MODERATION OF CORPORATE GOVERNANCE AND THE EFFECT OF PROFITABILITY, LEVERAGE, COMPANY SIZE, AND DIVIDEND POLICY ON SUSTAINABLE FINANCIAL PERFORMANCE

Аннотация

INTRODUCTION profitability. According to research conducted The LQ45 index is one of the stock groups that by (Andhari &; Sukarha, 2017). This type of drive the economy in Indonesia. This is because company is actively traded stocks and avoids the LQ45 index covers 60% of the capitalization bias from the presence of sleeping stocks. This and transaction value in the Indonesian stock increase in LQ45 value is what makes market. There is empirical evidence that the companies in the group still be trusted by their LQ45 index is a combination of stocks with a shareholders. It is evident from the company's superior category with stable income selected ability to always characterize good financial based on criteria of productivity, liquidity, and management, pay attention to the welfare of its https://www.theamericanjournals.com/index.php/tajmei 21 THE USA JOURNALS THE AMERICAN JOURNAL OF MANAGEMENT AND ECONOMICS INNOVATIONS (ISSN- 2693-0811) VOLUME 06 ISSUE04 shareholders, and consider all activities in the economic issues into the long-term short and long term. performance of businesses (Montiel 2008; Van Marewijk 2003). Menurut Ben-limit (2019), The interaction of corporate sustainability distribusi kekayaan perusahaan dipengaruhi (CSP) performance and finance has received oleh CSP. Oleh karena itu, sustainability, in great attention from academia, the business conjunction with dividend policy, can serve as a community, and the financial industry due to value driver for shareholders and stakeholders the increasing influence of social and to reach the goals of various interested parties. environmental challenges on organizations. Companies perceive CSPs as a new strategic Many authors (e.g., Benlemlih 2019; Brooks and choice to enhance their reputation and gain Oikonomou 2018; Margolis, Elfenbein, and more competitive advantage because CSPs Walsh 2009; Naseem et al. 2020; Orlitzky, ultimately focus on long-term corporate value Schmidt, and Rynes 2003; Wang, Dou, and Jia rather than just maximizing short-term revenue 2016; Xie et al. 2019 among many others) (Oh and Park, 2021). Therefore, companies concentrate on the relationship between CSPs position themselves to balance the association and financial performance, but many of these of CSP and corporate values by aligning studies also discuss the relationship between environmental, social, and governance (ESG) CSPs and dividend policy in developed markets goals in strategic decisions (Dahrud 2008; (e.g. Benlemlih 2019; Cheung, Hu, and Montiel 2008). This is especially true for Schwiebert 2018; Matos, Barros, and Sarmento emerging markets where the tangible and 2020; Samet and Jarboui 2017; and Sheikh et al. intangible 2021). Because of this, developing nations that have seen tremendous expansion in trade and The benefits of sustainability activities will investment over the previous 20 years have a bring more competitive advantage over time. As gap that has to be addressed. They now account such, companies in these markets must embed for 46% of the amount of commerce globally, up sustainability at all levels of the organization from 32% in 2000. Regarding and prioritize developing solid relationships with investors and stakeholders through the After examining over 2000 empirical research, lens of sustainability (Stan, Stan, and Bratian Friede, Busch, and Bassen (2015) concluded 2020). that taking ESG factors into account improves a company's financial success, especially in Meanwhile, companies use different policies to emerging markets. CSP could, however, have a meet the expectations of shareholders and reverse impact on financial choices. As an stakeholders. Dividend policy is one of them. It illustration, a business could typically cut is an important way for investors to generate a dividends to provide the liquidity needed for return on investment, and as such, can be seen sustainability initiatives that live up to as a socially responsible attitude towards shareholder expectations. Accordingly, wealth distribution (Oh and Park 2021). The controlling shareholders in developing markets company uses a dividend policy to distribute a have a propensity to direct resources toward certain amount of net profit to shareholders. sustainability initiatives, which has a Given that companies generally engage with detrimental impact on dividend policy (Al- good corporate governance and socially Najjar and Kilincarslan 2016; Shaykh et al. responsible actions, dividend policy can be 2021). influenced by the implementation of sustainability measures and its tridimensional Examining contingency views in this context, perspective called Triple Bottom Line (Harjoto Indonesia is a fascinating location to look at and Jo 2011). corporate governance and profitability as moderators in examining the link between CSP The latter is concerned with integrating and dividend policy, with a focus on the LQ45 environmental, social, governance, and https://www.theamericanjournals.com/index.