Influence of Intellectual Capital and Corporate Social Responsibility on Company Financial Performance(Case Study on Indonesian Conventional Banking Listed in Indonesian Stock Exchange (IDX) on Period 2016-2020)

Abstract

Financial performance is an important indicator for holders and stakeholders to assess and make decisions for a company, one of which can be seen from the level of Return On Assets (ROA). The higher the ROA of a company, the better the company's performance in generating profits from its assets. The ROA condition of Indonesian Banking since 2016-2019 has increased which then fell in 2020.This study aims to determine how the influence of Intellectual Capital and Corporate Social Responsibility (CSR) on conventional banking ROA either partially or simultaneously. The population of this study is the conventional banking companies listed on the Indonesia Stock Exchange for the 2016-2020 period as many as 41 companies. The number of samples taken was 25 conventional banks which were selected through purposive sampling method. The research method used is panel data regression analysis.The results showed that Intellectual Capital and Corporate Social Responsibility simultaneously had a positive effect on conventional banking ROA. Partially VAHU and VACA have a significant effect on ROA, while STVA and CSR have no significant effect on ROA in conventional banking.

Does Intellectual Capital and Board Characteristics Affect Financial Performance?

“…So, the company will get more funds to expand its business. The findings of this investigation align with the scholarly inquiries carried out by Pratama & Mahardika (2022), Kurniawati et al (2020), andPoh et al (2018), which show that VACA has a favorable impact on corporate performance. This is due to the ability of firms to cultivate favorable associations with their customers and investors, resulting in enhanced physical capital efficiency and net profit, ultimately leading to a development in financial success.…”

“…Value Added Human Capital (VAHU) Pratama & Mahardika (2022) conducted research on the VAHU metric, which is intended to evaluate the effectiveness of human capital by exhibiting the additional contribution per employee utilization unit to the company's total value added.…”

“…Structural Capital Value Added (STVA) Structural capital refers to the organizational capacity of a company to effectively carry out its activities, processes, and system structures (Gani, 2022). This capacity is crucial in supporting employees' efforts to achieve optimal intellectual performance and overall business success (Pratama & Mahardika, 2022).…”

“…According to Ulum (2017: 135) According to Ulum (2017:135), VACA demonstrates how the equity of the company contributes to the added value. Amalia & Rokhyadi (2020), Xu & Liu (2020), and (Pratama & Mahardika, 2022) conducted research that found a positive correlation between VACA and financial performance. According to research conducted by Heryustitriasputri & Suzan (2019), it was found that VACA did not have an impact on financial performance.…”

“…Having a high level of knowledge and experience enables a human resource to perform at their best (Hapsari et al, 2021). Based on previous research by Pratama & Mahardika (2022), which states that VAHU has a positive influence on financial performance. However, according to the results of research conducted by Murti et al (2015), Poh et al (2018), andSoewarno &Tjahjadi (2020) stated that VAHU has no influence on financial performance.…”