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The effect of corporate governance, corporate social responsibility and information asymmetry on the value of Indonesian-listed firms

Annisa Abubakar Lahjie (Faculty of Economics and Business, Mulawarman University, Samarinda, Indonesia)
Riccardo Natoli (Institute for Sustainable Industries and Liveable Cities, Victoria University, Melbourne, Australia)
Segu Zuhair (Department of Business and Construction, Melbourne Polytechnic, Preston, Australia)

International Journal of Accounting & Information Management

ISSN: 1834-7649

Article publication date: 16 October 2023

Issue publication date: 13 November 2023

361

Abstract

Purpose

This study aims to examine the influence of corporate governance (CG) and corporate social responsibility (CSR) on firm value while accounting for the impact of information asymmetry.

Design/methodology/approach

This empirical analysis is based on 1,079 observations from 83 listed Indonesian firms for the period 2007–2019. The authors applied simultaneous equation models with ordinary least squares and two-stage least squares.

Findings

The authors present empirical evidence of CG mechanisms that significantly contribute to low levels of CSR. Moreover, the authors identify a significant impact of information asymmetry on the relationship between CG, CSR and firm value.

Research limitations/implications

The results show that information asymmetry, CG and CSR do not necessarily result in improved firm value across boards. Moreover, the employment of a nonlinear Cobb–Douglas-type function indicated diminishing marginal returns.

Practical implications

The findings can help policymakers in developing countries in improving the monitoring and supervisory roles of CG mechanisms to provide more support to CSR, increasing regulatory pressures for improved CSR performance and reducing information asymmetry by adopting a standardized CSR reporting scheme.

Social implications

The suggested implications can contribute to more sustainable practices among Indonesian-listed firms as well as improving relationships with consumers and stakeholders toward the practice of CSR.

Originality/value

The adoption of a comprehensive CSR measurement tool to examine the value of CSR contributes to the extant literature, along with examining the impact of information asymmetry on the relationship between CG, CSR and firm value in a developing country context.

Keywords

Acknowledgements

The authors are grateful to the editor and the anonymous reviewers for their useful suggestions, which have improved the quality of the manuscript.

Conflict of Interest statement: No competing interests were disclosed.

Citation

Lahjie, A.A., Natoli, R. and Zuhair, S. (2023), "The effect of corporate governance, corporate social responsibility and information asymmetry on the value of Indonesian-listed firms", International Journal of Accounting & Information Management, Vol. 31 No. 5, pp. 785-807. https://doi.org/10.1108/IJAIM-02-2023-0038

Publisher

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Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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