Good Corporate Governance, Corporate Social Responsibility, Firm Value, and Financial Performance as Moderating Variable

Nopriyanto Nopriyanto,Ubaidillah Ubaidillah,Arista Hakiki,Kencana Dewi,Mukhtaruddin Mukhtaruddin

doi:10.28992/ijsam.v3i1.74

Nopriyanto Nopriyanto, Ubaidillah Ubaidillah + Show 3 more

Open Access

https://doi.org/10.28992/ijsam.v3i1.74

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Abstract

Good corporate governance and corporate social responsibility can assist the company in facing the challenges and risks as a strategy in increasing the firm value by building the right image from the stakeholders’ view. This study aims to determine the effect of good corporate governance and corporate social responsibility on firm value with financial performance as a moderating variable. The population of this research is banking companies listed in Indonesia Stock Exchange (IDX) for 2011–2015. The sample consisted of 23 companies which were selected by purposive random sampling. This data is analyzed by using Partial Least Square approach. The results of this study indicate that good corporate governance has an insignificant positive effect on firm value; otherwise corporate social responsibility has a significant negative impact on firm value. Financial performance has significantly strengthened the relationship between good corporate governance and corporate social responsibility on firm value.

Highlights

In the globalization era, the development in the business world is more rapidly followed by increasingly fierce competition
The results showed that Corporate Governance Percentage Index (CGPI) as a good corporate governance (GCG) proxy to firm value (FV) with Net Profit Margin (NPM) and Return on Assets (ROA) as intervening variable has no significant effect
R square for Q ratio is equal to 0.326 which indicate that big contribution given variable of corporate social responsibility (CSR), GCG, ROA and its moderation effect to variable Q ratio is equal to 32.6% value this is included in the moderate category, while the rest as much as 67.4% variance of Q ratio variable is influenced by other factors outside CSR, GCG, ROA, and its moderation effect

Summary

Introduction

The development in the business world is more rapidly followed by increasingly fierce competition. A company certainly wants its company continues to develop, has excellent financial performance and a great firm value, and continues to increase over time. In particular, is a financial institution which is business activities are collecting funds from the community and distributing the funds back to the community and providing other bank services. This intermediary institution depends on public funds and trusts both within inside and outside the country, whereas in conducting business the bank faces various risks, such as credit risk, market risk, operational risk, liquidity risk, legal risk, strategic risk, compliance risk, and reputation risk, political and sovereign risk (Tobing et al, 2013)

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