The role of institutional ownership in strengthening to the enterprise value on the banking issuers

Iskandar Muda,Jamaliah Said,Erlina Erlina,Muhammad Panca Diharja,Normah Haji Omar

doi:10.21511/bbs.14(1).2019.05

Iskandar Muda, Jamaliah Said + Show 3 more

Open Access

https://doi.org/10.21511/bbs.14(1).2019.05

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Abstract

This study examines the role of institutional ownership in moderating the relation between fundamental factors of a company and Corporate Social Responsibility (CSR) and Enterprise Value (firm value). The type of this research is an explanation research method. The sampling method was a proportional random sampling method of the population of banking companies of the Indonesian Stock Exchange. The method of data collection was documentation. The method of data analysis was Multiple Regression Analysis. The results of this study showed that simultaneous net profit margin and corporate social responsibility had a significant effect on the firm value. Partial test shows that net profit margin variables had an effect on the firm value and corporate social responsibility variables, which consist of economy, and had no influence on firm value. The results also indicated that institutional ownership strengthened the relation of fundamental factors and corporate social responsibility with the Enterprise Value.

Highlights

The responsibility of managing the organization, which was originally for shareholders only, shifted to stakeholders
Several dimensions of organizational strategy applied by Malaysian banking public companies in the successful Corporate Social Responsibility (CSR) implementation are Visibility, Voluntarism, Proactivity, Specificity and Centrality
Implementing sustainable CSR practices ‘responsibility’, whereas the role of the business will obtain operational permits from the comworld with its CSR practices is expected in the pro- munity

Summary

Introduction

The responsibility of managing the organization, which was originally for shareholders only, shifted to stakeholders (owners, employees and government). The implementation of CSR in public banking companies in Malaysia has succeeded in integrating stakeholder interests as the company’s goal of earning profit but still paying attention to aspects of sustainable social and environmental responsibility and company commitments that pay attention to non-financial aspects (Jaiyeoba et al, 2018; Jusoh & Ibrahim, 2018; Jie & Hasan, 2018; Rahman & Ismail, 2018). The implementation of CSR in six banking public companies in Malaysia was carried out in the aspect of management process voluntary ethical behavior and social obligation. Information on corporate social and environmental involvement as well as non-financial information is delivered to stakeholders. These activities are communicated with the annual financial report.

Results

Discussion

Conclusion