Do Political Connection and Corporate Governance Mechanism Increase Corporate Social Responsibility Disclosure?

Main Article Content

Yeterina Widi Nugrahanti


Political connection, Corporate governance mechanism, Corporate social responsibility, Disclosure


The objective of this study is to investigate the impact of political connection and corporate governance mechanisms (independent board of commissioner, institutional ownership, and board of commissioner size) toward Corporate Social Responsibility (CSR) disclosures using Global Reporting Initiative (GRI) Guidelines. Purposive sampling technique was conducted and 272 non-financial companies listed in the Indonesian Stock Exchange during 2015-2017 were acquired as the samples (816 firm-years). For testing the hypotheses, unbalanced Generalized Least Square panel data regression was employed. The finding shows that political connection and board of commissioner size have a positive impact on CSR disclosures while independent board of commissioner and institutional ownership do not. This study contributes to political connection, corporate governance mechanism, and CSR disclosure literature by identifying CSR disclosure based on GRI guidelines up to the most detailed level, which are 77 disclosure items indicators and 254 sub-indicators. Meanwhile, previous research only identify CSR disclosure up to 77 GRI indicators without paying attention to the sub-indicators in detail.


Download data is not yet available.
Abstract 627 | pdf Downloads 461


Ahmad, N. B. J., Rashid, A., & Gow, J. (2017). Board independence and corporate social responsibility (CSR) reporting in Malaysia. Australasian Accounting, Business and Finance Journal, 11(2), 61–85. doi: 10.14453/aabfj.v11i2.5
Al-Hadi, A., Chatterjee, B., Yaftian, A., Taylor, G., & Monzur Hasan, M. (2017). Corporate social responsibility performance, financial distress and firm life cycle: evidence from Australia. Accounting and Finance, 59(2), 961–989. doi: 10.1111/acfi.12277
Arora, P., & Dharwadkar, R. (2011). Corporate governance and corporate social responsibility (CSR): The moderating roles of attainment discrepancy and organization slack. Corporate Governance: An International Review, 19(2), 136–152. doi: 10.1111/j.1467-8683.2010.00843.x
Bansal, S., Lopez-Perez, M., & Rodriguez-Ariza, L. (2018). Board Independence and Corporate Social Responsibility Disclosure: The Mediating Role of the Presence of Family Ownership. Administrative Sciences, 8(3), 33. doi: 10.3390/admsci8030033
Bouten, L., Everaert, P., Van Liedekerke, L., De Moor, L., & Christiaens, J. (2011). Corporate social responsibility reporting: A comprehensive picture? Accounting Forum, 35(3), 187–204. doi: 10.1016/j.accfor.2011.06.007
Bredart, X. (2014). Financial Distress and Corporate Governance: The Impact of Board Configuration. International Business Research, 7(1), 1–9. doi: 10.5539/ibr.v7n3p72
Buchanan, S., Cao, C. X., & Chen, C. (2018). Corporate social responsibility, firm value, and influential institutional ownership. Journal of Corporate Finance, 52(C), 73–95. doi: 10.1016/j.jcorpfin.2018.07.004
Chackroun, R., & Matoussi, H. (2012). Determinants of The Extent of Voluntary Disclosure in The Annual Reports of the Tunisian Firms. Journal of Accounting and Management Information Systems, 11(3), 335–370.
Christitama, I. H. (2018). Firm Characteristics, Consumer Proximity, Environmental Sensitivity, and Corporate Social Responsibility Disclosures. Brawijaya University.
Correia, M. M. (2014). Political connections and SEC enforcement. Journal of Accounting and Economics, 57(2–3), 241–262. doi: 10.1016/j.jacceco.2014.04.004
Dyck, A., Lins, K. ., Roth, L., & Wagner, H. . (2019). Do institutional investors drive corporate social responsibility? International evidence. Journal of Financial Economics, 131(1), 693–714. doi: 10.1016/j.jfineco.2018.08.013
El-Bassiouny, D., & El-Bassiouny, N. (2018). Diversity, corporate governance and csr reporting. Management of Environmental Quality: An International Journal, 1(1), 1–22. doi: 10.1108/MEQ-12-2017-0150.
Esa, E., Anum, N., & Ghazali, M. (2012). Corporate Social Responsibility And Corporate Governance In Malaysian Government‐Linked Companies, Corporate Governance. The International Journal of Business in Society, 12(3), 292–305. doi: 10.1108/14720701211234564
Fahad, P., & Rahman, P. M. (2020). Impact of corporate governance on csr disclosure. International Journal of Disclosure and Governance, 17(1), 1–13. doi: 10.1057/s41310-020-00082-1
Famiyeh, S. (2016). Corporate social responsibility and firm’s performance. Corporate Social Responsibility Journal, 13(2), 390–406. doi: 10.1108/SRJ-04-2016-0049
Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach (1st ed.). Pitman.
Gamerschlag, R., Möller, K., & Verbeeten, F. (2011). Determinants of voluntary CSR disclosure: Empirical evidence from Germany. Review of Managerial Science, 5(2), 233–262. doi: 10.1007/s11846-010-0052-3
Ghabayen, M. A., Mohamad, N. R., & Ahmad, N. (2016). Board characteristics and corporate social responsibility disclosure in the Jordanian banks. Corporate Board: Role, Duties & Composition, 1(84–100). doi: 10.22495/cbv12i1c1art2
Goldman, E., Rocholl, J., & So, J. (2013). Politically connected boards of directors and the allocation of procurement contracts. Review of Finance, 17(5), 1617–1648. doi: 10.1093/rof/rfs039
Gosal, M. ., Pangemanan, S. ., & Tielung, M. (2018). The influence of good corporate governance on firm value: empirical study of companies listed in idx30 index within 2013-2017. Economics, Management, Busineess and Accounting Journal, 6(4), 2688–2697. doi: 10.35794/emba.v6i4.21050
Gujarati, D. ., & Porter, D. . (2020). Basic Econometrics (6th ed.). McGraw-Hill.
Habbash, M. (2016). Corporate governance and corporate social responsibility disclosure: evidence from Saudi
Arabia. Social Responsibility Journal, 12(4), 740–754. doi: 10.1108/SRJ-07-2015-0088
Habib, A., Muhammadi, A. H., & Jiang, H. (2017). Political connections, related party transactions, and auditor choice: Evidence from Indonesia. Journal of Contemporary Accounting and Economics, 13(1), 1–19. doi: 10.1016/j.jcae.2017.01.004
Hashim, M. F. A. M., & Yusof, M. ‘Atef M. (2016). Corporate Philanthropy Disclosure : Does Board ’ s Education Matters ? Journal for Studies in Management and Planning, 02(2), 325.
Houston, F., Jiang, L., Lin, C., & Ma, Y. (2014). Political connections and the cost of bank loans. Journal of Accounting Research, 52(1), 193–243. doi: 10.1111/1475-679X.12038
Huang, H., & Zhao, Z. (2016). The influence of political connection on corporate social responsibility——evidence from Listed private companies in China. International Journal of Corporate Social Responsibility, 1(1), 1–19. doi: 10.1186/s40991-016-0007-3
Islam, M. A. (2017). CSR reporting and legitimacy theory: some thoughts on future research agenda. The Dynamics of Corporate Social Responsibility, 1(1), 323–339.
Javed, M., Rashid, M. A., Hussain, G., & Ali, H. Y. (2020). The effects of corporate social responsibility on corporate reputation and firm financial performance: Moderating role of responsible leadership. Corporate Social Responsibility and Environmental Management, 27(3), 1395–1409. doi: 10.1002/csr.1892
Jizi, M. I., Salama, A., Dixon, R., & Stratling, R. (2014). Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from the US Banking Sector. Journal of Business Ethics, 125(4), 601–615. doi: 10.1007/s10551-013-1929-2
Joutsenvirta, M., & Vaara, E. (2015). Legitimacy struggles and political corporate social responsibility in international setting: a comparative discursive analysis of a contested investment in Latin America. Organization Studies, 36(6), 741–777. doi: 10.1177/0170840615571958
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. doi: 10.1007/s10551-012-1336-0
Kim, Y., & Kim, M. (2014). Corporate social responsibility and shareholder value of restaurant firms. International Journal of Hospitality Management, 40(1), 120–129. doi: 10.1016/j.ijhm.2014.03.006
Li, S., Song, X., & Wu, H. (2015). Political Connection, Ownership Structure, and Corporate Philanthropy in China: A Strategic-Political Perspective. Journal of Business Ethics, 129(2), 399–411. doi: 10.1007/s10551-014-2167-y
Liao, L., Lin, T. P., & Zhang, Y. (2016). Corporate Board and Corporate Social Responsibility Assurance: Evidence from China. Journal of Business Ethics, 150(1), 211–225. doi: 10.1007/s10551-016-3176-9
Lin, K. J., Tan, J., Zhao, L., & Karim, K. (2014). In the name of charity: Political connections and strategic corporate social responsibility in a transition economy. Journal of Corporate Finance, 32, 327–346. doi: 10.1016/j.jcorpfin.2014.10.007
Lopatta, K., Buchholz, F., & Kaspereit, T. (2015). Asymmetric information and corporate social responsibility. Business & Society, 55(3), 458–488. doi: 10.1177/0007650315575488
Manzaneque, M., Prigeo, A., & Merino, E. (2016). Corporate governance effect on financial distress likelihood: evidence from Spain. Spanish Accounting Review, 19(1), 111–121. doi: 10.1016/j.rcsar.2015.04.001
Michelon, G., & Parbonetti, A. (2012). The effect of corporate governance on sustainability disclosure. Journal of Management and Governance, 16(3), 477–509. doi: 10.1007/s10997-010-9160-3
Muttakin, M. B., Mihret, D. G., & Khan, A. (2018). Corporate political connection and corporate social responsibility disclosures: a neo-pluralist hypothesis and empirical evidence. Accounting, Auditing &
Accountability Journal, 31(2), 725–744. doi: 10.1108/AAAJ-06-2015-2078
Nassem, M. ., Riaz, S., Rehman, R., Ikram, A., & Malik, F. (2017). Impact of board characteristic on corporate social responsibility disclosure. The Journal of Applied Business Research, 33(4), 801–901.
Nelwan, M. L. (2017). Corporate governance disclosure in the existence of ownership structure and growth opportunities. Finance and Banking Journal, 21(2), 200–210.
Nugrahanti, Y. ., & Maharani, O. (2013). Firm characteristics toward Corporate Social Responsibility Disclosures and Its Impact on Financial Performance. Journal of Management and Business, 12(1), 128–142. doi: 10.24123/jmb.v12i1.14
Nugrahanti, Y. ., Sutrisno, T., Rahman, A. F., & Mardiati, E. (2020). Do firm characteristics, political connection and corporate governance mechanism affect financial distress? International Journal of Trade and Global Market, 13(2), 220–250. doi: 10.1504/IJTGM.2020.106753
O’Riordan, L., & Fairbrass, J. (2014). Managing CSR Stakeholder Engagement: A New Conceptual Framework. Journal of Business Ethics, 125(1), 121–145. doi: 10.1007/s10551-013-1913-x
Opazo, L., Raddatz, C., & Schmukler, S. . (2015). Institutional investors and long-term investment: evidence from Chile. The World Bank Economic Review, 29(3), 479–522.
Patrisia, D., & Datsgir, S. (2017). Diversification and Corporate Social Performance in Manufacturing Companies. Eurasian Business Review, 7(1), 121–139. doi: 10.1007/s40821-016-0052-6
Patten, D. . (2014). Accounting for the public interest: Perspectives on accountability, professionalism and role in society. In Accounting for the Public Interest: Perspectives on Accountability, Professionalism and Role in Society (pp. 1–280). Illinois State University. doi: 10.1007/978-94-007-7082-9
Petta, B. C., & Tarigan, J. (2017). Pengaruh Kepemilikan Institusional Terhadap Kinerja Keuangan Melalui Struktur Modal Sebagai Variabel Intervening Pada Perusahaan Manufaktur Yang Terdaftar Dalam Bursa Efek Indonesia ( Bei ). Business Accounting Review, 5(2), 625–634.
Pfeffer, J., & Salancik, G. (1978). The External Control of Organizations: A Resource Depencende Perspective (1st ed.). Stanford University Press.
Rabi, M. . (2019). Board Characteristics and Environmental Disclosure: Evidence from Jordan. International Journal of Business and Management, 14(2), 57. doi: 10.5539/ijbm.v14n2p57
Rahman, I. M. A., & Ismail, K. N. I. K. (2016). The effects of political connection on corporate social responsibility disclosure – Evidence from listed companies in Malaysia. International Journal of Business and Management Invention, 5(2), 16–21.
Rahman, N., Zain, M., & Al-Haj. (2011). CSR disclosures and its determinants: evidence from Malaysian government link companies. Social Responsibility Journal, 7(2), 181–201.
Rashid, A. (2018). Board independence and firm performance: Evidence from Bangladesh. Future Business Journal, 4(1), 34–49. doi: 10.1016/j.fbj.2017.11.003
Rendtorff, J. D. (2019). Corporate Social Responsibility, Sustainability, and Stakeholder Management. Philosophy of Management and Sustainability: Rethinking Business Ethics and Social Responsibility in Sustainable
Development, 43–52. doi: 10.1108/978-1-78973-453-920191004
Rodriguez, M., Martinez, D., & Perez, B. (2018). Which corporate governance mechanism drive csr disclosure practices in emerging countries? Sustainability, 11(61), 1–20. doi: 10.3390/su11010061
Saidu, S. (2019). CEO characteristics and firm performance: focus on origin, education and ownership. Journal of Global Entrepreneurship Research, 9(1). doi: 10.1186/s40497-019-0153-7
Sari, W. ., & Rani, P. (2015). The Effect of Institutional Ownership, Managerial Ownership and Firm Size toward CSR Disclosures. Accounting and Finance Journal, 4(1), 1–20.
Shamil, M. M., Shaikh, J. M., Ho, P. ., & Krishnan, A. (2014). Corporate Board: Role, Duties & Composition. Asian Review of Accounting Asian Review of Accounting Asian Review of Accounting, 22(2), 78–97. doi: 10.1108/ARA-09-2013-0060
Song, Y., Gianiodis, P. T., & Li, Y. (2016). Institutional ownership and corporate philanthropic giving in an emerging economy. Management and Organization Review, 12(2), 357–385. doi: 10.1017/mor.2015.33
Stuebs, M. T., & Sun, L. (2012). Corporate Social Responsibility and Firm Reputation. SSRN Electronic Journal. doi: 10.2139/ssrn.1863343
Susilowati, I. ., & Sanjaya, I. . (2015). The effect of ultimate ownership toward earnings in formativeness. Modus Journal, 12(1), 13–27.
Tao, Q., Sun, Y., Zhu, Y., & Yang, X. (2017). Political Connections and Government Subsidies: Evidence from Financially Distressed Firms in China. Emerging Markets Finance and Trade, 53(8), 1854–1868. doi: 10.1080/1540496X.2017.1332592
Tran, H. (2018). Differences in corporate social responsibility disclosure between japan and the usa. Journal of Asian Business and Economics Studies, 4(2), 1–20. doi: 10.1108/JABES-04-2018-0002
Wang, Q., Wong, T. J., & Xia, L. (2008). State ownership, the institutional environment, and auditor choice: Evidence from China. Journal of Accounting and Economics, 46(1), 112–134. doi: 10.1016/j.jacceco.2008.04.001
Wang, & Qian. (2011). Corporate Philanthropy and corporate financial performance: the roles of stakeholder response and political access. Academy of Management, 54(6), 1159–1181.
Wijesinghe, K. (2012). Current context of disclosure of corporate social responsibility in Sri Lanka. Procedia Economics and Finance, 171–178. doi: 10.1016/S2212-5671(12)00077-9
Wiranata, Y., & Nugrahanti, Y. . (2013). Influence of Ownership Structure on Profitability of Manufacturing Companies in Indonesia. Journal of Accounting and Finance, 15(1), 15–26. doi: 10.9744/jak.15.1.15-26
Wu, W., Wu, C., & Rui, O. M. (2012). Ownership and the Value of Political Connections: Evidence from China. European Financial Management, 18(4), 695–729. doi: 10.1111/j.1468-036X.2010.00547.x
Yao, M., Song, C., & Song, Z. (2018). State ownership, political connections and entry barriers: evidence from China. Applied Economics Letters, 25(17), 1250–1254. doi: 10.1080/13504851.2017.1414928
Zhang, C. (2017). Political connections and corporate environmental responsibility: adopting or escaping. Energy Economics, 68(c), 539–547. doi: 10.1016/j.eneco.2017.10.036