The Effect of Financial Conditions, Growth, and Debt to Equity Ratio on Company Sustainability with Corporate Governance as a Moderating Variable

Verawati Verawati

Abstract


The purpose of this study is to get an empirical evidence whether financial condition, growth, and debt to equity ratio have a significant effect on company sustainability. Sample consists of companies that listed on Indonesian Stock Exchange since 2014 to 2017 and participating in the CGPI survey conducted by Indonesian Institute for Corporate Governance. Using multiple regression and moderated regression, the empirical results show that financial condition and debt to equity ratio has a significant positive effect on company sustainability, meanwhile growth does not have a significant effect in company sustainability. This study also try to get an empirical evidence whether corporate governance has a moderating effect to the relationship between financial condition and company sustainability, debt to equity ratio and company sustainability, growth and company sustainability. The result show that corporate governance does not have a moderating effect to the relationship between financial condition and company sustainability, debt to equity ratio and company sustainability, growth and company sustainability. Further study can use ASEAN CG Scorecard to obtain corporate governance scores and make a comparisons between industries.

Full Text:

PDF

Article Metrics

Abstract views : 58| PDF views : 0

References


Agoes, Sukrisno and I Cenik Ardana. (2009). Etika Bisnis dan Profesi Tantangan Membangun Manusia Seutuhnya. Jakarta: Salemba Empat.

Ameer, Rashid, and Radiah Othman. (2012). Sustainability Practices and Corporate Financial Performance: A Study Based on the Top Global Corporations. Journal Business Ethics, pp. 61-79.

Aras, Guler and Crowther, David. (2008). An Investigation into the Relationship between Corporate Governance and Corporate Sustainability. Management Decision, Vol. 46, No. 3, pp. 433-448.

Arevalo, Jorge A. and Aravind, Deepa. (2010). The Impact of the Crisis on Corporate Responsibility: the case of UN Global Compact Participants in the USA. Corporate Governance, Vol. 10, No. 4, pp. 406-420

Bhatia, Aparna and Tuli, Siya. (2017). Corporate Attributes Affecting Sustainability Reporting: An Indian Perspective. International Journal of Law and Management, Vol. 59, No. 3, pp. 322-340.

Brealey, Richard A., Myers, Stewart C., and Allen, Franklin. (2011). Principles of Corporate Finance. Tenth Edition. Global Edition. New York: McGraw-Hill/Irwin

Brigham, Eugene F. and Ehrhardt, Michael C. (2008). Financial Management: Theory and Practice. Twelfth Edition. United States of America: Thomson South-Western.

Cooper, Elizabeth and Uzun, Hatice. (2019). Corporate Social Responsibility and Bankruptcy. Studies in Economics and Finance, Vol. 36, No. 2, pp. 130-153.

Dilling, Petra F.A. (2010). Sustainability Reporting In A Global Context: What Are The Characteristics Of Corporations That Provide High-Quality Sustainability Reports – An Empirical Analysis. International Business & Economics Research Journal, Vol. 8, No. 1, pp. 19-30

Donaldson, Thomas, and Lee E. Preston. (1995). The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications. The Academy of Management Review, Vol 20, No. 1, pp. 65-91.

Helfert, Erich A. (2001). Financial Analysis Tools and Techniques: a Guide for Managers. United States of America: The McGraw-Hill Companies, Inc.

Institut Akuntan Publik Indonesia. (2011). Standar Profesional Akuntan Publik. Jakarta: Salemba Empat.

Jenner, Peter. (2016). Social Enterprise Sustainability Revisited: an International Perspective. Social Enterprise Journal, Vol. 12, No. 1, pp. 42-60.

Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, Vol. 3, No. 4, pp. 305-360.

Karaman, Abdullah S., Kilic, Merve, and Uyar, Ali. (2018). Sustainability Reporting in the Aviation Industry: Worldwide Evidence. Sustainability Accounting, Management and Policy Journal, Vol. 9, No. 4, pp. 362-391.

Lourenco, Isabel Costa, Manuel Castelo Branco, Jose Dias Curto, and Teresa Eugenio. (2012). How Does the Market Value Corporate Sustainability Performance?. Journal Business Ethics, pp. 417-428.

Mahmah, Assil El and Kandil, Magda. (2019). Fiscal Sustainability Challenges in the New Normal of Low Oil Prices: Empirical Evidence from GCC Countries. International Journal of Development Issues, Vol. 18, No. 1, pp. 109-134.

Mardjono, Amerta. (2005). A Tale of Corporate Governance: Lessons Why Firms Fail. Managerial Auditing Journal, Vol. 20, No. 3, pp. 272-283

Morhardt, J. Emil, Sarah Baird, and Kelly Freeman. (2002). Scoring Corporatte Environmental and Sustainability Reports Using GRI 2000, ISO 14031 and Other Criteria. Corporate Social Responsibility and Environmental Management, 9, pp. 215-233.

Natalia, Ria and Josua Tarigan. (2014). Pengaruh Sustainability Reporting terhadap Kinerja Keuangan Perusahaan Publik dari Sisi Profitability Ratio. Business Accounting Review, Vol 2, No. 1, pp 111-120

Omran, Mohamed A. and El-Galfy, Ahmed M. (2014). Theoretical Perspectives on Corporate Disclosure: a Critical Evaluation and Literature Survey. Asian Review of Accounting, Vol. 22, No. 3, pp. 257-286.

Oppenheimer, Peter H. (2000). An Investigation of Current Debt Levels of Equity REITS. Journal of Real Estate Portfolio Management, Jul-Sep, Vol. 6, No. 3, pp. 225-237

Orazalin, Nurlan and Mahmood, Monowar. (2019). Determinants of GRI-Based Sustainability Reporting: Evidence from an Emerging Economy. Journal of Accounting in Emerging Economies

Rahman, Abdul and Siregar, Baldric. (2012). Faktor-Faktor yang Mempengaruhi Kecenderungan Penerimaan Opini Audit Going Concern Pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia. Simposium Nasional Akuntansi XV Banjarmasin.

Salehi, Mahdi, Tarighi, Hossein, and Rezanezhad, Malihe. (2019). Empirical Study on the Effective Factors of Social Responsibility Disclosure of Iranian Companies. Journal of Asian Business and Economic Studies, Vol. 26, No. 1, pp. 34-55.

Santosa, Arga Fajar and Linda Kusumaning Wedari. (2007). Analisis Faktor-Faktor yang Mempengaruhi Kecenderungan Penerimaan Opini Audit Going Concern. JAAI Vol. 11, No. 2, pp. 141-158.

Searcy, Cory and Ruvena Buslovich. (2014). Corporate Perspectives on the Development and Use of Sustainability Reports. Journal Business Ethics, pp. 149–169.

Setyarno, Eko Budi, Indira Januarti, and Faisal. (2006). Pengaruh Kualitas Audit, Kondisi Keuangan Perusahaan, Opini Audit Tahun Sebelumnya, Pertumbuhan Perusahaan Terhadap Opini Audit Going Concern. Simposium Nasional Akuntansi IX Padang.

Shamil, Mohamed M., Shaikh, Junaid M., Ho, Poh-Ling, and Krishnan, Anbalagan. (2014). The Influence of Board Characteristics on Sustainability Reporting: Empirical Evidence from Sri Lankan Firms. Asian Review of Accounting, Vol. 22, No. 2, pp. 78-97.

Subramanyam, K. R. and Wild, John J. (2009). Financial Statement Analysis. Tenth Edition. International Edition. New York: McGraw-Hill/Irwin.

Widoatmodjo, Sawidji. (2009). Pasar Modal Indonesia: Pengantar dan Studi Kasus. Bogor: Ghalia Indonesia.

Yu, Vincent F. and Hsiu-I Ting. (2012). Financial Development, Investor Protection, and Corporate Commitment to Sustainability. Management Decision, Vol. 50, No. 1, pp. 130-146.


Refbacks

  • There are currently no refbacks.