Impact of Corporate Governance on Company’s Performance with Sustainability Reporting as an Intervening Variable in Indonesia

Machdar, Nera Marinda

doi:10.2991/aicar-18.2019.34

Cited by 3 publications

(4 citation statements)

References 24 publications

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“…Again, the focus is on generating enough profits which would ensure a better reward for the owners. This result conforms with the outcome of the study in Indonesia by Machdar (2019) who found that corporate social responsibility (CSR) does not mediate the relationship between CG and organisational financial performance.…”

Section: Discussionsupporting

confidence: 91%

Corporate governance and performance of medium-sized firms in Nigeria: does sustainability initiative matter?

Adedeji

San

Uzir

et al. 2020

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Purpose The non-existence of the corporate governance (CG) concept for practices by non-financial medium-sized firms (MSFs) in Nigeria informed. This study aims to determine whether CG practices influence firms’ performance and whether sustainability initiative (SI) mediates the relationship between CG and MSFs’ performance in Nigeria. Design/methodology/approach A total of 300 firms were selected on convenience sampling basis from South Western Nigeria using a structured questionnaire. The authors used Statistical Package for Social Sciences for exploratory data analysis and hypotheses were tested using covariance-based structural equation modelling. Findings The results show that CG has a significant positive effect on performance [financial performance (FNP) and non-financial performance (NFP)] and SI. SI has a mixed impact on performance, e.g. a significant positive impact on NFP but insignificant negative impact on FNP. Similarly, SI has a combined mediating effect in the relationship between CG and performance, e.g. fully mediates CG → NFP and does not mediate CG → FNP. Firms are to invest in social and environmental initiatives substantially. CG codes will complement the International Financial Reporting Standards for MSFs. Research limitations/implications This study supports the assumptions of theories (institutional, stakeholder and agency) as the basis for the usage of multiple approaches to determine the outcome of hypotheses, especially in developing climes. Practical implications The study contributes to CG and performance literature by examining the mediating effects of SI. The paper also shows the necessity to emphasise NFP aspect. Policymakers should evolve CG codes to encourage stakeholders to believe more in the corporate existence of MSFs for strengthening capital-base and quality personnel engagement. Originality/value To the best of the authors’ knowledge, this is one of the first empirical attempts showing the evidence on the relationship between CG and NFP in Nigeria.

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Section: Discussionsupporting

confidence: 91%

Corporate governance and performance of medium-sized firms in Nigeria: does sustainability initiative matter?

Adedeji

San

Uzir

et al. 2020

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“…The company's goal is not solely oriented to intensifying the value of the owner but also to other people who are interested in the company. Stakeholder theory is one of the fundamental theories used to underlie research on sustainability reports (Machdar, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

Environmental performance, Islamic corporate governance, and liquidity's impact on financial performance with sustainability reporting as a mediating factor

Rismawati,

Bawono

2022

J. Account. Digit. Financ.

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This study aims to determine the effect of environmental performance, Islamic corporate governance, and liquidity on financial performance in companies listed on ISSI and perform a Performance Assessment Program in Environmental Management with sustainability reporting as an intervening variable. This type of research is quantitative and uses secondary data obtained through each company's website and the Ministry of Environment and Forestry of the Republic of Indonesia 2014-2021. The analytical tool used is path analysis. The results of this study show that the environmental performance variable has a significant positive effect on financial performance. Islamic corporate governance and liquidity variables do not affect financial performance. Then the environmental performance variables, Islamic corporate governance, and liquidity do not affect sustainability reporting. Sustainability reporting cannot mediate the relationship between environmental performance, Islamic corporate governance, and liquidity on financial performance. However, the sustainability reporting variable significantly negatively affects financial performance.

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“…Machdar [32] argued the concept of Profitability could be termed as the ability to make a profit from all the business activities of an organization, company, firm, or an enterprise. It reveals how efficiently the management can make a profit by using all the resources available in the market.…”

Section: Profitabilitymentioning

confidence: 99%

“…Fakir, Islam and Miah [18]; Machdar [32]; Rani and Rani [49]; Pajrok [46] studies on responsibility accounting have been inconclusive and controversial and no consensus has been reached, especially the impact of responsibility accounting on profitability. While some authors have established positive relationships in their studies, others have established negative or no relationship using shareholders' wealth as a proxy for responsibility accounting and while liquidity, return on investment; earnings per share and assets replacement were used as a proxy for profitability.…”

Section: Justification For the Studymentioning

confidence: 99%

Responsibility Accounting and Profitability of Listed Companies in Nigeria

Festus¹,

Ochai-Adejoh²,

Ayodeji³

2020

IJAFRM

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Structuring activities into responsibility centers and optimization of resource is a priority in meeting investors' performance and profitability expectations in both small and large organizations. Studies have shown that to meet these expectations, adequate performance evaluation and reward system are managers' challenges. This study investigated the effect of responsibility accounting on profitability of listed companies in Nigeria. Ex-post facto research design was adopted. The population was 173 quoted companies on the Nigerian Stock Exchange as at 31st December 2016. Ten companies were selected using stratified and purposive sampling technique. Data were extracted from published financial statements of sampled companies; validity and reliability of the data were premised on the scrutiny of the external auditors. Descriptive and inferential (Panel data regression) statistics were used to analyze the data. The study revealed that profitability measured by NPBT, of listed companies in Nigeria is significantly influenced by responsibility accounting (RA), F-Stat=114.56, AdjR 2 =.0.6964, p=0.000. There is no significant difference in the result of NPBT with and without the control variable of firm size. The result with control variables revealed F-Stat=87.63; AdjR 2 =0.7242; P=0.000. The study also revealed that RA had a positive significant relationship with EPS with control variables of firm size, F-Stat=6.56, AdjR 2 =0.1442; P=0.000. However, without control variables, no significant effect of responsibility accounting on EPS was observed as shown in the following result: F-Stat=0.45, AdjR 2 =-0.0112, p=0.64. Furthermore, the study revealed that profitability measured by ROA exhibited an insignificant relationship with RA given the following results, AdjR 2 =0.0089; P=0.000. RA with control variables of firm size, insignificantly affected ROA while Firm Size exerted significant positive effect on ROA (as the size of the firm changes by a unit, ROA increased by 23.9% as seen in model 3b) given the following result: AdjR 2 =0.0399; P=0.782. This study concluded that responsibility accounting had an influence on profitability of listed companies in Nigeria. The study recommended that since profitability is the whole essence of responsibility accounting, managers should ensure delegation of task with responsibilities clearly spelt out, regular appraisal process, achievable project budgeting, instituting cross functional teams and efficient reward systems put in place towards achieving the corporate objective that would influence better profitability.

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Impact of Corporate Governance on Company’s Performance with Sustainability Reporting as an Intervening Variable in Indonesia

Cited by 3 publications

References 24 publications

Corporate governance and performance of medium-sized firms in Nigeria: does sustainability initiative matter?

Corporate governance and performance of medium-sized firms in Nigeria: does sustainability initiative matter?

Environmental performance, Islamic corporate governance, and liquidity's impact on financial performance with sustainability reporting as a mediating factor

Responsibility Accounting and Profitability of Listed Companies in Nigeria

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