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Disclosure of corporate social responsibility (CSR) and its implications on company value as a result of the impact of corporate governance and profitability

Kamaliah (Faculty of Economics and Business, Riau University, Pekanbaru, Indonesia)

International Journal of Law and Management

ISSN: 1754-243X

Article publication date: 23 May 2020

Issue publication date: 2 June 2020

3349

Abstract

Purpose

The purpose of this study is to examine the effect of corporate governance and corporate profitability on firm value with corporate social responsibility (CSR) disclosure as the intervening variable.

Design/methodology/approach

The population of this study was all companies listed in the LQ 45 Index group in the Indonesia Stock Exchange in 2013-2014. The inferential statistics used in this study applied the partial least square (PLS) based structural equation model (SEM) method with the assistance of SmartPLS 2.0. The PLS method was selected based on the consideration that there was a construct formed with reflective indicators in this study.

Findings

From the results of this study, it can be concluded that corporate governance does not have any effect on CSR disclosure, profitability of company has an effect on CSR disclosure, CSR disclosure has an effect on firm value. In addition, CSR disclosure does not mediate the effect of on firm value. These results showed that corporate governance can have an effect on firm value directly, and there is no role of CSR disclosure in mediating the effect of corporate governance on firm value, and profitability of company has an effect on firm value through CSR disclosure.

Originality/value

The originality of this research is on the reason that many studies that have been conducted still indicated the inconsistency in the results and diversity of the indicators, so that a similar research was conducted by involving the indicators used for measuring the corporate governance variable, which were the proportion of independent commissioners and audit committee. Meanwhile, for the profitability variable, return on assets and return on equity were used as the indicators.

Keywords

Citation

, K. (2020), "Disclosure of corporate social responsibility (CSR) and its implications on company value as a result of the impact of corporate governance and profitability", International Journal of Law and Management, Vol. 62 No. 4, pp. 339-354. https://doi.org/10.1108/IJLMA-08-2017-0197

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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