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THE INFLUENCE OF GOOD CORPORATE GOVERNANCE AND
CORPORATE SOCIAL RESPONSIBILITY ON COMPANY VALUE WITH
PROFITABILITY AS INTERVENING VARIABLES
Agus Ismaya Hasanudin, Rahma Sukmadianti, Sabaruddinsah
Universitas Sultan Ageng Tirtayasa, Serang, Indonesia
Email : ismayaagus@untirta.ac.id, rahmasukma79@gmail.com, sabaruddin77@gmail.com
ARTICLE INFO
ABSTRACT
Date received : 25 June 2022
Revision date : 15 July 2022
Date Approved : 25 July 2022
This study aims to determine the effect of good corporate
governance and corporate social responsibility on firm value
with profitability as an intervening variable. The sample used
in this study is the Manufacturing Company in the Consumer
Goods Industry Sector which is listed on the Indonesia Stock
Exchange. This study uses secondary data that refers to
information that has been collected from existing sources. In
the form of company records or documentation, industry
analysis by the media, government publications, internet,
websites and others. SPSS 20 was used in this study to analyze
research consisting of descriptive statistics and hypothesis
testing. The results of this study indicate that Good Corporate
Governance has an effect on firm value. Meanwhile, Corporate
Social Responsibility has no effect on Company Value.
Keywords: Good Corporate
Governance; Corporate
Social Responsibility; firm
value; profitability.
This work is licensed under CC BY-SA 4.0
INTRODUCTION
Firm value is an investor's perception of the company, which is often read by stock
prices. If the stock price is high, the value of the company is also high Fakhruddin &
Hadianto, (2001) in Moringa, (2017).
The importance of implementing good corporate governance can be seen from the
side of one of the goals in establishing a company, in addition to improving the welfare
of its owners or shareholders as well as maximizing shareholder wealth through
increasing company value Brigham & Houston, (2001).
The practice of Good Corporate Governance in Indonesia is still not going well.
This is evidenced by the statement of the Corruption Eradication Commission (KPK) which
conducted an intensive examination of the suspect. This case is related to the planned
complaint of goods and equipment by the Directorate of Technology and Production of
The Influence of Good Corporate Governance and Corporate Social Responsibility on Company
Value With Profitability as Intervening Variables
Indonesian Journal of Multidisciplinary Science
, Vol 1 (10), July 2022
1332
PT KRAS (Krakatau Steel) in 2019, which are valued at Rp. 24 billion and Rp. 2.4 billion,
respectively. This is considered very detrimental to the company and at the same time is
a very sad practice because with stronger obligations and standards of Good Corporate
Governance, companies from various sectors listed on the IDX can avoid corrupt practices
Gabrilin, (2019).
In addition, Corporate Social Responsibility (CSR) is an obligation for the business
world and is often considered as the core of business ethics which means that companies
not only have obligations to shareholders (shareholders) but are also responsible to other
interested parties (stakeholders). Corporate Social Responsibility for a company can be a
marketing strategy in offering its products. People tend to choose products produced by
companies that care about the environment or implement corporate social responsibility.
Thus, the company's image is getting better and consumer loyalty is getting higher. By
increasing consumer loyalty in the long term, the company's sales can improve and in the
end with the implementation of Corporate Social Responsibility, it is expected to increase
the value of the company as a result of increasing company sales by carrying out various
social activities in the surrounding environment Widiasa et al., (2014).
One of the main reasons companies operate is to generate profits that benefit
shareholders. Profitability is a factor that gives management freedom and flexibility to
carry out and disclose to shareholders social responsibility programs more broadly Devina,
(2010).
The objectives of this study are: 1) To determine the effect of good corporate
governance on firm value; 2) To determine the effect of corporate social responsibility on
firm value; 3) To determine the effect of good corporate governance on profitability; 4)
To determine the effect of corporate social responsibility on profitability; 5) To determine
the significant effect of profitability to mediate good corporate governance on firm value;
6) To find out the significant effect of profitability, it can mediate corporate social
responsibility on firm value.
Underlying Theory
Agency Theory
According to Jensen & Meckling, (2019) explaining the agency relationship that
the company is a collection of contracts between principals and agents that manage and
control these resources.
Legistimacy Theory
Legitimacy theory states that a company continuously tries to convince the public
that its activities are carried out by outsiders, by ensuring that its business activities are
in accordance with the boundaries and norms that exist in society Deegan, (2011).
The Influence of Good Corporate Governance and Corporate Social Responsibility on Company
Value With Profitability as Intervening Variables
Indonesian Journal of Multidisciplinary Science
, Vol 1 (10), July 2022
1333
Good Corporate Governance
According to (FCGI (forum for corporate governance in Indonesia), 2001) the
notion of Good Corporate Governance is a set of regulations that regulate the relationship
between shareholders, management (managers) of the company, creditors, government,
employees, as well as other internal and external stakeholders in connection with with
their rights and obligations or in other words a system that regulates and controls the
company.
Corporate Social Responsibility
Corporate Social Responsibility is a form of the company's commitment to
stakeholders, both directly and indirectly, to improve the quality of the environment and
also the welfare of the community by considering the negative impacts of the company.
Khasanah & Sucipto, (2020).
Profitability
According to Munawir, (2007) explains that profitability is the ratio used to assess
the company's ability to earn profitsv.
The value of the company
Company value is the investor's interpretation of the company's level of success in
managing existing resources at the end of the current year which is reflected in the
company's stock price. So the stock price is a reflection of a company's value. The higher
the stock price, the higher the value of the company, on the other hand, if the stock price
is lower, the value of the company will be low, which means the company's performance
is not good Budi dan Rachmawati, (2014).
Hypothesis Development
The Effect of Good Corporate Governance on Company Value
The results of this study are supported by the results conducted by (Widiyaningsih,
2018), independent commissioners have a positive influence. This shows that the more
independent commissioners there are, the more effective the process of supervising
financial reporting by the board of commissioners will be so as to improve company
performance. Based on the theory and description of the research results above, the
hypothesis is formulated as follows:
H1 : Good Corporate Governance Has a Positive Effect on Company Value
The Influence of Corporate Social Responsibility on Company Value
The results of research conducted by Dewi, (2018) show that the corporate social
responsibility variable has a positive effect on firm value. If corporate social responsibility
has increased, then the value of the company has also increased significantly.
H2 : Corporate Social Responsibility Positively Affects Company Value
The Influence of Good Corporate Governance and Corporate Social Responsibility on Company
Value With Profitability as Intervening Variables
Indonesian Journal of Multidisciplinary Science
, Vol 1 (10), July 2022
1334
The Effect of Good Corporate Governance on Profitability
The results of research conducted by Islami (2018) the proportion of independent
members of the board of commissioners has a positive effect on company profitability.
H3 : Good Corporate Governance Berpengaruh Positif Terhadap Profitabilitas
The Effect of Corporate Social Responsibility on Profitability
The results of research conducted by Rokhmawati, (2020) show that partially the
Corporate Social Responsibility (CSR) variable which is proxied by the Corporate Social
Responsibility Index ratio has a significant positive direct effect on profitability as proxied
by (ROE).
Based on the theory and description of the research results above, the hypothesis is
formulated as follows:
H4 : Corporate Social Responsibility Has Positive Effect on Profitability
The Influence of Good Corporate Governance on Company Value With
Profitability as an Intervening Variable
Research conducted by Niken Ayuningrum., (2017) profitability variable as an
intervening variable between the relationship of corporate governance variables to firm
value has a positive and significant effect on profitability. After being mediated by the
profitability variable, the influence of corporate governance on firm value is greater than
its direct effect.
H5 : Profitability as an Intervening Variable Able to Mediate Good Corporate
The Influence of Corporate Social Responsibility on Company Value With
Profitability as an Intervening Variable
The results of research conducted by Dewi, (2018) found that the profitability
variable moderating CSR on firm value obtained a significance value of <0.05. This means
the profitability variable as a moderating variable. Which means that profitability is able
to mediate corporate social responsibility on firm value.
H6 : Profitability as an Intervening Variable Able to Mediate Corporate Social
Responsibility on Company Value.
Research Model
The model in this study is described as follows:
The Influence of Good Corporate Governance and Corporate Social Responsibility on Company
Value With Profitability as Intervening Variables
Indonesian Journal of Multidisciplinary Science
, Vol 1 (10), July 2022
1335
Figure 1. Research Model
METHOD
This study uses a quantitative approach with the type of data used, namely
secondary data in the form of annual financial reports obtained from the IDX website.
The sampling technique uses purposive sampling which is selected by determining certain
criteria Kalsum, (2017). The criteria in this research sample are as follows: 1) Companies
listed on the Indonesia Stock Exchange consecutively from 2015 to 2020, by publishing
their annual reports which can be accessed through www.idx.co.id 2) Financial
statements with positive profit status or equal to no loss during 2015 to 2020. 3) Financial
statements in rupiah currency or not using foreign currency. 4) Have complete data as
needed in research.
RESULT AND DISCUSSION
This study uses 26 manufacturing companies with 6 years of observation. The
results of the descriptive statistical test are explained in the following table:
Table 1. Descriptive Statistical Analysis
Descriptive Statistics
N
Maximum
Mean
Std.
Deviation
DKI
156
0.57
0.3931
0.07665
CSRD
156
0.48
0.322
0.06382
ROE
156
1.45
0.201
0.2542
PBV
156
82.44
4.8707
11.0045
Valid N
(listwise)
156
Source: SPSS output processed, 2022
The Influence of Good Corporate Governance and Corporate Social Responsibility on Company
Value With Profitability as Intervening Variables
Indonesian Journal of Multidisciplinary Science
, Vol 1 (10), July 2022
1336
Table 2. Equation I . Test Results
Coefficients
a
Model
Unstandardized
Coefficients
Standardized
Coefficients
t
Sig.
B
Std.
Error
Beta
1
(Constant)
-.947
.559
-
1.693
.092
ln_DKI
1.699
.414
.313
4.101
.000
ln_CSRD
-.437
.333
-.100
-
1.311
.192
a. Dependent Variable: ln_ROE
Source: SPSS output processed, 2022
Multiple regression analysis of structure I of this study shows the effect of
independent board of commissioners and disclosure of social responsibility on
profitability.
The regression coefficient value of the independent board of commissioners
variable is 1.699. The coefficient value shows a positive direction, meaning that the
independent board of commissioners has a positive effect on profitability.
CSR variable regression coefficient value is -0.437. The coefficient value shows a
negative direction, meaning that the disclosure of social responsibility has a negative
effect on profitability.
While the results of the t-test, the t-count value of the independent board of
commissioners variable is 4.101 and the t-table is 1.975, so the t-count (4.101) > 1.975.
The coefficient value shows a positive direction.
CSR variable shows the t-count value of negative corporate social responsibility is
-1.311 and t-table is -1.975, so t-count (-1.311) < -1.975. The coefficient value shows a
negative direction.
Table 3. Results of the Coefficient of Determination (R2)
Model Summary
Model
R
R Square
Adjusted R
Square
Std. Error of
the Estimate
1
.329
a
.108
.097
.98557
a. Predictors: (Constant), ln_CSRD, ln_DKI
The Influence of Good Corporate Governance and Corporate Social Responsibility on Company
Value With Profitability as Intervening Variables
Indonesian Journal of Multidisciplinary Science
, Vol 1 (10), July 2022
1337
Table 4. Equation II . Test Results
Coefficients
a
Model
Unstandardized
Coefficients
Standardized
Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
1.553
.464
3.344
.001
ln_ROE
.618
.067
.591
9.289
.000
ln_DKI
.514
.359
.091
1.430
.155
ln_CSRD
-.878
.276
-.192
-
3.183
.002
a. Dependent Variable: ln_PBV
Source: SPSS output processed, 2022
Regression analysis of the structure of equation II shows the influence of
independent commissioners and corporate social responsibility on firm value through
profitability. The constant value of the PBV variable is 1.553.
The regression coefficient value of the profitability variable is 0.618. The coefficient
value shows a positive direction. The regression coefficient value of the independent
board of commissioners variable is 0.514. The coefficient value shows a positive direction.
The regression coefficient value of CSR variable is -0.878. The coefficient value
shows a negative direction. While the results of the t-count value of the profitability
variable are 9.289 and the t-table is 1.975, then the t-count (9.289) > 1.975. The
coefficient value shows a positive direction, meaning that profitability has a positive effect
on firm value.
The independent board of commissioners variable shows the t-count value of
1.430 and t-table of 1.975, so the t-count (1.430) < 1.975. The coefficient value shows
a positive direction, meaning that the independent board of commissioners has a positive
effect on firm value.
Corporate social responsibility variable t-count value is -3.183 and t-table is 1.975,
so t-count (-3.183) < 1.975. The coefficient value shows a negative direction, meaning
that the disclosure of social responsibility has a negative effect on firm value.
Table 5. Results of the Coefficient of Determination (R2)
Model Summary
Model
R
R Square
Adjusted R
Square
Std. Error of
the Estimate
1
.672
a
.451
.441
.81111
a. Predictors: (Constant), ln_CSRD, ln_PDKI, ln_ROE
The Influence of Good Corporate Governance and Corporate Social Responsibility on Company
Value With Profitability as Intervening Variables
Indonesian Journal of Multidisciplinary Science
, Vol 1 (10), July 2022
1338
Path Analysis
This study uses statistical analysis, namely path analysis. This analysis is used to
examine the effect of the intervening variable (Z) where the use of regression analysis to
estimate the causality relationship between variables (casual model). Path analysis is
used to determine the direct or indirect effect of good corporate governance and
corporate social responsibility on firm value mediated by profitability. Based on the test
results are presented as follows:
Table 6. Analysis Test (Path Path)
Variable Effect
Causal Influence
Total
Influence
Direct
Indirect
(Through
ROE)
DKI PBV
0,091
0,185
0,091 + 0,185 =
0,276
CSRD PBV
-0,192
-0,06
-0,192 + (-0,06)
= -0,252
Source: SPSS output processed, 2022.
CONCLUSION
This research can be concluded as follows: 1) The independent board of
commissioners has a positive effect on the value of the consumer goods industrial sector
companies listed on the IDX in 2015-2020. 2) Disclosure of CSR (social responsibility) has
a negative effect on the value of companies in the consumer goods industry sector listed
on the IDX in 2015-2020. 3) The independent board of commissioners has a positive
effect on the profitability of companies in the consumer goods industry sector listed on
the IDX in 2015-2020. 4) Disclosure of social responsibility CSR has a negative effect on
the profitability of companies in the consumer goods industry sector listed on the
Indonesia Stock Exchange in 2015-2020. 5) Profitability is able to mediate the relationship
between the independent board of commissioners and the value of companies in the
consumer goods industry sector listed on the IDX in 2015-2020. 6) Profitability is not able
to mediate the relationship between CSR social responsibility and the value of companies
in the consumer goods industry sector listed on the IDX in 2015-2022.
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, Vol 1 (10), July 2022
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