THE IMPACT OF GOOD CORPORATE GOVERNANCE ON THE CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE

Abstract

The study examines the effect of corporate governance on the disclosure of Corporate Social Responsibility. This study uses Corporate Social Disclosure Index (CSDI) with reference to the Global Report Initiative (GRI) Index and the index based on disclosures made by ASTRA which is considered as a benchmark for CSR disclosure in Indonesia. The sample is 108 non-financial companies listed on the Jakarta Stock Exchange (JSE) in 2004 to 2005. Data is collected from company annual reports obtained from the JSE website, ICMD, and JSE reference center JSE. The analysis is done using regression testing with panel data analysis. The result shows that the Corporate Governance Index (CGI) has a significant positive correlation to both the GRI and CSDI ASTRA. This result verifies that the paradigm which emerged in a variety of discourses about the correlation of Corporate Governance and CSR Disclosure is proven in empirical research. It also provides broad opportunities for GRI to develop and become a useful guide in Indonesia. The result is supported by a significant increase in CSDI GRI between 2004 and 2005. However, the small average figure of CSDI suggests that CSR disclosures have not received priority in corporate disclosure by companies in Indonesia so that transparency regulations can not be well implemented. The significant control variable is company size, while profitability and leverage are not significant.