The effect of corporate governance structure on financial difficulties

Wuryan Andayani () and Dalila Daud ()
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Wuryan Andayani: University of Brawijaya, Indonesia
Dalila Daud: UiTM Cawangan Negeri Sembilan, Malaysia

Entrepreneurship and Sustainability Issues, 2020, vol. 7, issue 3, 1803-1818

Abstract: This study aims to examine the effect of Corporate Governance Structure (CG) and Corporate Social Responsibility (CSR) on Financial Difficulties. The contribution of this research is to explore the truth of CG goals and achieve quality CSR reporting and can provide solutions to conditions before and when companies experience financial difficulties and provide things that are considered important to anticipate the possibility of financial difficulties. CG in this study uses the size of the audit committee and independent commissioners, then CSR is measured by the quality of CSR disclosure. The data analysis method used is multiple linear regression. The results of this study are the audit committee has no effect on financial difficulties but the independent commissioner has a negative effect on financial difficulties. The contribution of the proportion of independent directors apparently contributed more to the proportion of the number of audit committees. The proportion of the audit committee is not able to minimize or even be a solutive effect on the financial difficulties of companies in Indonesia. The audit committee is a form of responsibility for compliance with government regulations only. The test results also support the influence of CSR on financial difficulties assuming that the quality of CSR disclosure has a significant negative effect on corporate financial difficulties. Disclosure and implementation of CSR activities can have an effect to minimize if in the future the company experiences financial difficulties, the guarantee of funds will remain well distributed so as to minimize the financial difficulties experienced by the company

Keywords: quality; disclosure; corporate governance; corporate social responsibility; audit committee; independent commissioner (search for similar items in EconPapers)
JEL-codes: G20 G30 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ssi:jouesi:v:7:y:2020:i:3:p:1803-1818

DOI: 10.9770/jesi.2020.7.3(24)

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