soewarno, N. (2018). The effect of good corporate governance mechanism and corporate social responsibility on financial performance with earnings management as mediating variable. Asian Journal of Accounting Research.

Mardnly, Z., Mouselli, S., & Abdulraouf, R. (2018). Corporate governance and firm performance: an empirical evidence from Syria. International Journal of Islamic and Middle Eastern Finance and Management.

Moratis, L. (2017). The credibility of corporate CSR claims: a taxonomy based on ISO 26000 and a research agenda. Total Quality Management & Business Excellence, 28(1-2), 147-158.

Moratis, L., & Widjaja, A. T. (2014). Determinants of CSR standards adoption: exploring the case of ISO 26000 and the CSR performance ladder in The Netherlands. Social Responsibility Journal.

Mwangi, C. I., & Jerotich, O. J. (2013). The relationship between corporate social responsibility practices and financial performance of firms in the manufacturing, construction and allied sector of the Nairobi Securities Exchange. International Journal of Business, Humanities and Technology, 3(2), 81-90.

Nehru, R. S. S. (2016). Corporate social responsibility & education for sustainable development. International Research Journal of Engineering, IT and Scientific Research, 2(3), 72-81.

Nuryana, Y., & Surjandari, D. A. (2019). The effect of good corporate governance mechanism, and earning management on company financial performance. Global Journal of Management and Business Research.

Prastiti, N., Sari, R. P., & Setiawan, L. A. (2015). Penerapan It Human Resource Menggunakan PER02/MBU/2013 dan Cobit 4.1 untuk Mendukung Good Corporate Governance (GCG)(Studi Kasus: PT. PLN (Persero) Area Surabaya Selatan). Proceedings Konferensi Nasional Sistem dan Informatika (KNS&I).

Purbawangsa, I. B. A., Solimun, S., Fernandes, A. A. R., & Rahayu, S. M. (2019). Corporate governance, corporate profitability toward corporate social responsibility disclosure and corporate value (comparative study in Indonesia, China and India stock exchange in 2013-2016). Social Responsibility Journal.

Putra, I. G. B. W. P., Sujana, I. K., Suprasto, H. B., & Gayatri, G. (2019). Effect of corporate social responsibility and institutional ownership of tax avoidance with executive characters as moderator. International Research Journal of Management, IT and Social Sciences, 6(6), 201-206.

Ranängen, H., Zobel, T., & Bergström, A. (2014). The merits of ISO 26000 for CSR development in the mining industry: a case study in the Zambian Copperbelt. Social Responsibility Journal.

Rodriguez-Fernandez, M. (2016). Social responsibility and financial performance: The role of good corporate governance. BRQ Business Research Quarterly, 19(2), 137-151. https://doi.org/10.1016/j.brq.2015.08.001

Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of business research, 68(2), 341-350. https://doi.org/10.1016/j.jbusres.2014.06.024

Singh, D., & Delios, A. (2017). Corporate governance, board networks and growth in domestic and international markets: Evidence from India. Journal of World Business, 52(5), 615-627. https://doi.org/10.1016/j.jwb.2017.02.002

Sitanggang, R. P., Karbhari, Y., Matemilola, B. T., & Ariff, M. (2019). Audit quality and real earnings management: evidence from the UK manufacturing sector. International Journal of Managerial Finance.

Sobel, K. (2014). The effect of occupational stressors on health and individual productivity: Assessments via Sobel test. Jurnal Ekonomi Malaysia, 48(1), 117-131.

Ullmann, A. A. (1985). Data in search of a theory: A critical examination of the relationships among social performance, social disclosure, and economic performance of US firms. Academy of management review, 10(3), 540-557.

Uwuigbe, U., Uwuigbe, O. R., & Okorie, B. (2015). Assessment Of The Effects Of Firms’characteristics On Earnings Management Of Listed Firms In Nigeria. Asian economic and financial review, 5(2), 218-228.

World Bank Group. (2016). World development report 2016: digital dividends. World Bank Publications.

Zhang, Q., Oo, B. L., & Lim, B. T. H. (2019). Drivers, motivations, and barriers to the implementation of corporate social responsibility practices by construction enterprises: A review. Journal of cleaner production, 210, 563-584.