Atika Wulandari, Santi Yopie

The Influence Of Board Of Directors' Components On Social Responsibility Reputation In Lq-45 Index Companies

Introduction

The influence of board of directors' components on social responsibility reputation in lq-45 index companies. Examine how board of directors' diversity (gender, education, age) impacts social responsibility reputation in LQ-45 index companies. Discover its significant positive effect on CSR decision-making.

Abstract

The aims of this study is to examine the effect of the diversity of the board director components on companies that have social responsibility (CSR) due to limited evidence that the diversity of the board of directors within a company affects the reputation of organizations or companies that are involved in social responsibility (CSR). The object of this study is a company listed on the LQ45 Index, which is a stock market index on the Indonesia Stock Exchange which consists of 45 companies that are included in the top 60 companies with the highest market capitalization in the past year. The diversity is based on gender diversity, board meetings, board education variety, board average age, and number of board of commissioners. There are 225 observation samples from 2017-2021. In this study it was concluded that the diversity of directors based on the matters mentioned above had a significant and positive impact. The diversity of components of a company's board of directors influences an organization or company in decision making and involvement in social responsibility as demanded by directors or stakeholders. This study aims to determine the importance of the diversity of the board directors on social responsibility and the positive influence of the diversity of the board of directors in managing corporate social responsibility.

Review

This study embarks on a pertinent investigation into the influence of board of directors' diversity on social responsibility reputation within LQ-45 index companies in Indonesia. Addressing a perceived gap in existing literature, the research aims to establish how various components of board diversity — specifically gender, board meetings frequency, educational variety, average age, and the number of commissioners — impact a company's standing in corporate social responsibility (CSR). Drawing on 225 observations spanning from 2017 to 2021, the study concludes that these diversity elements exert a significant and positive effect, thereby influencing organizational decision-making and responsiveness to stakeholder demands concerning CSR. The research tackles a highly relevant and contemporary issue, given the escalating global emphasis on corporate governance and social responsibility, particularly within emerging markets like Indonesia. The explicit focus on LQ-45 index companies provides valuable insights into the governance dynamics of major, influential firms within this specific economic context. By incorporating multiple facets of board diversity, from demographic attributes such as gender and age to operational aspects like meeting frequency and educational backgrounds, the study adopts a comprehensive approach to understanding board composition. The stated clear objective of establishing a positive link between board diversity and CSR reputation is commendable, promising significant implications for corporate governance practices and strategic CSR management. While the abstract effectively outlines the study's purpose and main conclusions, a full paper would significantly benefit from a more detailed exposition of the theoretical framework underpinning the selection of specific diversity variables and their hypothesized relationships with CSR outcomes. Crucially, clarity on the precise methodology used to measure "social responsibility reputation" would be essential, as this metric can be operationalized in various ways, each with distinct implications for the findings. Future research could further explore potential mediating or moderating roles of other firm-specific characteristics or industry dynamics. Nonetheless, this study presents a compelling argument for the strategic importance of a diverse board in cultivating and maintaining a robust corporate social responsibility profile.

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