Corporate governance and corporate social responsibility: A study of emerging market listed firms

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Annisa A. Lahjie ORCID logo, Riccardo Natoli ORCID logo, Segu Zuhair

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The main purpose of this paper is to examine the impact of corporate governance (CG) on corporate social responsibility (CSR) of Indonesian listed firms. Estimations via simultaneous equation models with ordinary least squares (OLS) and two-stage least squares (2SLS) were employed for 84 firms with a total of 924 observations over the period of 2007-2017. The results showed that a lack of CG in monitoring and supervisory mechanisms, as well as a high concentration of managerial ownership, can significantly contribute to low levels of CSR. There are data limitations as a number of firms were omitted due to the application of the CSR criteria utilised in this study. The research has implications for Indonesian listed firms with respect to aligning CSR initiatives to firm objectives. The paper provides recommendations for future research in this area. The paper provides one of the few studies to analyse CG on CSR via a comprehensive measurement of CSR. Further, it adds to the empirical academic literature from a developing country context.

Keywords: Corporate Governance, Corporate Social Responsibility, Indonesia, OLS, 2SLS

Authors’ individual contribution: Conceptualization – A.A.L.; Methodology – S.Z.; Investigation – A.A.L., R.N., and S.Z.; Resources – A.A.L.; Writing – Original Draft – A.A.L., R.N., and S.Z.; Writing – Review & Editing – A.A.L., R.N., and S.Z.; Funding – S.Z.; Supervision – R.N. and S.Z.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: C3, M1, M4

Received: 05.10.2020
Accepted: 11.01.2021
Published online: 13.01.2021

How to cite this paper: Lahjie, A. A., Natoli, R., & Zuhair, S. (2021). Corporate governance and corporate social responsibility: A study of emerging market listed firms. Corporate Ownership & Control, 18(2), 90-105.