The Mediating Effect of Corporate Social Disclosure on the Relationship Between Board Governance and Financial Performance

Edy Supriyono, Rahmawati Rahmawati, Djoko Suhardjanto, Agung Nur Probohudono

Abstract


This research aims to examine the mediating role of corporate social disclosure on the relationship between board governance and company financial performance. Board governance is often associated with firm performance (Bhagat & Black, 1999), but in addition the company also must pay attention to its sustainability. High performance can be achieved by optimizing the three dimensions, i.e. profit, planet, and people (Elkington, 1997). Board governance as a board of supervisor and advisor (Bapepam, 2007) can optimize the TBL three dimensions, so that the existence of board governance can affect corporate social responsibility (measured by CSD), and company financial performance. Ninety companies were taken as samples per year, thus we observe 360 companies in four years research period. Hypothesis testing is done using ordinary least square. Multiple regression analysis was used to test the mediating role of corporate social disclosure in the relationship between BG and company financial performance using path analysis. The result shows that corporate social disclosure is able to mediate the effect of board governance that include the size of the board of commissioners, the number of board meetings, and educational background of economic and business commissioners on the financial performance of the company.

Keywords


board governance, corporate social disclosure, financial performance

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