Sylvia Veronica Siregar

Corporate social reporting: empirical evidence from Indonesia Stock Exchange

Purpose - The purpose of this paper is to investigate the effect of board size, foreign ownership, firm size, profitability, and leverage on corporate social responsibility (CSR) reporting and the possible effect of CSR reporting on a firms future performance. Design/methodology/approach - Annual reports were analyzed by content analysis method and multiple regression was used to test hypotheses. Findings - Evidence was found that board size has a positive and non-linear (quadratic and concave) relationship with CSR. This result confirms predictions that a larger board will be able to exercise better monitoring, but that too large a board will make the monitoring process ineffective. Firm size has a positive effect on CSR. This suggests that larger firms have more resources to devote to social activities and a larger asset base over which to spread the costs of social responsibility. They also face more pressure to disclose their social activities for various groups in society. Profitability and leverage, however, do not have significant influence. Little evidence was found of positive impact of CSR on future performance. This result could encourage firms to disclose their CSR activities because there seems to be a positive affect on future performance. Research limitations/implications - The measure of CSR may involve subjective judgement and is only limited to annual reports. Practical implications - The paper shows that it is important for a company to increase its awareness on corporate social activities and also its disclosure in the annual report. Originality/value - The paper shows that board size has a positive and non-linear effect on CSR, which has been rarely examined in previous research.

Corporate governance, reporting quality, and firm value: evidence from Indonesia

Purpose – The purpose of this paper is to investigate whether corporate governance practices and the quality of reporting are associated with firm value for public firms in Indonesia.Design/methodology/approach – The authors hypothesize that there are positive associations between firm value and corporate governance practices and reporting quality. For the authors’ proxies for corporate governance and reporting quality they develop two new indices. First, they develop a corporate governance index (the CGI) to measure corporate governance practices by Indonesian firms. Second, they develop a reporting quality index (the RQI) to measure the firms’ quality of reporting and disclosures. To examine the associations the authors run multivariate regressions of their proxies for firm value on the two indices.Findings – Consistent with the first hypothesis, the paper finds positive associations between corporate governance and different proxies of firm value. These findings suggest that firms that implement better...

Fraud awareness survey of private sector in Indonesia

Purpose – The purpose this study is to investigate the level of fraud awareness of the private sector in Indonesia, as well as steps that have been taken by corporations to detect or prevent fraud. Design/methodology/approach – This paper presents a descriptive survey. In total, 67 respondents returned the questionnaires, which can be considered suitable for a descriptive survey. Some descriptive (included percentages, means) and inferential statistics (mean differences test) are used to summarize and analyze the questionnaire results. Findings – It was found that majority of respondents agree that fraud is a major concern for businesses in Indonesia and that corporations have enough level of fraud awareness. Poor internal control and lack of ethical values are ranked as the most likely reasons why entities are being threatened by fraud, and a sound ethical policy and code of conduct is perceived as the most important fraud risk management process. Corporations have implemented several tools to detect or ...

The associations between environmental disclosures with financial performance, environmental performance, and firm value

Purpose This study aims to investigate both the direct and indirect associations of environmental disclosures with financial performance, environmental performance and firm value. Design/methodology/approach The samples are companies listed on the Indonesia Stock Exchange in the agriculture industry, mining industry, basic industry and chemicals, miscellaneous industry and consumer goods industry and that are participating in the Performance Rating Assessment Program on Environment Management (PROPER/Program Penilaian Peringkat Kinerja Perusahaan) of the Ministry of the Environment Republic of Indonesia or have been awarded the Green Industry Award by the Ministry of Industry Republic of Indonesia in 2012-2014. Data are collected from sustainability reports, annual reports and annual financial statements. The authors used simultaneous equation modeling and panel data regression analysis to analyze the data. Findings The authors find that the financial performance does not affect the environmental disclosures. The lagged environmental performance has a positive effect on the current environmental disclosures, and environmental disclosures do not affect the firm market value and do not mediate the effect of financial performance and environmental performance on firm value. Originality/value This study comprehensively examines both direct and indirect associations of environmental disclosures with financial performance, environmental performance and firm value, which is rarely examined in extant studies.

Social Responsibility Disclosure, Corporate Governance and Cost of Equity Capital

This study aims to examine whether social responsibility disclosure positively affects the cost of equity capital in the previous year and to test whether social responsibility disclosure negatively affects the cost of equity capital in companies with good corporate governance. The approach is based on empirical research, drawing on data from annual sustainability reports published between 2012 to 2014 using 53 sample companies listed on IDX in accordance with GRI disclosure criteria for content analysis. CSR score calculation and regression analysis techniques were used for hypothesis testing with multivariate analysis. The findings confirmed that the influence of social responsibility disclosure was positively related to the cost of equity capital in the previous year and social responsibility disclosure negatively affected the cost of equity capital in firms with good corporate governance. These findings expand on empirical research related to CSR and corporate governance on the cost of equity capital using GRI4 and corporate governance scores in Indonesia context.