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Does a Foreign Board Improve Corporate Social Responsibility?

Author

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  • Doddy Setiawan

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia
    Center for Fintech and Banking, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

  • Rayenda Khresna Brahmana

    (College of Business Administration, University of Bahrain, Sakhir 32038, Bahrain)

  • Andi Asrihapsari

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

  • Siti Maisaroh

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

Abstract

This study examines the effect of foreign boards on corporate social responsibility, exploring the issues of two-tier board systems (boards of directors and boards of commissioners). Using data for manufacturing firms listed on the Indonesia Stock Exchange over the sample period of 2017–2019, the results suggest that a foreign board engages more in corporate social responsibility activities. Our key finding remains robust with respect to all foreign board measures (foreign ownership, foreign board members, foreign directors, foreign commissioners, foreign CEO, and foreign chairperson) and to alternative estimation methods, and pass a series of endogeneity checks. We established the causal effect from foreign boards to CSR, supporting institutional theory and contesting agency theory.

Suggested Citation

  • Doddy Setiawan & Rayenda Khresna Brahmana & Andi Asrihapsari & Siti Maisaroh, 2021. "Does a Foreign Board Improve Corporate Social Responsibility?," Sustainability, MDPI, vol. 13(20), pages 1-17, October.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:20:p:11473-:d:658368
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    References listed on IDEAS

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