The Influence of Corporate Social Responsibility and Good Corporate Governance on Market Response with Corporate Reputation as a Moderator

Makhmudah, Syahriyatul (2025) The Influence of Corporate Social Responsibility and Good Corporate Governance on Market Response with Corporate Reputation as a Moderator. Magister thesis, Institut Teknologi dan Bisnis Widya Gama Lumajang.

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Abstract

The capital market responds to various types of information disclosed by companies, including practices related to social responsibility and good governance. However, previous studies on the influence of Corporate Social Responsibility (CSR) and Good Corporate Governance (GCG) on market response have shown mixed and inconsistent results. Therefore, this study aims to analyze the impact of CSR and GCG on market response by considering corporate reputation as a moderating variable. The research was conducted on property sector companies listed on the Indonesia Stock Exchange (IDX) during the 2020–2023 period, involving a purposively selected sample of 13 companies. This study uses a quantitative approach with multiple linear regression and moderated regression analysis (MRA) methods to test both direct effects and interaction effects. CSR is measured based on disclosure indicators referring to the Global Reporting Initiative (GRI) and Indonesian Financial Services Authority (POJK) standards. GCG is assessed using governance mechanism components such as the proportion of independent commissioners, number of board meetings, and institutional ownership. Market response is measured using cumulative abnormal return (CAR) over a specific observation window. Corporate reputation, as the moderating variable, is evaluated through the company’s public perception and visibility using indicators aligned with previous literature. The results reveal that CSR has a positive and significant effect on market response, indicating that corporate social activities provide positive signals to investors. Conversely, GCG does not show a significant effect on market response, suggesting that governance factors may not yet be a primary concern for investors in the property sector. Additionally, corporate reputation significantly moderates the relationship between CSR and market response but does not moderate the relationship between GCG and market response. These findings highlight the importance of corporate reputation in enhancing the positive signals of CSR activities to investors and emphasize the need for stronger sustainability communication strategies to increase market responsiveness. This study contributes to the development of legitimacy and agency theories within the context of the Indonesian capital market and offers practical implications for companies, regulators, and investors in integrating non-financial aspects into strategic decision-making.

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