CSR Disclosure, Earning Management, Good Corporate Governance, and Financial Performance: a Moderation and Mediation Analysis
N. Puspitasari (a), A.M. Aslamiyah (b)

Faculty of Economic and Business, University of Jember
Jl. Kalimantan Tegalboto No.37, Jember 68121, Indonesia

Abstract

Purpose - This study aimed to investigate the direct effect of Islamic corporate social responsibility disclosure (ICSRD) on financial performance (FP), as well as through mediating role of real earning management (REM) and also the moderating role of Good Corporate Governance (GCG).

Design/methodology/approach - Secondary data was collected from thirty-six companies listed in Jakarta Islamic Index for the years 2014-2021 and were analyzed by structural equation modeling (SEM) carried out by using the software Analysis of Moment Structure (AMOS).

Findings - Direct interaction test shows that there is a positive significant effect between real earnings management (REM), independent commissioners (KIND), and institutional ownership (KINS), on financial performance (FP). meanwhile, the direct relationship between ICSRD and FP tends to be insignificant. Meanwhile, moderation test showed that KIND variable was able to moderate the relationship between ICSRD and FP, while the KINS did not. The results of the mediation test using the causal step method provide empirical evidence that the REM variable tends to be unable to mediate the ICSRD relationship variable to FP.

Practical implications - The study contributes new evidence about how ICSRD, REM, and GCG practices affect the financial performance for both academics and Indonesian investors.

Suggestion for Future Research - Further research needs to extend the research period in order to provide empirical evidence regarding the most optimal time for companies to obtain benefits from social responsibility disclosure. In addition, future research can investigate several companies from different countries to measure the importance of the country^s regulatory and cultural factors in determining the relationship between each variable in this study.

Keywords: Islamic Corporate Social Responsibility, Good Corporate Governance, Real Earning Management, Financial Performance

Topic: Finance