The Mediating Role of Financial Performance in the Influence of Good Corporate Governance and Corporate Social Responsibility on Firm Value: Evidence from Indonesian Palm Oil Issuers
Keywords:
Good Corporate Governance, Corporate Social Responsibility, Financial Performance, Firm Value, Palm Oil Issuers.
Abstract
This study analyzes the effect of Good Corporate Governance (GCG) and Corporate Social Responsibility (CSR) on Firm Value through Financial Performance across 14 palm oil issuers listed on the Indonesia Stock Exchange (IDX) (56 firm year observations, 2022–2025 period). Employing a quantitative approach with purposive sampling, data were analyzed using PLS-SEM via SmartPLS 4.0. GCG was proxied by independent commissioners and institutional ownership; CSR disclosure was measured using GRI indicators; Financial Performance was proxied by ROA, ROE, and NPM; and Firm Value was measured using Tobin’s Q, PBV, and PER.
The findings indicate that GCG and CSR exert a positive and significant effect on Financial Performance and Firm Value. Financial Performance also has a significant positive effect on Firm Value and is empirically proven to mediate the relationship between GCG and CSR and Firm Value. The R2 values for Financial Performance (0.567) and Firm Value (0.684) confirm the strong explanatory power of the model. These findings emphasize that enhancing the value of palm oil issuers requires integrating good governance and sustainability disclosure with solid profitability performance.
References
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Lukman, L., Ridloah, S., & Humaira, H. (2024). Board characteristics and financial performance of companies from the agency theory perspective. Journal of Social Science (JoSS), 3(2), 1246–1270. https://doi.org/10.57185/joss.v3i2.292
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Putra, F. K., & Budastra, M. A. (2024). The mediating role of financial performance in environmental, social, and governance (ESG) and firm value. Jurnal Akuntansi Bisnis, 17(1), 1. https://doi.org/10.30813/jab.v17i1.4931
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Sarstedt, M., Ringle, C. M., & Hair, J. F. (2022). Partial least squares structural equation modeling. In Handbook of Market Research (pp. 587–632). Springer International Publishing. https://doi.org/10.1007/978-3-319-57413-4_15
Sekaran, U., & Bougie, R. (2026). Research methods for business: A skill-building approach (9th ed.). Wiley.
Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374. https://doi.org/10.2307/1882010
Suhartini, D., Tjahjadi, B., & Fayanni, Y. (2024). Impact of sustainability reporting and governance on firm value: Insights from the Indonesian manufacturing sector. Cogent Business & Management, 11(1), 1–20. https://doi.org/10.1080/23311975.2024.2381087
Tarjo, T., Anggono, A., Yuliana, R., Prasetyono, P., Syarif, M., Alkirom Wildan, M., & Syam Kusufi, M. (2022). Corporate social responsibility, financial fraud, and firm’s value in Indonesia and Malaysia. Heliyon, 8(12), e11907. https://doi.org/10.1016/j.heliyon.2022.e11907
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Zulhilmi, Erlina, & Tarmizi, H. B. (2022). Effects of good corporate governance and financial performance on firm value with corporate social responsibility as a moderating variable in manufacturing companies. International Journal of Research and Review, 9(1), 676–688. https://doi.org/10.52403/ijrr.20220179
Zutter, C. J., & Smart, S. B. (2022). Principles of managerial finance (16th ed.). Pearson
Bagh, T., Fuwei, J., & Khan, M. A. (2024). Corporate ESG investments and firm’s value under the real-option framework: Evidence from two world-leading economies. Borsa Istanbul Review, 24(2), 324–340. https://doi.org/10.1016/j.bir.2024.01.002
Bagh, T., Hunjra, A. I., & Corbet, S. (2025). The impact of corporate governance on firm value: Understanding the role of strategic change. International Review of Economics & Finance, 103, 104472. https://doi.org/10.1016/j.iref.2025.104472
Baltagi, B. H. (2021). Econometric analysis of panel data (6th ed.). Springer. https://doi.org/10.1007/978-3-030-53953-5
Brigham, E. F., & Ehrhardt, M. C. (2017). Financial management: Theory & practice (15th ed.). Cengage Learning.
Brooks, C. (2019). Introductory econometrics for finance (4th ed.). Cambridge University Press. https://doi.org/10.1017/9781108524872
Chandler, D. (2022). Strategic corporate social responsibility: Sustainable value creation (6th ed.). SAGE Publications.
Damodaran, A. (2025). Investment valuation: Tools and techniques for determining the value of any asset (4th ed.). Wiley.
Feltham, G. A., & Ohlson, J. A. (1995). Valuation and clean surplus accounting for operating and financial activities. Contemporary Accounting Research, 11(2), 689–731. https://doi.org/10.1111/j.1911-3846.1995.tb00462.
Ferriswara, D., Sayidah, N., & Agus Buniarto, E. (2022). Do corporate governance, capital structure predict financial performance and firm value? (empirical study of Jakarta Islamic index). Cogent Business & Management, 9(1), 2147123.
Fourati, Y. M., & Dammak, M. (2021). Corporate social responsibility and financial performance: International evidence of the mediating role of reputation. Corporate Social Responsibility and Environmental Management, 28(6), 1749–1759. https://doi.org/10.1002/csr.2143
Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pitman.
Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B. L., & de Colle, S. (2010). Stakeholder theory: The state of the art. Cambridge University Press. https://doi.org/10.1017/CBO9780511815768
Gabungan Pengusaha Kelapa Sawit Indonesia (GAPKI). (2026). Kinerja sawit 2025 menguat: Produksi naik, ekspor tembus Rp590 triliun. https://gapki.id/news/2026/03/13/kinerja-sawit-2025-menguat-produksi-naik-ekspor-tembus-rp590-triliun/
Gillan, S. L., Koch, A., & Starks, L. T. (2021). Firms and social responsibility: A review of ESG and CSR research in corporate finance. Journal of Corporate Finance, 66, 101889. https://doi.org/10.1016/j.jcorpfin.2021.101889
Global Reporting Initiative. (2021). GRI standards. Global Reporting Initiative.
Hair, J. F., Hult, G. T. M., Ringle, C. M., Sarstedt, M., & Danks, N. P. (2021). Partial least squares structural equation modeling using R: A workbook. Springer. https://doi.org/10.1007/978-3-030-80519-7
Hapsari, D. W., Budiharjo, R., Pratomo, D., & Yazid, H. (2025). Profitability in linking governance structure and firm value. Jurnal Akuntansi, 29(2), 206–224. https://doi.org/10.24912/ja.v29i2.2421
Hart, S. L., & Milstein, M. B. (2003). Creating sustainable value. Academy of Management Perspectives, 17(2), 56–67. https://doi.org/10.5465/ame.2003.10025194
Hermawaty, N., & Rahyuda, H. (2025). Mediating role of financial performance on the effect of ESG disclosure and board gender diversity on firm value of SRI-KEHATI stock index. International Journal of Business, Economics and Management, 8(3), 244–258. https://doi.org/10.21744/ijbem.v8n3.2435
Jao, R., Randa, F., Holly, A., & Laorens, E. (2024). Pengaruh corporate social responsibility terhadap nilai perusahaan dengan reputasi perusahaan dan kinerja keuangan sebagai variabel mediasi. Balance: Jurnal Akuntansi Dan Bisnis, 9(2), 173. https://doi.org/10.32502/jab.v9i2.8768
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Kementerian Pertanian Republik Indonesia. (2026). Ekspor CPO menguat, Indonesia kian kokoh sebagai raja sawit dunia. Kementan RI.
Komite Nasional Kebijakan Governansi (KNKG). (2021). Pedoman umum governansi korporat Indonesia (PUG-KI) 2021. KNKG.
Laszlo, C., & Zhexembayeva, N. (2017). Embedded Sustainability. Routledge. https://doi.org/10.4324/9781351278324
Lukman, L., Ridloah, S., & Humaira, H. (2024). Board characteristics and financial performance of companies from the agency theory perspective. Journal of Social Science (JoSS), 3(2), 1246–1270. https://doi.org/10.57185/joss.v3i2.292
OECD. (2023). G20/OECD principles of corporate governance 2023. OECD Publishing. https://doi.org/10.1787/ed750b30-en
Ohlson, J. A. (1995). Earnings, book values, and dividends in equity valuation. Contemporary Accounting Research, 11(2), 661–687. https://doi.org/10.1111/j.1911-3846.1995.tb00461.
Otoritas Jasa Keuangan. (2021). Surat Edaran Otoritas Jasa Keuangan Republik Indonesia Nomor 16/SEOJK.04/2021 tentang Bentuk dan Isi Laporan Tahunan Emiten atau Perusahaan Publik. Otoritas Jasa Keuangan.
Pamungkas, I. D., Purwantoro, P., Sari, M. P., & Hersugondo, H. (2023). Corporate governance and financial performance on firm value: The case of Indonesia. WSEAS Transactions on Business and Economics, 20, 92–103. https://doi.org/10.37394/23207.2023.20.10
Putra, F. K., & Budastra, M. A. (2024). The mediating role of financial performance in environmental, social, and governance (ESG) and firm value. Jurnal Akuntansi Bisnis, 17(1), 1. https://doi.org/10.30813/jab.v17i1.4931
Sampong, F., Song, N., Boahene, K. O., & Wadie, K. A. (2018). Disclosure of CSR performance and firm value: New evidence from South Africa on the basis of the GRI guidelines for sustainability disclosure. Sustainability, 10(12), 4518. https://doi.org/10.3390/su10124518
Sarstedt, M., Ringle, C. M., & Hair, J. F. (2022). Partial least squares structural equation modeling. In Handbook of Market Research (pp. 587–632). Springer International Publishing. https://doi.org/10.1007/978-3-319-57413-4_15
Sekaran, U., & Bougie, R. (2026). Research methods for business: A skill-building approach (9th ed.). Wiley.
Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374. https://doi.org/10.2307/1882010
Suhartini, D., Tjahjadi, B., & Fayanni, Y. (2024). Impact of sustainability reporting and governance on firm value: Insights from the Indonesian manufacturing sector. Cogent Business & Management, 11(1), 1–20. https://doi.org/10.1080/23311975.2024.2381087
Tarjo, T., Anggono, A., Yuliana, R., Prasetyono, P., Syarif, M., Alkirom Wildan, M., & Syam Kusufi, M. (2022). Corporate social responsibility, financial fraud, and firm’s value in Indonesia and Malaysia. Heliyon, 8(12), e11907. https://doi.org/10.1016/j.heliyon.2022.e11907
USDA Foreign Agricultural Service (USDA FAS). (2025). Indonesia: Oilseeds and products update. USDA.
Zulhilmi, Erlina, & Tarmizi, H. B. (2022). Effects of good corporate governance and financial performance on firm value with corporate social responsibility as a moderating variable in manufacturing companies. International Journal of Research and Review, 9(1), 676–688. https://doi.org/10.52403/ijrr.20220179
Zutter, C. J., & Smart, S. B. (2022). Principles of managerial finance (16th ed.). Pearson
Published
2026-10-16
How to Cite
Zainal Firdaus, Fifi Swandari, Astrid Juniar, Meina Wulansari Yusniar, & Ahmad Rifani. (2026). The Mediating Role of Financial Performance in the Influence of Good Corporate Governance and Corporate Social Responsibility on Firm Value: Evidence from Indonesian Palm Oil Issuers. International Journal of Economics, Business and Innovation Research, 5(06), 1423-1440. https://doi.org/10.63922/ijebir.v5i06.6886
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