Presenters: Alviani Indraswari, Devi Narulitasari
Affiliation: UIN Raden Mas Said Surakarta
Room: 4
ICIES News- At the 4th International Conference on Islamic Economics Studies (ICIES) 2024, researchers Alviani Indraswari and Devi Narulitasari from UIN Raden Mas Said Surakarta presented their insightful study titled “The Influence of Profitability and Independent Board of Commissioners on Firm Value with ISR Disclosure as an Intervening Variable.” This research explored the dynamics of Sharia stocks, particularly focusing on their market capitalization, profitability, and governance structures.
The study comes against the backdrop of a significant increase in the market capitalization of Sharia stocks in 2022, with the Indonesia Sharia Stock Index (ISSI) having the highest market capitalization. The market capitalization reflects the market value of a company’s outstanding shares and is often seen as an indicator of a good investment.
Indraswari and Narulitasari aimed to analyze how profitability and the presence of an independent board of commissioners influence firm value, with the Islamic Social Reporting (ISR) disclosure serving as an intervening variable. The researchers adopted a quantitative approach, utilizing path analysis with IBM SPSS 23 software and the Sobel Test Calculator to determine the significance of the mediation effects.
The population for this study comprised companies listed on the ISSI in 2022, with a sample size of 495 companies selected through purposive sampling. The findings of the study revealed several critical insights:
- Profitability positively affects ISR disclosure, indicating that more profitable companies are more likely to engage in and disclose Islamic Social Reporting.
- The presence of an independent board of commissioners does not significantly influence ISR disclosure or firm value through ISR disclosure.
- Profitability does not affect firm value through ISR disclosure, suggesting that other factors might mediate the relationship between profitability and firm value.
These findings suggest that while profitability is a significant driver for ISR disclosure, the role of an independent board of commissioners and the direct impact of ISR disclosure on firm value require further exploration. The study underscores the complexity of the relationships between financial performance, governance, and social responsibility disclosures in the context of Sharia-compliant companies.
The presentation highlighted the importance of considering multiple factors and their interplay when assessing firm value in Sharia stocks. Indraswari and Narulitasari’s research provides a valuable contribution to the understanding of how Islamic finance principles and corporate governance practices influence market perceptions and investment decisions.