The effect of corporate governance structure on financial difficulties

Abstract

This study aims to examine the effect of Corporate Governance Structure (CG) and Corporate Social Responsibility (CSR) on Financial Difficulties. The contribution of this research is to explore the truth of CG goals and achieve quality CSR reporting and can provide solutions to conditions before and when companies experience financial difficulties and provide things that are considered important to anticipate the possibility of financial difficulties. CG in this study uses the size of the audit committee and independent commissioners, then CSR is measured by the quality of CSR disclosure. The data analysis method used is multiple linear regression. The results of this study are the audit committee has no effect on financial difficulties but the independent commissioner has a negative effect on financial difficulties. The contribution of the proportion of independent directors apparently contributed more to the proportion of the number of audit committees. The proportion of the audit committee is not able to minimize or even be a solutive effect on the financial difficulties of companies in Indonesia. The audit committee is a form of responsibility for compliance with government regulations only. The test results also support the influence of CSR on financial difficulties assuming that the quality of CSR disclosure has a significant negative effect on corporate financial difficulties. Disclosure and implementation of CSR activities can have an effect to minimize if in the future the company experiences financial difficulties, the guarantee of funds will remain well distributed so as to minimize the financial difficulties experienced by the company.

Financially Distressed Firms: Environmental, Social, and Governance Reporting in Indonesia

“…Other ESG reporting studies examine the context of the financially distressed firm. For instance, [44] uses Indonesia as one of the countries where some of its giant state-owned enterprises are experiencing financial difficulties. They find that ESG reporting is one approach that effectively prevents financial distress in Indonesian listed firms.…”

“…Lagged Variables ESG reporting studies are dominated by ones who focus on its impact, not the factor that determines the ESG reporting quality. For instance, firm performance [7,40,41] and risk of financial distress [11,44,45]. Thus, it will raise the causality issue that questions the "true" interested and dependent variables [38,63].…”

Influence of the audit committee size and gender diversity on financial performance and auditor opinion

“…Additionally, the studies by Sukma and Bernawati (2019), Andayani and Daud (2020), and Assad (2023) concluded that the audit committee size significantly influences the quality of the audit. Therefore, the audit committee size is expected to be correlated with the auditor's opinion, as Carcello and Neal (2000) and Alkilani et al (2019) found.…”

The Influence of Corporate Social Responsibility and Stakeholder Commitment to Company Performance with Slack Resources as Moderation

“…Slack resources Companies need to maintain their good name by disclosing information on CSR implementation to the public with regard to their concern for environmental aspects, labour, consumers, society, and the energy used in company operations to gain the trust of shareholders and stakeholders which will lead to company performance [5]. [6], [7] show a negative relationship between CSR and company performance.…”