The Effect of Sales Growth and Independent Commissioner’s Supervision on Financial Performance: The Moderating Role of Corporate Social Responsibility

ANGELIA, NADIA and KUMALASARI, DEVIANTY and Christiawan, Yulius Jogi (2021) The Effect of Sales Growth and Independent Commissioner’s Supervision on Financial Performance: The Moderating Role of Corporate Social Responsibility. [UNSPECIFIED]

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Abstract

Various studies on sales growth and supervision of independent commissioners on financial performance have been carried out and based on agency theory. Agency theory explains that agents must act following the principals wishes. Sales growth and supervision of independent commissioners are needed to improve financial performance to meet the principals wishes. On the other hand, stakeholder theory explains that it is not enough for companies only to fulfill the principals wishes but must also pay attention to stakeholders interests. The company can realize its concern for stakeholders through Corporate Social Responsibility (CSR) activities. Based on these two theoretical perspectives, the researchers conducted this study to examine whether CSR activities can affect the relationship between sales growth and independent commissioners supervision on financial performance. The study was conducted on 59 manufacturing companies listed on the IDX (Indonesian Stock Exchange) for 2018-2020. This study uses multiple linear regression panel data. The study results prove that the higher the sales growth and the supervision of independent commissioners, the higher the financial performance. Related to the moderating role of CSR, it is proved that the increase in financial performance due to increased sales growth will weaken in companies with extensive CSR activities. Furthermore, significant CSR activities can strengthen the independent commissioners supervisory relationship to financial performance. The results of this study are expected to be used by the management of growing companies to be more careful in carrying out CSR activities. In addition, researchers suggest that companies with high independent commissioner supervision carry out many CSR activities.

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