ESG and Financial Scandals : The Role of Investor Attention in Curbing Misconduct in Indonesia’s Banking Industry

Indah Sri Lestari; Wulan Budi Astuti; Ratiningsih Ratiningsih

doi:10.61132/ijema.v1i1.1057

Authors

Indah Sri Lestari Universitas Wahid Hasyim
Wulan Budi Astuti Universitas Wahid Hasyim
Ratiningsih Ratiningsih Universitas Wahid Hasyim

DOI:

https://doi.org/10.61132/ijema.v1i1.1057

Keywords:

Earnings Management, Environmental, Governance, Institutional Ownership, Investor Attention

Abstract

This study aims to analyze the effect of Environmental, Social, and Governance (ESG) performance on financial misreporting, with investor attention as a moderating variable in banking companies listed on the Indonesia Stock Exchange during the 2019–2022 period. The theoretical framework is grounded in Agency Theory and Legitimacy Theory to explain the role of ESG as an internal control mechanism and a means of gaining external legitimacy. The research employs a quantitative approach using secondary data from annual reports and sustainability reports. Financial misreporting is proxied by earnings management measured through discretionary accruals, while ESG performance is assessed using the GRI Standards index, and investor attention is proxied by institutional ownership. Data analysis was conducted using multiple regression and Moderated Regression Analysis (MRA). The findings reveal that all three ESG dimensions (environmental, social, and governance) have a significant negative effect on earnings management. Institutional investor attention is found to strengthen the negative relationship between environmental and social aspects with earnings management, but weaken the influence of governance. These results indicate that institutional investors tend to be more responsive to environmental and social issues compared to governance aspects. Practically, this study provides empirical evidence that ESG implementation can serve as a control instrument against financial misreporting in the banking sector, while theoretically enriching the literature on investor moderation in the relationship between ESG and earnings management practices.

Downloads

Download data is not yet available.

References

Akerlof, G. A., & Kranton, R. E. (2005). Identity and the economics of organizations. Journal of Economic Perspectives, 19(1), 9–32. https://doi.org/10.1257/0895330053147930

Akisik, O., & Gal, G. (2017). The impact of corporate social responsibility and internal controls on stakeholders’ view of the firm and financial performance. Sustainability Accounting, Management and Policy Journal, 8(3), 246–280. https://doi.org/10.1108/SAMPJ-06-2015-0044

Alexander, N., & Palupi, A. (2020). Pengaruh corporate social responsibility reporting terhadap manajemen laba. Jurnal Bisnis dan Akuntansi, 22(1), 105–112. https://doi.org/10.34208/jba.v22i1.628

Andriani, N., & Arsjah, R. J. (2022). Pengaruh intellectual capital dan ESG terhadap manajemen laba yang dimoderasi oleh profitabilitas. Jurnal Ekonomi Trisakti, 2(2), 595–610. https://doi.org/10.25105/jet.v2i2.14646

Baier, P., Berninger, M., & Kiesel, F. (2020). Environmental, social and governance reporting in annual reports: A textual analysis. Financial Markets, Institutions and Instruments, 29(3), 93–118. https://doi.org/10.1111/fmii.12132

Bareksa. (2020, August 31). Dampak perubahan iklim terhadap pasar dan investasi. https://www.bareksa.com/berita/pasar-modal/2020-08-31/schroders-ini-dampak-perubahan-iklim-terhadap-pasar-dan-investasi

Citrajaya, D., & Ghozali, I. (2020). Pengaruh corporate social responsibility dan aktivitas CSR dalam dimensi tata kelola, lingkungan, dan sosial terhadap manajemen laba. Diponegoro Journal of Accounting, 9(2), 1–14.

Dananjaya, D. G. Y., & Ardiana, P. A. (2016). Proporsi dewan komisaris independen sebagai pemoderasi pengaruh kepemilikan institusional pada manajemen laba. E-Jurnal Akuntansi Universitas Udayana, 15(2), 1595–1622.

Dyck, A., Lins, K. V., Roth, L., & Wagner, H. F. (2019). Do institutional investors drive corporate social responsibility? International evidence. Journal of Financial Economics, 131(3), 693–714. https://doi.org/10.1016/j.jfineco.2018.08.013

Eisenhardt, K. M. (2018). Agency theory: An assessment and review. Academy of Management Review, 14(1), 57–74.

Ermayanti, D. (2017). Pengungkapan sosial, diversifikasi perusahaan, dan kompensasi bonus terhadap manajemen laba pada perusahaan manufaktur di BEI. Jurnal Akuntansi, 20(1), 70–83. https://doi.org/10.24912/ja.v20i1.76

Evadewi, R., & Meiranto, W. (2014). Pengaruh pengungkapan corporate social responsibility terhadap earnings management: A political cost perspective. Diponegoro Journal of Accounting, 3(1), 1–12. http://ejournal-s1.undip.ac.id/index.php/accounting

Global Reporting Initiative (GRI). (2021). GRI Standards 2021 update.

Handayani, S. (2021). [Article information unavailable]. Jurnal Akuntansi, 8(2).

He, J. (Jack), Huang, J., & Zhao, S. (2019). Internalizing governance externalities: The role of institutional cross-ownership. Journal of Financial Economics, 134(2), 400–418. https://doi.org/10.1016/j.jfineco.2018.07.019

Heltzer, W. (2011). The asymmetric relationship between corporate environmental responsibility and earnings management: Evidence from the United States. Managerial Auditing Journal, 26(1), 65–88. https://doi.org/10.1108/02686901111090844

Hong, H., & Kacperczyk, M. (2009). The price of sin: The effects of social norms on markets. Journal of Financial Economics, 93(1), 15–36. https://doi.org/10.1016/j.jfineco.2008.09.001

Hong, H., Fisman, R., Karpoff, J., Arlen, J., Mas, A., Dobie, W., Edmans, A., & Liskovich, I. (2015). Crime, punishment and the halo effect of corporate social responsibility (NBER Working Paper No. 21215). National Bureau of Economic Research. http://www.nber.org/papers/w21215

Juliani, M., & Ventty, C. (2022). Analisis pengaruh CSR terhadap manajemen laba dengan tata kelola perusahaan sebagai variabel moderasi. Jesya (Jurnal Ekonomi & Ekonomi Syariah), 5(1), 71–84. https://doi.org/10.36778/jesya.v5i1.566

Kim, Y., Park, M. S., & Wier, B. (2012). Is earnings quality associated with corporate social responsibility? Accounting Review, 87(3), 761–796. https://doi.org/10.2308/accr-10209

Kompas. (2023, February 19). Penyaluran kredit UMKM terus dipacu. https://www.kompas.id/baca/ekonomi/2023/02/19/genjot-porsi-kredit-umkm-capai-target-30-persen-pada-2024

Kurniawati, D. (2021). Pengaruh pengungkapan corporate social responsibility terhadap manajemen laba riil dengan mekanisme corporate governance sebagai pemoderasi. Jurnal Buana Akuntansi, 6(2), 1–29.

Liao, L., Luo, L., & Tang, Q. (2015). Gender diversity, board independence, environmental committee and greenhouse gas disclosure. British Accounting Review, 47(4), 409–424. https://doi.org/10.1016/j.bar.2014.01.002

Liu, D. (2023). Bagaimana kinerja ESG perusahaan mempengaruhi penyimpangan keuangan? [Unpublished manuscript].

Mardianto, & Carin, L. (2021). Pengaruh tata kelola perusahaan terhadap manajemen laba pada perusahaan manufaktur. Forum Ekonomi, 23(3), 523–538. http://journal.feb.unmul.ac.id/index.php/FORUMEKONOMI/article/view/10022

Muka, U., Moore, J. A., & Xu, L. (2018). Advances in accounting. Advances in Accounting, 1(1), 1–14.

Pieritsz, L. R. (2021). Peran tata kelola perusahaan dan tanggung jawab sosial perusahaan terhadap manajemen laba. ABIS: Accounting and Business Information Systems Journal, 9(2). https://doi.org/10.22146/abis.v9i2.65908

Prabaningrat, I. G. A. A., & Widanaputra, A. A. G. (2015). Pengaruh good corporate governance dan konservatisme akuntansi pada manajemen laba. E-Jurnal Akuntansi Universitas Udayana, 3(8), 663–676.

Ramalingegowda, S., Utke, S., & Yu, Y. (2021). Common institutional ownership and earnings management. Contemporary Accounting Research, 38(1), 208–241. https://doi.org/10.1111/1911-3846.12628

Safriani, M. N., & Utomo, D. C. (2020). Pengaruh environmental, social, governance (ESG) disclosure terhadap kinerja perusahaan. Diponegoro Journal of Accounting, 9(3), 1–11. http://ejournal-s1.undip.ac.id/index.php/accounting

Saleh, M., Zulkifli, N., & Muhamad, R. (2010). Corporate social responsibility disclosure and its relation on institutional ownership: Evidence from public listed companies in Malaysia. Managerial Auditing Journal, 25(6), 591–613. https://doi.org/10.1108/02686901011054881

Santi, D. K., & Wardani, D. K. (2018). Pengaruh tax planning, ukuran perusahaan, corporate social responsibility terhadap manajemen laba. Jurnal Akuntansi, 6(1), 11–24. https://doi.org/10.24964/ja.v6i1.536

Sembiring, C. L. (2017). Manajemen laba dan pengungkapan tanggung jawab sosial perusahaan dengan komisaris independen dan kepemilikan institusional sebagai variabel pemoderasi. Berkala Akuntansi dan Keuangan Indonesia, 2(1), 20–41. https://doi.org/10.20473/baki.v2i1.3544

Sugiyono. (2011). Metode penelitian kuantitatif, kualitatif, dan R&D. Alfabeta.

Sumanto, B., Asrori, & Kiswanto. (2014). Pengaruh kepemilikan institusional dan ukuran dewan komisaris terhadap manajemen laba. Accounting Analysis Journal, 3(1), 44–53. http://journal.unnes.ac.id/sju/index.php/aaj

Triyani, A., Setyahuni, S. W., & Kiryanto, K. (2020). The effect of environmental, social and governance (ESG) disclosure on firm performance: The role of CEO tenure. Jurnal Reviu Akuntansi dan Keuangan, 10(2), 261–272. https://doi.org/10.22219/jrak.v10i2.11820

Ulfah, M. (2023). Pengaruh pengungkapan environmental, social, dan governance terhadap kinerja keuangan (studi empiris pada perusahaan yang terdaftar di Bursa Efek Indonesia tahun 2019–2021). [Undergraduate thesis].

Viodolin Manurung, R., & Syafruddin, M. (2020). Pengaruh tata kelola perusahaan terhadap manajemen laba akrual. Diponegoro Journal of Accounting, 9(2), 1–9. http://ejournal-s1.undip.ac.id/index.php/accounting

Yani, N. P. T. P., & Suputra, I. D. G. D. (2020). Pengaruh kepemilikan asing, kepemilikan institusional, dan leverage terhadap pengungkapan corporate social responsibility. E-Jurnal Akuntansi, 30(5), 1196–1210. https://doi.org/10.24843/eja.2020.v30.i05.p10

Zaeninaa, S., Himmawan, A., & Nugroho, D. (2022). Pengaruh fraud diamond terhadap penyimpangan akuntansi. Fair Value: Jurnal Ilmiah Akuntansi dan Keuangan, 4(7), 859–870. https://journal.ikopin.ac.id/index.php/fairvalue/article/view/1311