THE MODERATING ROLE OF GOOD CORPORATE GOVERNANCE CHARACTERISTICS ON THE RELATIONSHIP BETWEEN CORPORATE SOCIAL RESPONSIBILITY AND FIRM PERFORMANCE: A COMPARATIVE STUDY BETWEEN INDONESIA AND MALAYSIA

Abstract

This study examines the consequences of Corporate Social Responsibility (CSR) on the performance of companies while considering the moderating influence of Good Corporate Governance (GCG) characteristics in the manufacturing sector of the Indonesia Stock Exchange between 2017 and 2022. The study employs a panel data regression analysis on a sample size of 264 companies. The findings reveal that CSR does not directly affect firm performance and that institutional ownership does not moderate this relationship. However, managerial ownership moderates the impact of CSR on performance, emphasizing the role of managers in ensuring transparency and effective management. This study highlights that companies are increasingly viewing CSR as a legal obligation rather than a branding strategy. This research contributes to legitimacy theory by linking CSR to firm performance through the moderating effect of GCG, underscoring the importance of companies fulfilling their social contracts to ensure sustainability. Practically, this research provides insights into improving firm performance through better decision-making and governance, with implications for enhancing long-term shareholder wealth.