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Research Paper | Management | Indonesia | Volume 8 Issue 8, August 2019

The Effect of Profitability and Firm Size on Corporate Social Responsibility and Good Corporate Governance for Companies Listed on the Indonesia Stock Exchange

I Made Wirata | Henny Rahyuda

Abstract: Good Corporate Governance (GCG) is an internal control system of a company that refers to laws and business ethics to move towards increasing business growth and corporate accountability, so that it can establish good relationships with stakeholders. CSR is to pay attention to the interests of corporate stakeholders which are interpreted as parties with an interest in the sustainability of the company, which includes employees, customers, consumers, suppliers, communities and the government. This study aimed to the effect of profitability and firm size on CSR and GCG, especially for companies that are listed on the Indonesia Stock Exchange (IDX) for the 2014-2017. The population in this study was 9 (nine) companies that are listed on the IDX and included in the ranking by SWA magazine. The data analysis technique used was path analysis. This study showed that profitability has a negative and significant effect on GCG, firm size has a negative and significant effect on GCG, profitability has a negative and significant effect on CSR, firm size has a positive and significant effect on CSR, CSR has a negative and significant effect on GCG. The result indicated that CSR and GCG are corporate obligations mandated by law, thus it is not influenced by the high-low profitability and firm size. Company must take notice on the financial conditions as indicated by the high-low profitability in carrying out CSR and GCG activities.

Keywords: good corporate governance, profitability, firm size, corporate social responsibility

Edition: Volume 8 Issue 8, August 2019,

Pages: 920 - 924

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