Corporate Social Responsibility and Good Corporate Governance on Financial Risk: Corporate Reputation as a Mediating Variable in Banking
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Financial risk is an important concern in the banking sector because it can affect financial stability and stakeholder confidence. Corporate social responsibility and good corporate governance are expected to influence financial risk, while corporate reputation may represent an important mechanism linking these factors to financial outcomes. This study aimed to analyze the effects of corporate social responsibility and good corporate governance on financial risk, with corporate reputation as a mediating variable, among banking companies listed on the Indonesia Stock Exchange during 2022–2024. A quantitative explanatory research design was employed using secondary data obtained from annual reports, sustainability reports, and financial statements. The sample was selected through purposive sampling, resulting in 25 banking companies and 75 observations over the three-year study period. Corporate social responsibility was measured using a disclosure index based on the 2021 Global Reporting Initiative Standards, good corporate governance was measured through institutional ownership, managerial ownership, independent commissioners, and the audit committee, financial risk was proxied by non-performing loans, and corporate reputation was measured using corporate awards. Data were analyzed using Structural Equation Modeling–Partial Least Squares with SmartPLS 4 and bootstrapping for mediation testing. The results showed that corporate social responsibility and good corporate governance had positive and significant effects on financial risk, while corporate social responsibility had a positive and significant effect on corporate reputation. Good corporate governance had a positive but insignificant effect on corporate reputation, whereas corporate reputation had a positive and significant effect on financial risk. Corporate reputation did not mediate the effects of corporate social responsibility or good corporate governance on financial risk. These findings contribute to understanding the relationships among corporate responsibility, governance, reputation, and financial risk in the banking sector.
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