The Moderating Effect of Corporate Governance on the Relationship between Sustainability Performance and Financial Performance


  • Anita Anita
  • Agustini Fatmasari Universitas Internasional Batam


Moderation, Financial Performance, Sustainability Performance, Governance


This research is intendedto determine the influence of corporate governance on the relationship between sustainability performance and financial performance. The research method used is quantitative data obtained from the BEI (Indonesian Stock Exchange) website. The sample selection procedure used a purposive sampling method from 767 listed companies and only 53 companies met the criteria. Research results using software statistical program for social science(spss) and eviews 10 which proves that the size of the board of directors, CEO duality and female top board members have no effect on sustainability performance. The independence of the board of directors has a significant negative effect on sustainability performance. Furthermore, researchers also found that governance cannot moderate the relationship between sustainability and financial performance. Research data was collected using panel data regression analysis using time series data and cross-sectional data. The research findings conclude that the higher the level of governance in a company, the better it can pay attention to sustainability performance issues and can be used as a reference in making policies for the government and helps to use additional references regardingGRI (Global Reporting Initiative) disclosure.


Download data is not yet available.


Adeabah, D., Gyeke-Dako, A., & Andoh, C. (2018). Board gender diversity, corporate governance and bank efficiency in Ghana: a two stage data envelope analysis (DEA) approach. Emerald Insight.

Adel, C., Hussain, MM, Mohamed, EKA, & Basuony, MAK (2019). Is corporate governance relevant to the quality of corporate social responsibility disclosure in large European companies? International Journal of Accounting and Information Management, 27(2), 301–332.

Ahmad, NBJ, 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.

Ahmand, N., Rashid, A., & Gow, J. (2017). CEO duality and corporate social responsibility reporting: Evidence from Malaysia. Corporate Ownership & Control, 14(2), 3–142.

Aksoy, M., Yilmaz, M. K., Tatoglu, E., & Basar, M. (2020). Antecedents of corporate sustainability performance in Turkey: the effects of ownership structure and board attributes on non-financial companies. Journal of Cleaner Production, 276, 124284.

Alabdullah, TTY, Ahmed, E.R., & Muneerali, M. (2019). Effect of board size and duality on corporate social responsibility: What has improved in corporate governance in Asia? Journal of Accounting Science, 3(2), 121–135.

Ali, R., Sial, MS, Brugni, T.V., Hwang, J., Khuong, NV, & Khanh, ENT (2020). Does CSR moderate the relationship between corporate governance and Chinese firms' financial performance? Evidence from the Shanghai Stock Exchange (SSE) firms. Sustainability (Switzerland), 12(1).

Angela, D. (2020). Financial distress: The impacts of profitability, liquidity, leverage, firm size, and free cash flow. International Journal of Business, Economics and Law, 22(1), 1.

Anita, A., & Amalia, D.P. (2021). The influence of social responsibility on financial performance: Ownership structure as a moderating variable. Journal of Modernization Economics, 17(1), 54–68.

Aprilia, AW, Haryono, L., & Marsetio, NC (2020). The influence of directors' characteristics on the performance of companies listed on the Indonesia Stock Exchange. 12(November), 233–255.

Apriliyani, IKAB, Farwitawati, R., & Nababan, RIAA (2019). Analysis of the implementation of the global reporting initiative (gri) g4 in agricultural sector company sustainability reports. 0761.

Ariani, MO, & Pratiwi, D. (2021). The influence of corporate social responsibility on tax aggressiveness with financial performance as a moderating variable. AKUNESA: Unesa Accounting Journal, 9(3).

Aunga, D., & Nathan, M. (2018). The impact of corporate social responsibility on corporate financial performance in Tanganyika Wilderness camps limited in Arusha Region, Tanzania. The International Journal of Social Sciences and Humanities Invention, 5(1), 4292–4306.

Bawaneh, SS (2020). Impact of corporate governance on financial institutions' performance: a board composition case. Asian Economic and Financial Review, 10(1), 54–63.

Bhattacharya, A., Good, V., Sardashti, H., & Peloza, J. (2021). Beyond Warm Glow: The risk mitigating effects of corporate social responsibility (CSR). Journal of Business Ethics, 171(2), 317–336.

BPS. (2020). Analysis of survey results on the impact of Covid-19 on business actors volume 2. -business-volume-2.html

Caesaria, AF, & Basuki, B. (2017). The study of sustainability report disclosure aspects and their impact on the companies' performance. 08001.

Cancela, BL, Neves, MED, Rodrigues, LL, & Gomes Dias, AC (2020). The influence of corporate governance on corporate sustainability: new evidence using panel data in the Iberian macroeconomic environment. International Journal of Accounting and Information Management, 28(4), 785–806.

Chandra, B., & Junita, N. (2021). Corporate governance and earnings management on dividend policy in Indonesia. Journal of Modernization Economics, 17(1), 15–26.

Chandra, K., & Devie. (2017). The influence of ceo duality. Business Accounting Review, 5(1), 301–312.

Cherian, J., Sial, M.S., Tran, D.K., Hwang, J., Hong, T., Khanh, T., & Ahmed, M. (2020). The Strength of CEOs' Influence on CSR in Chinese listed companies. New insights from an agency theory perspective. Sustainability 2020, 12, 2190.

Cordeiro, J. J., Profumo, G., & Iutore, I. (2019). Board gender diversity and corporate environmental performance: The moderating role of family and dual‐class majority ownership structures environment. Wiley Online Library.

Darmawan, SDH (2021). Book value (book value) – definition, calculations and examples. Value or Book Value, one company with another company.

Davis, J., Schoorman, F., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management Review, 22(1), 20–47.

Dianova, A., & Nahumury, J. (2019). Investigating the effect of liquidity, leverage, sales growth and good corporate governance on financial distress. Journal of Accounting and Strategic Finance, 2(2), 143–156.

Endrikat, J., De Villiers, C., Guenther, T.W., & Guenther, E.M. (2021). Board characteristics and corporate social responsibility: A meta-analytic investigation. Business & Society, 60(8), 2099–2135.

Fakir, ANM, A., & Jusoh, R. (2020). Board gender diversity and corporate sustainability performance: Mediating role of enterprise risk management. Journal of Asian Finance, Economics and Business, 7(6), 351–363.

Feng, Y., Chen, H. H., & Tang, J. (2018). The impacts of Social responsibility and ownership structure on sustainable financial development of China's energy industry. 1973, 1–15.

Gallego-Álvarez, I., & Pucheta-Martínez, M. C. (2022). Board competences and CSR reporting: The moderating role of CEO power. Revista de Contabilidad - Spanish Accounting Review, 25(2), 282–301.

Galletta, S., Mazzù, S., Naciti, V., & Vermiglio, C. (2021). Gender diversity and sustainability performance in the banking industry. Wiley Online Library.

Ghozali, I., Wahyudi, S., Hersugondo, Prabuwono, AS, & Pamungkas, ID (2022). Bid-ask spread on earnings management with good corporate governance as moderation variables: Banking sector in Indonesia. Wseas Transactions on Business and Economics, 19, 386–395.

Hafidzi, A. . (2019). The effect of commissioners' board size and committee board size on disclosure of corporate social responsibility (CSR). AGGREGATE: Journal of Economics and Business, 3.

Hendrianto, YAP, & Umar. (2020). Factors that influence corporate social responsibility disclosure in manufacturing companies.

Herdi, F., & NR, E. (2020). The influence of profitability, leverage, and the composition of the independent board of commissioners on corporate social responsibility disclosure. Journal of Exploratory Accounting, 2(1), 2428–2444.

Hussain, N., Rigoni, U., & Orij, R. P. (2018). Corporate governance and sustainability performance: Analysis of triple bottom line performance. Journal of Business Ethics, 149(2), 411–432.

Islam, R., Erica, F., & Ali, M. (2022). Evaluating board diversity and its importance in the environmental and social performance of organizations. Wiley Online Library.

Janang, J.S., Joseph, C., & Said, R. (2020). Corporate governance and corporate social responsibility society disclosure: The application of legitimacy theory. International Journal of Business and Society, 21(2), 660–678.

Janette, J., & Hendriyeni, N. (2020). Does corporate social responsibility matter? Advances in Economics, Business and Management Research, 149.

Jarboi, MS. (2017). CSR, agency costs and investment-cash flow sensitivity: A mediated moderation analysis. Managerial Finance.

Jensen, M., & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure Michael. Human Relations, 72(10), 1671–1696.

Juliani, M., & Ventty, C. (2022). Analysis of the influence of CSR on earnings management with corporate governance as a moderating variable. Jesya (Journal of Sharia Economics & Economics), 5(1), 71–84.

Kantabutra, S., & Ketprapakorn, N. (2020). Toward a theory of corporate sustainability: A theoretical integration and exploration. Journal of Cleaner Production, 270, 122292.

Kosyuk, A., Guedes, M. J. C., & Govorum, D. (2020). Corporate governance: Examining key challenges and perspectives/Conference proceedings. International Online Conference.

Kusumayani, NL, Widanaputra, AAGP, Wirama, DG, & Budiasih, IGA . (2019). The ability of good corporate governance in moderating the effects of financial distress on the velocity of publication of financial statements. International Journal of Multicultural and Multireligious Understanding, 6(5), 80–94.

Lannelongue, G., Gonzalez-Benito, J., & Quiroz, I. (2017). Environmental management and labor productivity: The moderating role of capital intensity. Journal of Environmental Management, 190, 158–169.

Laskar, N., Chakraborty, T.K., & Maji, S.G. (2017). Corporate sustainability performance and financial performance: empirical evidence from Japan and India. Management and Labor Studies, 42(2), 88–106.

Lassen, A.H., & Laugen, B.T. (2017). Open innovation: on the influence of internal and external collaboration on degrees of newness. Business Process Management Journal, 23(6), 1129–1143.

Lestari, J., & Solikhah, B. (2019). The effect of CSR, tunneling incentive, fiscal loss compensation, debt policy, profitability, firm size to tax avoidance. Accounting Analysis Journal, 8(1), 31–37.

Li, F., Li, T., & Minor, D. (2016). CEO power, corporate social responsibility, and firm value: a test of agency theory. International Journal of Managerial Finance, 12(5), 611–628.

Lindawati, ASL, The, O., Tanuwijaya, J., & Saputri, S. (2021). The effect of CSR disclosure, company sizes and sales growth on profitability of customers good industry registered in Indonesia stock exchange period 2016-2018. ACM International Conference Proceedings Series, 185–192.

Lu, L. W. (2021). The moderating effect of corporate governance on the relationship between corporate sustainability performance and corporate financial performance. International Journal of Disclosure and Governance, 18(3), 193–206.

Mahrani, M., & Soewarno, N. (2018). The effect of good corporate governance mechanism and corporate social responsibility on financial performance with earnings management as mediating variable. Asian Journal of Accounting Research, 3(1), 41–60.

CSR (2022). GRI issues the latest standards for sustainability reporting guidelines.

Manning, B., Braam, G., & Reimsbach, D. (2019). Corporate governance and sustainable business conduct—Effects of board monitoring effectiveness and stakeholder engagement on corporate sustainability performance and disclosure choices. Corporate Social Responsibility and Environmental Management, 26(2), 351–366.

Maude, E., Gambo, J., Bawa, Bello, A., & Rimamshung, S. A. (2018). Effect of board size, board composition and board meetings on financial performance of listed consumer goods in Nigeria. International Business Research, 11(6), 1.

Meng, S., Su, H., & Yu, J. (2022). Digital transformation and corporate social performance: How do board independence and institutional ownership matter? Frontiers in Psychology, 13(May).

Muange, R., & Kiptoo, N. (2020). Effects of CEO duality and board tenure on corporate social responsibility of firms listed in Nairobi securities Exchange, Kenya. International Journal of Research and Innovation in Social Science, 4(6), 524–532.

Mubeen, R., Han, D., Abbas, J., Álvarez-Otero, S., & Sial, M. S. (2021). The relationship between CEO duality and business firms' performance: The moderating role of firm size and corporate social responsibility. Frontiers in Psychology, 12, 4817.

Murtaza, S.A., Mahmood, A., Saleem, S., Ahmad, N., Sharif, M.S., & Moln, E. (2021). Proposing Stewardship Theory as an Alternative to Explain the Relationship between CSR and Employees' Pro-Environmental Behavior.

Nazar, M. (2016). Does CEO duality affect the firm performance? Evidence from Sri Lanka. International Journal of Advances in Management and Economics, 5, 56. fect-the-Firm -Performance-Evidence-from-Sri-Lanka.pdf

Ni, Y., Huang, P., Chiang, P., & Liao, Y. (2019). Cash flow statements and firm value: Evidence from Taiwan. Quarterly Review of Economics and Finance, 71, 280–290.

Nurmamedova, T. (2021). The impact of audit quality on the financial performance of listed companies in Russia. International Journal of Social Science and Humanities Research ISSN, 9(2), 313–319.

Orozco, L.A., Vargas`, J., & Galindo-Dorado, R. (2017). Trends on the relationship between board size and financial and reputational corporate performance the Colombian case. Emerald Insight, 2444–8451.

Ortas, E., Álvarez, I., & Zubeltzu, E. (2017). Firms' board independence and corporate social performance: A meta-analysis. Sustainability (Switzerland), 9(6), 1–26.

Pareek, R., Nath Sahu, T., & Gupta, A. (2021). Gender diversity and corporate sustainability performance: empirical evidence from India.

Pareek, R., Pandey, K. D., & Sahu, T. N. (2019). Corporate governance, firms' characteristics and environmental performance disclosure practices of Indian Companies. Indian Journal of Corporate Governance, 12(2), 142–155.

Pasko, Zhang, L., Tuzhyk, K., Proskurina, N., & Gryn, V. (2021). Do sustainability reporting conduct and corporate governance attributes relate? Empirical evidence from China. Problems and Perspectives in Management, 19(4), 110–123.

Pfeffer Jeffrey, & Gerald, S. (1978). The external control of organizations: A resource dependence perspective.

Pham, HST, & Nguyen, D.T. (2020). Debt financing and firm performance: The moderating role of board independence. Journal of General Management, 45(3), 141–151.

Pieritsz, L. R. (2021). The role of corporate governance and corporate social responsibility on earnings management. Accounting and Business Information Systems Journal, 9(2). (2021). A series of corruption cases remind us the importance of implementing GCG.

Rahman, F., & Pandey, P. (2020). The Impression of Corporate Social Responsibility (CSR) on Corporate Financial Performance (Cfp) & the Concept and Role of Agency Theory. SSRN Electronic Journal.

Rashid, M. H. U., & Hossain, S. Z. (2022). Does board independence moderate the effect of politician directors on CSR disclosure? Evidence from the publicly listed banks in Bangladesh. Social Responsibility Journal, 18(5), 935–950.

Reddy, S., & Jadhav, A. (2019). Gender diversity in boardrooms–a literature review. Cogent Economics and Finance, 7(1).

Robiyanto, R., Putra, AR, & Lako, A. (2019). The effect of good corporate governance mechanism on firm value of Indonesian socially responsible firms. Contaduría y Administración 66 (1).

Romano, M., Cirillo, A., Favino, C., & Netti, A. (2020). ESG (Environmental, social and governance) performance and board gender diversity: The moderating role of CEO duality. Sustainability (Switzerland), 12(21), 1–16.

Rostami, S., Rostami, Z., & Kohansal, S. (2016). The effect of corporate governance components on return on assets and stock return of companies listed in Tehran stock exchange. Procedia Economics and Finance, 36(16), 137–146.

Samudra, TB, Maslichah, & Sudaryanti, D. (2020). The influence of corporate governance mechanisms on the extent of CSR disclosure. Faculty of Economics and Business, Islamic University of Malang, 09(02), 47–57.

Sandria, F. (2021). A series of finance scandals on the Indonesian stock market, Indofarma-Hanson. CNBC Indonesia.

Santi Yopie, & Robin. (2023). The Influence of Corporate Governance System and Corporate Social Responsibility on Corporate Profit Management Kompas 100. Migration Letters, 20(7), 1327–1346.

Satwinder, S., Naeem, T., Tamer, D. K., & Georgios., B. (2017). Corporate governance and Tobin's q as a measure of organizational performance. British Journal of Management, 00, 1–20.

Silalahi, T., Karo Karo, S., Hanu, L., Ginting, J., Kholis, A., & Ariani, R. (2022). Analysis of CSR index, profitability, sales growth and its effect on financial performance on the Indonesia stock exchange in 2017-2020. Economist Journal: Scientific Journal of Accountancy, Management and Finance, 2(1), 31–42.

Singh, S., Tabassum, N., Darwish, T. K., & Batsakis, G. (2018). Corporate governance and Tobin's Q as a measure of organizational performance. British Journal of Management, 29(1), 171–190.

Siswanti, I., Risman, A., Elmi, F., & Cahaya, F. (2021). The role of the sharia supervisory board (ssb) in moderating the effect of good corporate governance on financial performance of Islamic banks in Indonesia. The International Journal of Accounting and Business Society, 29(1).

Suryaningtyas, A., & Rohman, A. (2019). The effect of implementing corporate governance on company value with financial performance as a mediating variable. DIPONEGORO JOURNAL OF ACCOUNTING, 8, 1–10.

Suryarini, T., Hajawiyah, A., & Munawaroh, S. (2021). The impact of CSR, capital intensity, inventory intensity, and intangible assets on tax aggressiveness. Journal of Accounting Dynamics, 13(2), 168–179.

Sutedja, S. (2021). Get to know one-tier and two-tier systems in corporate governance - ESGI. ESGI.

Tamimi, N., & Sebastianelli, R. (2017). Transparency among S&P 500 companies: An analysis of ESG disclosure scores. Australian Catholic University, 55(8), 1660–1680.

Tanujaya, K., & Anggreany, E. (2021). The relationship between board of directors, gender diversity and sustainable performance on tax avoidance. Scientific Journal of Accounting and Finance, 4(5), 1648–1666.

Teti, E., Dell'Acqua, A., Etro, L., & Rabuni, F. (2016). Corporate governance and cost of equity: Empirical evidence from Latin American companies. Emerald Insight, 16(5), 831–848.

Toly, Arianto, A., Ronald, Stefanus, Hartanto, Victor, & Stevie, F. (2019). The effect of CSR, tax avoidance, and information asymmetry issues on corporate reputation. Journal of Economics and Business, 2(2).

Ullah, F. (2019).

Uyar, A., Kuzey, C., Kilic, M., & Karaman, A.S. (2021). Board structure, financial performance, corporate social responsibility performance, CSR committee, and CEO duality: Disentangling the connection in healthcare. Wiley Online Library, March, 1–19.

Vasconcelos, V.D., Ribeiro, M. de S., & Crisóstomo, V.L. (2022). Does gender diversity moderate the relationship between CSR committees and sustainable development goals disclosure? Evidence from Latin American companies. RAUSP Management Journal, 57(4), 434–456.

Vitolla, F., Raimo, N., Marrone, A., & Rubino, M. (2020). The role of board of directors in intellectual capital disclosure after the advent of integrated reporting. Corporate Social Responsibility and Environmental Management, 27(5), 2188–2200.

Vivian, Wijaya, Y., Charlie, F., Winnie, Devi, Ufrida, N., & Rahmi. (2020). The influence of profitability, leverage, company size, company age, and independent board of commissioners on corporate social responsibility in mining companies listed on the Indonesia Stock Exchange in the 2014-2018 period. MEA Scientific Journal (Management, Economics and Accounting), 4(3), 257–274.

Wati, E., & Malik, AQ (2021). Corporate Social Responsibility and Earnings Management: The Moderating Role of Corporate Governance. Journal of Accounting Research, Organization and Economics, 4(3), 298-307.

Younas, Z. I., Klein, C., Trabert, T., & Zwergel, B. (2019). Board composition and corporate risk-taking: A review of listed firms from Germany and the USA. Journal of Applied Accounting Research, 20(4), 526–542.