CHARACTERISTICS OF THE AUDIT COMMITTEE AND BOARD OF DIRECTORS: HOW DO THEY INFLUENCE CORPORATE SOCIAL RESPONSIBILITY
Keywords:
CSR, audit committee characteristics, board of directors characteristics, STATA
Abstract
This research aims to examine the influence of the characteristics of the audit committee and board of directors on CSR scores. This article develops from various literature reviews regarding the relationship between the characteristics of the audit committee and the board of directors on CSR scores. This research uses all company sectors on the Indonesian Stock Exchange except financial sector companies. A purposive sampling was used, and a sample of 78 companies with a total sample data of 468 from 2018-2023 was used. Testing the data using STATA software. The research results show that independent audit committee members have an influence on CSR scores, the size of the audit committee has an influence on CSR scores, audit committee members who have financial expertise influence CSR scores, the size of the board of directors influences CSR scores, and gender diversity has an influence on CSR score. Except for the meeting variable, members of the board of directors do not influence the CSR score.
References
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Antonio, D., Lucia, L. R., & Russel, C. (2017b). Corporate governance effect on social responsibility disclosure. Australasian Accounting, Business & Finance Journal, Wollongong, 11(2), 3–22.
Appuhami, R., & Tashakor, S. (2017). The impact of audit committee characteristics on CSR disclosure: An analysis of Australian firms. Australian Accounting Review, 27(4), 400–420.
Ayunisari, P., & Sawitri, A. P. (2021). Dampak Moderasi Profitabilitas Terhadap Pengaruh CSR, GCG dan Intelectual Capital Terhadap Nilai Perusahaan. Inventory: Jurnal Akuntansi, 5(2), 80. https://doi.org/10.25273/inventory.v5i2.10649
Bhaduri, S. N., Selarka, E., Bhaduri, S. N., & Selarka, E. (2016). Impact of corporate governance on corporate social responsibility in india—empirical analysis. Corporate Governance and Corporate Social Responsibility of Indian Companies, 87–113.
Bhuiyan, M. B. U., & D’Costa, M. (2020). Audit committee ownership and audit report lag: evidence from Australia. International Journal of Accounting & Information Management.
Bose, S., Ali, M. J., Hossain, S., & Shamsuddin, A. (2022). Does CEO–audit committee/board interlocking matter for corporate social responsibility? Journal of Business Ethics, 179(3), 819–847.
Brammer, S., Millington, A., & Rayton, B. (2007). The contribution of corporate social responsibility to organizational commitment. The International Journal of Human Resource Management, 18(10), 1701–1719.
Bronson, S. N., Carcello, J. V, Hollingsworth, C. W., & Neal, T. L. (2009). Are fully independent audit committees really necessary? Journal of Accounting and Public Policy, 28(4), 265–280.
Brown-Liburd, H., & Zamora, V. L. (2015). The role of corporate social responsibility (CSR) assurance in investors’ judgments when managerial pay is explicitly tied to CSR performance. Auditing: A Journal of Practice & Theory, 34(1), 75–96.
Chakroun, S., Ben Amar, A., & Ben Amar, A. (2022). Earnings management, financial performance and the moderating effect of corporate social responsibility: evidence from France. Management Research Review, 45(3), 331–362.
Dong, H., & Zhang, H. (2019). Litigation risk and corporate voluntary disclosure: evidence from two quasi-natural experiments. European Accounting Review, 28(5), 873–900.
Dwekat, A., Meqbel, R., Seguí‐Mas, E., & Tormo‐Carbó, G. (2022). The role of the audit committee in enhancing the credibility of CSR disclosure: Evidence from STOXX Europe 600 members. Business Ethics, the Environment & Responsibility, 31(3), 718–740.
El Saleh, A. I., & Jurdi, D. J. (2023). Board composition and corporate social responsibility: uncovering the effects of co-opted directors. Journal of Accounting Literature, ahead-of-print.
Fahad, P., & Rahman, P. M. (2020). Impact of corporate governance on CSR disclosure. International Journal of Disclosure and Governance, 17(2–3), 155–167. https://doi.org/10.1057/s41310-020-00082-1
Fama, E. F. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 88(2), 288–307.
Firmansyah, A., Arham, A., Qadri, R. A., Wibowo, P., Irawan, F., Kustiani, N. A., Wijaya, S., Andriani, A. F., Arfiansyah, Z., & Kurniawati, L. (2022). Political connections, investment opportunity sets, tax avoidance: does corporate social responsibility disclosure in Indonesia have a role? Heliyon.
Fuente, J. A., García-Sánchez, I. M., & Lozano, M. B. (2017). The role of the board of directors in the adoption of GRI guidelines for the disclosure of CSR information. Journal of Cleaner Production, 141, 737–750. https://doi.org/10.1016/j.jclepro.2016.09.155
García‐Sánchez, I., Hussain, N., Khan, S., & Martínez‐Ferrero, J. (2022). Assurance of corporate social responsibility reports: Examining the role of internal and external corporate governance mechanisms. Corporate Social Responsibility and Environmental Management, 29(1), 89–106.
Giannarakis, G., Konteos, G., & Sariannidis, N. (2014). Financial, governance and environmental determinants of corporate social responsible disclosure. Management Decision, 52(10), 1928–1951.
Goodstein, J., Gautam, K., & Boeker, W. (1994). The effects of board size and diversity on strategic change. Strategic Management Journal, 15(3), 241–250.
Gul, F. A., & Leung, S. (2004). Board leadership, outside directors’ expertise and voluntary corporate disclosures. Journal of Accounting and Public Policy, 23(5), 351–379.
Habbash, M. (2017). Corporate governance and corporate social responsibility disclosure: evidence from Saudi Arabia. International Journal of Corporate Strategy and Social Responsibility, 1(2), 161–178.
Hermalin, B., & Weisbach, M. S. (2001). Boards of directors as an endogenously determined institution: A survey of the economic literature.
Iliev, P., & Roth, L. (2018). Learning from directors’ foreign board experiences. Journal of Corporate Finance, 51, 1–19.
Jizi, M. I., Salama, A., Dixon, R., & Stratling, R. (2013). Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from the US Banking Sector. Journal of Business Ethics, 125(4), 601–615. https://doi.org/10.1007/s10551-013-1929-2
Jouber, H. (2021). Is the effect of board diversity on CSR diverse? New insights from one-tier vs two-tier corporate board models. Corporate Governance: The International Journal of Business in Society, 21(1), 23–61.
Khan, A., Muttakin, M. B., & Siddiqui, J. (2013). Corporate Governance and Corporate Social Responsibility Disclosures: Evidence from an Emerging Economy. Journal of Business Ethics, 114(2), 207–223. https://doi.org/10.1007/s10551-012-1336-0
Kim, Y., Park, M. S., & Wier, B. (2012). Is earnings quality associated with corporate social responsibility? The Accounting Review, 87(3), 761–796.
Lee, J., & Park, J. (2019). The impact of audit committee financial expertise on management discussion and analysis (MD&A) tone. European Accounting Review, 28(1), 129–150.
Li, J., Mangena, M., & Pike, R. (2012). The effect of audit committee characteristics on intellectual capital disclosure. The British Accounting Review, 44(2), 98–110.
Liao, L., Luo, L., & Tang, Q. (2015). Gender diversity, board independence, environmental committee and greenhouse gas disclosure. British Accounting Review, 47(4), 409–424. https://doi.org/10.1016/j.bar.2014.01.002
Maharani, A. P., & Syafruddin, M. (2023). Tata Kelola Perusahaan Dan Tanggung Jawab Sosial Perusahaan. Diponegoro Journal of Accounting, 12(2), 1–12. http://ejournal-s1.undip.ac.id/index.php/accounting
McDaniel, L., Martin, R. D., & Maines, L. A. (2002). Evaluating financial reporting quality: The effects of financial expertise vs. financial literacy. The Accounting Review, 77(s-1), 139–167.
Mohammadi, S., Saeidi, H., & Naghshbandi, N. (2021). The impact of board and audit committee characteristics on corporate social responsibility: evidence from the Iranian stock exchange. International Journal of Productivity and Performance Management, 70(8), 2207–2236.
Muktadir-Al-Mukit, D., & Keyamoni, T. J. (2019). Corporate governance and earnings management practices among listed firms: A study on post stock market crisis period in Bangladesh. Journal of Asian Business Strategy, 9(1), 1.
Naseem, M. A., Riaz, S., Rehman, R. U., Ikram, A., & Malik, F. (2017). Impact of board characteristics on corporate social responsibility disclosure. Journal of Applied Business Research, 33(4).
Nielsen, S., & Huse, M. (2010). The contribution of women on boards of directors: Going beyond the surface. Corporate Governance: An International Review, 18(2), 136–148.
Nurhandika, A. (2023). How Does The Role Of Political Connections Influence The Corporate Social Responsibility Scores. International Journal of Management, Economic, Business and Accounting, 2(3), 14–22.
Nurhandika, A., & Manalu, V. G. (2023). How poilitical connection moderate audit committee characteristics and csr: evidence from Indonesian companies. Jurnal Mantik, 7(3), 1653–1660.
Oh, W.-Y., Chang, Y. K., & Kim, T.-Y. (2018). Complementary or substitutive effects? Corporate governance mechanisms and corporate social responsibility. Journal of Management, 44(7), 2716–2739.
Purbawangsa, I. B. A., Solimun, S., Fernandes, A. A. R., & Mangesti Rahayu, S. (2020). Corporate governance, corporate profitability toward corporate social responsibility disclosure and corporate value (comparative study in Indonesia, China and India stock exchange in 2013-2016). Social Responsibility Journal, 16(7), 983–999.
Qa’dan, M. B. A., & Suwaidan, M. S. (2018). Board composition, ownership structure and corporate social responsibility disclosure: the case of Jordan. Social Responsibility Journal, 15(1), 28–46.
Qaderi, S. A., Alhmoud, T. R., & Ghaleb, B. A. A. (2020). Audit committee features and CSR disclosure: Additional evidence from an emerging market. International Journal of Financial Research, 11(5), 226–237.
Reverte, C. (2016). Corporate social responsibility disclosure and market valuation: evidence from Spanish listed firms. Review of Managerial Science, 10, 411–435.
Sauerwald, S., & Su, W. (2019). CEO overconfidence and CSR decoupling. Corporate Governance: An International Review, 27(4), 283–300.
Untoro, D. A., & Zulaikha, Z. (2013). Pengaruh Karakteristik Good Corporate Governance (GCG) terhadap Luas Pengungkapan Corporate Social Responsibility (CSR) di Indonesia (Studi Empiris Pada Perusahaan perbankan yang Terdaftar di BEI Tahun 2008-2011). Fakultas Ekonomika dan Bisnis.
Uyar, A., Elbardan, H., Kuzey, C., & Karaman, A. S. (2023). Audit and CSR committees: are they complements or substitutes in CSR reporting, assurance and GRI framework adoption? International Journal of Accounting & Information Management, 31(1), 1–36.
Wang, J., & Sun, J. (2022). The role of audit committees in social responsibility and environmental disclosures: evidence from Chinese energy sector. International Journal of Disclosure and Governance, 19(1), 113–128. https://doi.org/10.1057/s41310-021-00131-3
Yani, R., Yusrawati, & Abrar. (2024). Pengaruh Ceo Tenur, Rapat Dewan Direksi, Earning Power Dan Pengungkapan Csr Terhadap Manajemen Laba (Studi Empiris pada Perusahaan Transportasi dan Logistik yang Terdaftar di Bursa Efek Indonesia Periode 2019-2021). Journal Of Islamic Finance And Accounting Research, 3(1 FEBRUARI), 61–76. https://doi.org/10.25299/jafar.2024.14264
Yarram, S. R., & Adapa, S. (2021). Board gender diversity and corporate social responsibility: Is there a case for critical mass? Journal of Cleaner Production, 278, 123319.
Yasser, Q. R., Al Mamun, A., & Ahmed, I. (2017). Corporate social responsibility and gender diversity: Insights from Asia Pacific. Corporate Social Responsibility and Environmental Management, 24(3), 210–221.
Yu, J., Xu, Y., & Zhang, J. H. (2016). The effects of the existence and financial expertise of audit committees on firms’ controversial activities—Evidence from IPOs. Journal of Forensic & Investigative Accounting, 8(3), 400–427.
Zhang, Y., Zhou, J., & Zhou, N. (2007). Audit committee quality, auditor independence, and internal control weaknesses. Journal of Accounting and Public Policy, 26(3), 300–327.
Antonio, D., Lucia, L. ., & Russel, C. (2017a). Corporate governance effect on social responsibility disclosure. Australasian Accounting, Business and Finance Journal, 11(2), 3–22.
Antonio, D., Lucia, L. R., & Russel, C. (2017b). Corporate governance effect on social responsibility disclosure. Australasian Accounting, Business & Finance Journal, Wollongong, 11(2), 3–22.
Appuhami, R., & Tashakor, S. (2017). The impact of audit committee characteristics on CSR disclosure: An analysis of Australian firms. Australian Accounting Review, 27(4), 400–420.
Ayunisari, P., & Sawitri, A. P. (2021). Dampak Moderasi Profitabilitas Terhadap Pengaruh CSR, GCG dan Intelectual Capital Terhadap Nilai Perusahaan. Inventory: Jurnal Akuntansi, 5(2), 80. https://doi.org/10.25273/inventory.v5i2.10649
Bhaduri, S. N., Selarka, E., Bhaduri, S. N., & Selarka, E. (2016). Impact of corporate governance on corporate social responsibility in india—empirical analysis. Corporate Governance and Corporate Social Responsibility of Indian Companies, 87–113.
Bhuiyan, M. B. U., & D’Costa, M. (2020). Audit committee ownership and audit report lag: evidence from Australia. International Journal of Accounting & Information Management.
Bose, S., Ali, M. J., Hossain, S., & Shamsuddin, A. (2022). Does CEO–audit committee/board interlocking matter for corporate social responsibility? Journal of Business Ethics, 179(3), 819–847.
Brammer, S., Millington, A., & Rayton, B. (2007). The contribution of corporate social responsibility to organizational commitment. The International Journal of Human Resource Management, 18(10), 1701–1719.
Bronson, S. N., Carcello, J. V, Hollingsworth, C. W., & Neal, T. L. (2009). Are fully independent audit committees really necessary? Journal of Accounting and Public Policy, 28(4), 265–280.
Brown-Liburd, H., & Zamora, V. L. (2015). The role of corporate social responsibility (CSR) assurance in investors’ judgments when managerial pay is explicitly tied to CSR performance. Auditing: A Journal of Practice & Theory, 34(1), 75–96.
Chakroun, S., Ben Amar, A., & Ben Amar, A. (2022). Earnings management, financial performance and the moderating effect of corporate social responsibility: evidence from France. Management Research Review, 45(3), 331–362.
Dong, H., & Zhang, H. (2019). Litigation risk and corporate voluntary disclosure: evidence from two quasi-natural experiments. European Accounting Review, 28(5), 873–900.
Dwekat, A., Meqbel, R., Seguí‐Mas, E., & Tormo‐Carbó, G. (2022). The role of the audit committee in enhancing the credibility of CSR disclosure: Evidence from STOXX Europe 600 members. Business Ethics, the Environment & Responsibility, 31(3), 718–740.
El Saleh, A. I., & Jurdi, D. J. (2023). Board composition and corporate social responsibility: uncovering the effects of co-opted directors. Journal of Accounting Literature, ahead-of-print.
Fahad, P., & Rahman, P. M. (2020). Impact of corporate governance on CSR disclosure. International Journal of Disclosure and Governance, 17(2–3), 155–167. https://doi.org/10.1057/s41310-020-00082-1
Fama, E. F. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 88(2), 288–307.
Firmansyah, A., Arham, A., Qadri, R. A., Wibowo, P., Irawan, F., Kustiani, N. A., Wijaya, S., Andriani, A. F., Arfiansyah, Z., & Kurniawati, L. (2022). Political connections, investment opportunity sets, tax avoidance: does corporate social responsibility disclosure in Indonesia have a role? Heliyon.
Fuente, J. A., García-Sánchez, I. M., & Lozano, M. B. (2017). The role of the board of directors in the adoption of GRI guidelines for the disclosure of CSR information. Journal of Cleaner Production, 141, 737–750. https://doi.org/10.1016/j.jclepro.2016.09.155
García‐Sánchez, I., Hussain, N., Khan, S., & Martínez‐Ferrero, J. (2022). Assurance of corporate social responsibility reports: Examining the role of internal and external corporate governance mechanisms. Corporate Social Responsibility and Environmental Management, 29(1), 89–106.
Giannarakis, G., Konteos, G., & Sariannidis, N. (2014). Financial, governance and environmental determinants of corporate social responsible disclosure. Management Decision, 52(10), 1928–1951.
Goodstein, J., Gautam, K., & Boeker, W. (1994). The effects of board size and diversity on strategic change. Strategic Management Journal, 15(3), 241–250.
Gul, F. A., & Leung, S. (2004). Board leadership, outside directors’ expertise and voluntary corporate disclosures. Journal of Accounting and Public Policy, 23(5), 351–379.
Habbash, M. (2017). Corporate governance and corporate social responsibility disclosure: evidence from Saudi Arabia. International Journal of Corporate Strategy and Social Responsibility, 1(2), 161–178.
Hermalin, B., & Weisbach, M. S. (2001). Boards of directors as an endogenously determined institution: A survey of the economic literature.
Iliev, P., & Roth, L. (2018). Learning from directors’ foreign board experiences. Journal of Corporate Finance, 51, 1–19.
Jizi, M. I., Salama, A., Dixon, R., & Stratling, R. (2013). Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from the US Banking Sector. Journal of Business Ethics, 125(4), 601–615. https://doi.org/10.1007/s10551-013-1929-2
Jouber, H. (2021). Is the effect of board diversity on CSR diverse? New insights from one-tier vs two-tier corporate board models. Corporate Governance: The International Journal of Business in Society, 21(1), 23–61.
Khan, A., Muttakin, M. B., & Siddiqui, J. (2013). Corporate Governance and Corporate Social Responsibility Disclosures: Evidence from an Emerging Economy. Journal of Business Ethics, 114(2), 207–223. https://doi.org/10.1007/s10551-012-1336-0
Kim, Y., Park, M. S., & Wier, B. (2012). Is earnings quality associated with corporate social responsibility? The Accounting Review, 87(3), 761–796.
Lee, J., & Park, J. (2019). The impact of audit committee financial expertise on management discussion and analysis (MD&A) tone. European Accounting Review, 28(1), 129–150.
Li, J., Mangena, M., & Pike, R. (2012). The effect of audit committee characteristics on intellectual capital disclosure. The British Accounting Review, 44(2), 98–110.
Liao, L., Luo, L., & Tang, Q. (2015). Gender diversity, board independence, environmental committee and greenhouse gas disclosure. British Accounting Review, 47(4), 409–424. https://doi.org/10.1016/j.bar.2014.01.002
Maharani, A. P., & Syafruddin, M. (2023). Tata Kelola Perusahaan Dan Tanggung Jawab Sosial Perusahaan. Diponegoro Journal of Accounting, 12(2), 1–12. http://ejournal-s1.undip.ac.id/index.php/accounting
McDaniel, L., Martin, R. D., & Maines, L. A. (2002). Evaluating financial reporting quality: The effects of financial expertise vs. financial literacy. The Accounting Review, 77(s-1), 139–167.
Mohammadi, S., Saeidi, H., & Naghshbandi, N. (2021). The impact of board and audit committee characteristics on corporate social responsibility: evidence from the Iranian stock exchange. International Journal of Productivity and Performance Management, 70(8), 2207–2236.
Muktadir-Al-Mukit, D., & Keyamoni, T. J. (2019). Corporate governance and earnings management practices among listed firms: A study on post stock market crisis period in Bangladesh. Journal of Asian Business Strategy, 9(1), 1.
Naseem, M. A., Riaz, S., Rehman, R. U., Ikram, A., & Malik, F. (2017). Impact of board characteristics on corporate social responsibility disclosure. Journal of Applied Business Research, 33(4).
Nielsen, S., & Huse, M. (2010). The contribution of women on boards of directors: Going beyond the surface. Corporate Governance: An International Review, 18(2), 136–148.
Nurhandika, A. (2023). How Does The Role Of Political Connections Influence The Corporate Social Responsibility Scores. International Journal of Management, Economic, Business and Accounting, 2(3), 14–22.
Nurhandika, A., & Manalu, V. G. (2023). How poilitical connection moderate audit committee characteristics and csr: evidence from Indonesian companies. Jurnal Mantik, 7(3), 1653–1660.
Oh, W.-Y., Chang, Y. K., & Kim, T.-Y. (2018). Complementary or substitutive effects? Corporate governance mechanisms and corporate social responsibility. Journal of Management, 44(7), 2716–2739.
Purbawangsa, I. B. A., Solimun, S., Fernandes, A. A. R., & Mangesti Rahayu, S. (2020). Corporate governance, corporate profitability toward corporate social responsibility disclosure and corporate value (comparative study in Indonesia, China and India stock exchange in 2013-2016). Social Responsibility Journal, 16(7), 983–999.
Qa’dan, M. B. A., & Suwaidan, M. S. (2018). Board composition, ownership structure and corporate social responsibility disclosure: the case of Jordan. Social Responsibility Journal, 15(1), 28–46.
Qaderi, S. A., Alhmoud, T. R., & Ghaleb, B. A. A. (2020). Audit committee features and CSR disclosure: Additional evidence from an emerging market. International Journal of Financial Research, 11(5), 226–237.
Reverte, C. (2016). Corporate social responsibility disclosure and market valuation: evidence from Spanish listed firms. Review of Managerial Science, 10, 411–435.
Sauerwald, S., & Su, W. (2019). CEO overconfidence and CSR decoupling. Corporate Governance: An International Review, 27(4), 283–300.
Untoro, D. A., & Zulaikha, Z. (2013). Pengaruh Karakteristik Good Corporate Governance (GCG) terhadap Luas Pengungkapan Corporate Social Responsibility (CSR) di Indonesia (Studi Empiris Pada Perusahaan perbankan yang Terdaftar di BEI Tahun 2008-2011). Fakultas Ekonomika dan Bisnis.
Uyar, A., Elbardan, H., Kuzey, C., & Karaman, A. S. (2023). Audit and CSR committees: are they complements or substitutes in CSR reporting, assurance and GRI framework adoption? International Journal of Accounting & Information Management, 31(1), 1–36.
Wang, J., & Sun, J. (2022). The role of audit committees in social responsibility and environmental disclosures: evidence from Chinese energy sector. International Journal of Disclosure and Governance, 19(1), 113–128. https://doi.org/10.1057/s41310-021-00131-3
Yani, R., Yusrawati, & Abrar. (2024). Pengaruh Ceo Tenur, Rapat Dewan Direksi, Earning Power Dan Pengungkapan Csr Terhadap Manajemen Laba (Studi Empiris pada Perusahaan Transportasi dan Logistik yang Terdaftar di Bursa Efek Indonesia Periode 2019-2021). Journal Of Islamic Finance And Accounting Research, 3(1 FEBRUARI), 61–76. https://doi.org/10.25299/jafar.2024.14264
Yarram, S. R., & Adapa, S. (2021). Board gender diversity and corporate social responsibility: Is there a case for critical mass? Journal of Cleaner Production, 278, 123319.
Yasser, Q. R., Al Mamun, A., & Ahmed, I. (2017). Corporate social responsibility and gender diversity: Insights from Asia Pacific. Corporate Social Responsibility and Environmental Management, 24(3), 210–221.
Yu, J., Xu, Y., & Zhang, J. H. (2016). The effects of the existence and financial expertise of audit committees on firms’ controversial activities—Evidence from IPOs. Journal of Forensic & Investigative Accounting, 8(3), 400–427.
Zhang, Y., Zhou, J., & Zhou, N. (2007). Audit committee quality, auditor independence, and internal control weaknesses. Journal of Accounting and Public Policy, 26(3), 300–327.
Published
2024-11-15
Section
Articles
Copyright (c) 2024 Arief Nurhandika, Lia Dwi Martika, Yudi Febriansyah
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