Effect of Diversification, Good Corporate Governance, Corporate Social Responsibility on Business Risk (Study on Manufacturing Companies listed on the Stock Exchange I 2015-2019)

Surya Habibie

Abstract


ABSTRACT :This study aims to analyze the effect of Diversification, Good Corporate Governance, Corporate Social Responsibility on Company Risk. The population in this study were manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2015-2019 period, which amounted to 176 companies. The research method used in this research is the explanatory method which aims to test the effect between variables through hypothesis testing using quantitative data. This study uses secondary data obtained from the website www.idx.co.id and the company's Annual Report. The sample selection used purposive sampling method with a total of 205 data from 41 companies in each period. This study uses Structural Equation Modeling-Partial Least Square (SEM-PLS) in analyzing the data. The results showed that Diversification had a positive and significant effect on Corporate Risk, Good Corporate Governance had a positive and significant impact on Corporate Risk, and Corporate Social Responsibility had a positive and significant impact on Corporate Risk. Company risk in this study is measured using Business Risk. Diversification is measured using the Herfindahl index, Good Corporate Governance is measured by the KNKG standard, and Corporate Social Responsibility is measured using the GRI-G4 indicator with the formula Good Corporate Governance has a positive and significant effect on Company Risk, Corporate Social Responsibility has a positive and significant impact on Company Risk. Company risk in this study is measured using Business Risk. Diversification is measured using the Herfindahl index, Good Corporate Governance is measured by the KNKG standard, and Corporate Social Responsibility is measured using the GRI-G4 indicator with the formula Good Corporate Governance has a positive and significant effect on Company Risk, Corporate Social Responsibility has a positive and significant impact on Company Risk . The company's risk in this study is measured using Business Risk. Diversification is measured using the Herfindahl index, Good Corporate Governance is measured by the KNKG standard, and Corporate Social Responsibility is measured using the GRI-G4 indicator with the formula Corporate Social Responsibility has a positive and significant impact on Company Risk. The company's risk in this study is measured using Business Risk. Diversification is measured using the Herfindahl index, Good Corporate Governance is measured by the KNKG standard, and Corporate Social Responsibility is measured using the GRI-G4 indicator with the formula Corporate Social Responsibility has a positive and significant impact on Company Risk. The company's risk in this study is measured using Business Risk. Diversification is measured using the Herfindahl index, Good Corporate Governance is measured by the KNKG standard, and Corporate Social Responsibility is measured using the GRI-G4 indicator with the formula CSR disclosure ratio measurement


Keywords


Diversification, Good Corporate Governance, Corporate Social Responsibility, Corporate Risk

Full Text:

PDF

References


Ahmad, Mas Daniri. 2005. Good Corporate Governance: Concepts and Applications in the Indonesian Context. Jakarta: Ray Indonesia

Aldridge, John., & E, S. Sutojo. (2008). Good Corporate Governance. Jakarta: PT Damar Mulia Pustaka.

Brigham, E. F., & Houston, j. F. (2010). Fundamentals of Financial Management (Essentials of Financial Management), Book 1 Edition 11 (Translated: Ali Akbar Yulianto). Jakarta: Salemba Empat

Haberberg, Adrian., & Rieple, Alison. (2003). The Strategic Management of Organizations. Prentice Hall.

Harto, P. (2005). Company Diversification Policy and Its Effect on Performance: Empirical Study on Public Companies in Indonesia. September, 297–307.

Kahloul, I., & Halara, S. (2010). The impact of diversification on firm performance and risk: An empirical evidence. International Research Journal of Finance and Economics, 35(35), 150–162.

Kurniasari, A. (2011). Effect of Corporate Diversification on Company Performance and Risk with Moderation of Managerial Ownership.

Kythle, Beth and Ruggie, J. (2005). CSR as a risk management.pdf. Hbr, 1–15.

Lestari, WR, & Sari, N. (2014). Diversification of the Risks and Performance of Banking Companies on the Indonesia Stock Exchange. SNEB Proceedings, 93, 1–11.

Lochhead, RY (1989). Electrosteric stabilization of water-in-oil emulsions by hydrophobically modified poly(acrylic acid) thickeners. Polymeric Materials Science and Engineering, Proceedings of the ACS Division of Polymeric Materials Science and Engineering, 61, 407.

Lu, W. (2016). Corporate Social Responsibility and Firm Risk: Implications from Employee Satisfaction. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2727172

Merna, T. & Al-Thani, FF (2005). Corporate Risk Management: An Organizational Perspective, Wiley, Hoboken, NJ.

Montgomery, CA, and Wernerfelt. (1988). Diversification, Ricardian Rent and Tobin's q, Rand Journal of Economics. things. 623-632.

Montgomery, CA (1994). Company Diversification. Journal of Economic Perspectives. Vol.8, No.3. things. 162-178Nguyen, P., & Nguyen, A. (2015). The effect of corporate social responsibility on firm risk. Social Responsibility Journal, 11(2), 324–339. https://doi.org/10.1108/SRJ-08-2013-0093

Murniati, Palupi A et al. 2013. Hypothesis Testing Tools. Semarang. Soegijapranata Catholic University Publisher.

Rahmawati. (2007). Earnings Management Detection Model in the Public Banking Industry in Indonesia and Its Effect on Banking Performance. Accounting and Management, XVIII(April), 13.

Roziq, A., & Danurwenda, HN (2015). The Effect of Good Corporate Governance on Corporate Social Responsibility through Business Risk and Financial Performance at Islamic Commercial Banks in Indonesia. Journal of Accounting, University of Jember, 10(1), 90. https://doi.org/10.19184/jauj.v10i1.1248

Soto Calderón Daysi, Cedeño Soto Nathaly, Parrága Loor Dolores, Q. . X. (2019).️No Title No Title. Journal of Chemical Information and Modeling, 53(9), 111. https://doi.org/10.1017/CBO9781107415324.004

Wahyudi, I. and B, Azheri. (2008). Corporate Social Responsibility, Principles of Regulation & Implementation. Malang: In-Trans Publishing.

Yapiter, Martina Prescila; Sugiarti, Yenny; Eriandani, R. (2013). Implementation of Good Corporate Governance Principles at Hotel X's Corporate Social Responsibility Program in Kupang. 2(2), 1–17




DOI: http://dx.doi.org/10.31258/ijeba.7.1.67-82

Refbacks

  • There are currently no refbacks.


Copyright (c) 2022 INTERNATIONAL JOURNAL OF ECONOMICS, BUSINESS AND APPLICATIONS