The Effect of Board Effectiveness on Firm Performance with Sustainability Disclosure as Mediating Variable
Main Article Content
Abstract
Board effectiveness plays a pivotal role in shaping the performance of firms listed on the Indonesian Stock Exchange (IDX). This research examines the effectiveness of the board of directors on firm performance of companies listed on the Indonesian Stock Exchange (IDX), which is mediated by sustainability disclosure. This research used data from 2020 to 2022, with 105 data from 35 companies listed on the IDX. The results showed that board effectiveness has a positive effect on firm performance. Furthermore, the findings indicate that sustainability disclosure does not significantly affect firm performance, and sustainability disclosure cannot be used as a mediating variable in this research. This research has implications for expanding insight, specifically for managers, investors, and regulators – especially those who aim to improve firm performance in emerging markets.
Article Details

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
References
References
K. Al-Adeem and I. Y. Al-Sogair, “Effectiveness of the board of directors in monitoring executive management,” J. Gov. Regul., vol. 8, no. 3, pp. 72–82, 2019, doi: 10.22495/jgr.
D. T. M. Butar-Butar and D. Indrianto, “The Effectiveness of The Board of Directors’ Performance and The Moderation Effect of Corporate Risk Management on The Company’s Financial Performance,” Glob. Financ. Account. J., vol. 7, no. 2, p. 274, 2024, doi: 10.37253/gfa.v7i2.8883.
A. Puni and A. Anlesinya, “Corporate governance mechanisms and firm performance in a developing country,” Int. J. Law Manag., vol. 62, no. 2, pp. 147–169, 2020, doi: 10.1108/IJLMA-03-2019-0076.
A. Y. Alodat, Z. Salleh, H. A. Hashim, and F. Sulong, “Investigating the mediating role of sustainability disclosure in the relationship between corporate governance and firm performance in Jordan,” Manag. Environ. Qual. An Int. J., 2022, doi: 10.1108/MEQ-07-2021-0182.
A. Elmashtawy, M. H. Che Haat, S. Ismail, and F. A. Almaqtari, “Audit committee effectiveness and audit quality: the moderating effect of joint audit,” Arab Gulf J. Sci. Res., 2023, doi: 10.1108/AGJSR-09-2022-0202.
J. Zhang, H. G. Djajadikerta, and T. Trireksani, “Corporate sustainability disclosure ’ s importance in China : fi nancial analysts ’ perception,” no. July, 2019, doi: 10.1108/SRJ-10-2018-0272.
R. Fariha, M. M. Hossain, and R. Ghosh, “Board characteristics, audit committee attributes and firm performance: empirical evidence from emerging economy,” Asian J. Account. Res., vol. 7, no. 1, pp. 84–96, 2022, doi: 10.1108/AJAR-11-2020-0115.
M. Mansour, H. Al Amosh, A. Y. Alodat, S. F. A. Khatib, and M. W. A. Saleh, “The Relationship between Corporate Governance Quality and Firm Performance: The Moderating Role of Capital Structure,” Sustain., vol. 14, no. 17, pp. 1–25, 2022, doi: 10.3390/su141710525.
W. Sheikh and K. Alom, “Corporate governance, board practices and performance of shipping firms in Bangladesh,” Asian J. Shipp. Logist., vol. 37, no. 3, pp. 259–267, 2021, doi: 10.1016/j.ajsl.2021.06.005.
A. K. Mishra, S. Jain, and R. L. Manogna, “Does corporate governance characteristics influence firm performance in India? Empirical evidence using dynamic panel data analysis,” Int. J. Discl. Gov., vol. 18, no. 1, pp. 71–82, 2021, doi: 10.1057/s41310-020-00098-7.
H. Bui and Z. Krajcsák, “The impacts of corporate governance on firms’ performance: from theories and approaches to empirical findings,” J. Financ. Regul. Compliance, 2023, doi: 10.1108/JFRC-01-2023-0012.
M. C. Pucheta-Martínez and I. Gallego-Álvarez, Do board characteristics drive firm performance? An international perspective, vol. 14, no. 6. Springer Berlin Heidelberg, 2020. doi: 10.1007/s11846-019-00330-x.
A. Prashar and P. Gupta, “Corporate boards and firm performance: a meta-analytic approach to examine the impact of contextual factors,” Int. J. Emerg. Mark., vol. 16, no. 7, pp. 1454–1478, 2020, doi: 10.1108/IJOEM-10-2019-0860.
I. Itan, M. Giovani, and D. T. M. Butar-Butar, “Corporate Social Responsibility and Company Performance: The Role Of Board Characteristics,” Gorontalo Account. J., vol. 7, no. 1, p. 116, 2024, doi: 10.32662/gaj.v7i1.3372.
B. Sarpong-Danquah, M. Adusei, and M. A. S. Al-Faryan, “The role of judicial efficiency in the board size-financial performance nexus: Evidence from microfinance institutions,” Soc. Sci. Humanit. Open, vol. 8, no. 1, p. 100584, 2023, doi: 10.1016/j.ssaho.2023.100584.
A. Kafidipe, U. Uwalomwa, O. Dahunsi, and F. O. Okeme, “Corporate governance, risk management and financial performance of listed deposit money bank in Nigeria,” Cogent Bus. Manag., vol. 8, no. 1, 2021, doi: 10.1080/23311975.2021.1888679.
D. T. M. Butar-butar, M. Ramadana, and S. Stefy, “THE EFFECTIVENESS OF BOD PERFORMANCE AND ERM ON COMPANY ’ S FINANCIAL PERFORMANCE,” pp. 42–48, 2024.
O. Al Farooque, W. Buachoom, and L. Sun, “Board, audit committee, ownership and financial performance – emerging trends from Thailand,” Pacific Account. Rev., vol. 32, no. 1, pp. 54–81, 2020, doi: 10.1108/PAR-10-2018-0079.
S. Fiandrino, A. Devalle, and V. Cantino, “Corporate governance and financial performance for engaging socially and environmentally responsible practices,” Soc. Responsib. J., vol. 15, no. 2, pp. 171–185, 2019, doi: 10.1108/SRJ-12-2017-0276.
A. K. Gupta and N. Gupta, “Effect of corporate environmental sustainability on dimensions of firm performance – Towards sustainable development: Evidence from India,” J. Clean. Prod., vol. 253, p. 119948, 2020, doi: 10.1016/j.jclepro.2019.119948.
A. Y. Alodat, Z. Salleh, H. A. Hashim, and F. Sulong, “Sustainability disclosure and firms’ performance in a voluntary environment,” Meas. Bus. Excell., vol. 28, no. 1, pp. 105–121, 2024, doi: 10.1108/MBE-01-2023-0008.
I. Itan, M. P. A. Ang, and D. T. M. Butar-Butar, “CORPORATE SOCIAL RESPONSIBILITY , CORPORATE PERFORMANCE , AND MODERATING EFFECT OF OWNERSHIP CONCENTRATION IN INDONESIAN COMPANIES,” vol. 16, no. 1, pp. 81–94, 2024.
D. T. M. Butar-Butar and Stefy, “PENGARUH DIVIDEN TERHADAP NILAI PERUSAHAAN YANG DIMODERASIKAN DENGAN KUALITAS AUDIT,” J. Akunt., vol. 17, no. 2, pp. 224–234, Oct. 2023, doi: 10.25170/jak.v17i2.4495.
M. Ramadana, H. Irawan, and D. T. M. Butar-butar, “Moderasi Corporate Sosial Responsibility Dalam Penghindaran Pajak Dan Tata Kelola Perusahan Terhadap Manajemen Laba,” Stud. Akutansi Dan Keuang., vol. 6, no. 2, pp. 437–460, 2023.
D. T. M. Butar-Butar, K. Y. Pangestu, and I. Itan, “EXAMINING BOARD CHARACTERISTICS AND INTEGRATED REPORTING QUALITY : INSIGHT FROM ESG-FOCUSED FIRMS IN INDONESIA,” vol. 11, no. December, pp. 95–103, 2024.
D. T. M. Butar-butar, L. Yunita, and S. Dewi, “The effect of independence and gender of BOD , managerial and institutional ownership , and ownership concentration on tax aggressiveness,” J. Contemp. Account., vol. 6, no. 1, pp. 1–10, 2024, doi: 10.20885/jca.vol6.iss1.art1.
M. Meiliana and I. Julia, “Analisis Pengaruh Struktur Dewan Direksi terhadap Kinerja Perusahaan,” Glob. Financ. Account. J., vol. 6, no. 1, p. 170, 2022, doi: 10.37253/gfa.v6i1.6683.
M. Ramadana, V. T. Pratama, and D. T. M. Butar-Butar, “Breaking Barriers: Female Directors, Earnings Management, and the Influence of Education and Sustainability Reporting,” J. Akunt. Bisnis, vol. 17, no. 2, p. 198, 2024, doi: 10.30813/jab.v17i2.4983.
M. Falatifah, “BOARD OF DIRECTORS EFFECTIVENESS , VOLUNTARY INTEGRATED REPORTING AND COST OF EQUITY : EVIDENCE FROM OECD COUNTRIES,” vol. 22, no. 1, pp. 443–460, 2021.
A. Armadani, A., and Zarefar, “Quality of Sustainability Disclosure, Foreign Board, and Firm Performance? Evidence from Indonesia,” J. Din. Akunt., vol. 15, no. 2, pp. 129–138, 2023.
L. I. Wijaya and W. R. Murhadi, “Ownership Structure , Good Corporate Governance , and Firm Performance in the Indonesian Capital Market,” vol. 115, no. Insyma, pp. 256–260, 2020.
Putri Pertiwi, I. F., Kusuma, H., Hadi, K., Arifin, J., Yoga, I., & Zakky Fahma, A. (2022). Isomorphism of integrated reporting’s sustainability embeddedness: evidence from Indonesian listed companies. Cogent Business & Management, 9(1). https://doi.org/10.1080/23311975.2022.2099605
A. K. Diharto, L. Madu, Z. F. Auliya, and S. Walyoto, “Application of Regional Commodity-Based Innovation Clusters to Improve SMEs Performance in Regional Superior Products,” Qual. - Access to Success, vol. 25, no. 201, pp. 322–330, 2024, doi: 10.47750/QAS/25.201.35.