Implications for Companies and Stakeholders

Oct 13, 2025 by windailys.com 45 views

Effect of Audit Quality, Corporate Social Responsibility, Financial Leverage, and Human Capital on Company Performance: An Empirical Study of Manufacturing Companies Listed on the Indonesia Stock Exchange in 2017-2019

Introduction

In today's fast-paced business environment, companies are constantly seeking ways to improve their performance and stay ahead of the competition. One of the key factors that can influence a company's performance is the quality of its internal and external audits, corporate social responsibility (CSR) initiatives, financial leverage, and human capital. This study aims to investigate the effect of these factors on the performance of manufacturing companies listed on the Indonesia Stock Exchange (IDX) in the 2017-2019 period.

Literature Review

Previous studies have shown that audit quality, CSR, financial leverage, and human capital can have a significant impact on a company's performance. Audit quality refers to the ability of auditors to provide accurate and reliable audit results, which can help companies identify risks and improve their corporate governance. CSR initiatives, on the other hand, can improve a company's image, strengthen relationships with stakeholders, and ultimately improve its performance. Financial leverage, or the use of debt to finance a company's operations, can also have a significant impact on its performance, but high financial leverage can also increase financial risk. Human capital, or the quality of a company's employees, is also a critical factor in determining its performance.

Methodology

This study uses a causal associative approach to analyze data from 169 manufacturing companies listed on the IDX. The purposive sampling method was chosen to obtain a sample relevant to this study, resulting in 72 sample companies and 151 observations. The data used comes from the financial statements of each sample company published on the official website of the IDX (www.idx.co.id). The variables studied are quality audits, CSR, financial leverage, and human capital as independent variables, while the company's performance, measured by profitability, is used as the dependent variable. The multiple linear regression method is used to test the relationship between variables.

Results

The results of this study show that quality audit, CSR, and financial leverage do not have a significant influence on the performance of manufacturing companies in Indonesia. However, human capital has a positive and significant influence on company performance. This suggests that companies that invest in their employees and develop their human capital are more likely to achieve better performance.

Deeper Analysis

The results of this study provide several important points to understand:

Quality Audit

The results of this study indicate that quality audits have no significant effect on the performance of manufacturing companies in Indonesia. This may be caused by several factors, such as lack of auditor quality, weak supervision of auditors, or even lack of company management awareness of the importance of quality audits.

Corporate Social Responsibility

Although companies that apply CSR are expected to have better performance, this research shows the opposite. It is possible that the application of CSR is not optimal, or has not been integrated with the company's overall business strategy.

Financial Leverage

High financial leverage does not always have a positive impact on company performance. This study shows that financial leverage has no significant effect on the performance of manufacturing companies in Indonesia. This may be caused by the high financial risk faced by the company, or the lack of the company's ability to manage financial leverage optimally.

Human Capital

This research proves that human capital has a positive and significant influence on company performance. The quality of competent, skilled, and dedicated labor is an important factor in improving the performance of manufacturing companies.

Implications for Companies and Stakeholders

The findings of this study have several implications for companies and stakeholders, including:

The Importance of Improving Audit Quality

The company needs to improve the quality of internal and external audits to get accurate and reliable audit results. This will assist companies in identifying risks and increasing better corporate governance.

Integrates CSR with a Business Strategy

Companies need to integrate CSR programs with their overall business strategy. An effective CSR program will improve the company's image, strengthen relationships with stakeholders, and ultimately improve company performance.

Optimal Financial Leverage Management

Companies need to manage financial leverage optimally to avoid excessive financial risks.

Investment in Human Capital

Companies need to invest resources to improve the quality of human resources. This can be done through training, development, and development of employees.

Conclusion

This study contributes to an understanding of the effect of quality audits, CSR, financial leverage, and human capital on the performance of manufacturing companies in Indonesia. The results of this study indicate that human capital is a key factor in improving company performance. Companies need to focus on the development and development of human resources to achieve better performance in the future.

Limitations of the Study

This study has several limitations, including:

The sample size is relatively small, which may limit the generalizability of the findings.
The study only focuses on manufacturing companies listed on the IDX, which may not be representative of all companies in Indonesia.
The study only uses financial statements as data, which may not capture all the relevant information about a company's performance.

Future Research Directions

Future research can build on this study by:

Investigating the effect of quality audits, CSR, financial leverage, and human capital on the performance of companies in other industries.
Using more advanced statistical methods to analyze the data.
Collecting more data from other sources, such as company reports and industry publications.

References

[List of references cited in the study]

Appendices

[Appendix 1: List of sample companies]
[Appendix 2: Data collection and analysis procedures]
[Appendix 3: Results of multiple linear regression analysis]
Q&A: Effect of Audit Quality, Corporate Social Responsibility, Financial Leverage, and Human Capital on Company Performance

Introduction

In our previous article, we discussed the effect of audit quality, corporate social responsibility (CSR), financial leverage, and human capital on the performance of manufacturing companies listed on the Indonesia Stock Exchange (IDX) in the 2017-2019 period. In this article, we will answer some of the most frequently asked questions (FAQs) related to this study.

Q1: What is the significance of this study?

A1: This study is significant because it investigates the effect of audit quality, CSR, financial leverage, and human capital on the performance of manufacturing companies in Indonesia. The findings of this study can provide insights for companies and stakeholders on how to improve their performance and achieve better results.

Q2: What are the limitations of this study?

A2: This study has several limitations, including a relatively small sample size, which may limit the generalizability of the findings. The study only focuses on manufacturing companies listed on the IDX, which may not be representative of all companies in Indonesia. The study only uses financial statements as data, which may not capture all the relevant information about a company's performance.

Q3: What are the implications of this study for companies and stakeholders?

A3: The findings of this study have several implications for companies and stakeholders, including the importance of improving audit quality, integrating CSR with a business strategy, managing financial leverage optimally, and investing in human capital.

Q4: How can companies improve their audit quality?

A4: Companies can improve their audit quality by selecting a reputable and experienced auditor, ensuring that the audit is conducted in accordance with the relevant standards, and providing the auditor with all the necessary information and access to the company's records.

Q5: What is the role of CSR in improving company performance?

A5: CSR can improve company performance by enhancing the company's image, strengthening relationships with stakeholders, and improving the company's reputation. However, the application of CSR must be integrated with the company's overall business strategy to achieve optimal results.

Q6: How can companies manage financial leverage optimally?

A6: Companies can manage financial leverage optimally by ensuring that the level of debt is not excessive, maintaining a strong cash flow, and having a clear plan for debt repayment.

Q7: What is the importance of human capital in improving company performance?

A7: Human capital is a critical factor in improving company performance. Companies that invest in their employees and develop their human capital are more likely to achieve better performance.

Q8: How can companies develop their human capital?

A8: Companies can develop their human capital by providing training and development opportunities for their employees, promoting a culture of learning and innovation, and ensuring that employees are motivated and engaged.

Q9: What are the future research directions for this study?

A9: Future research can build on this study by investigating the effect of quality audits, CSR, financial leverage, and human capital on the performance of companies in other industries, using more advanced statistical methods to analyze the data, and collecting more data from other sources.

Q10: What are the practical implications of this study for companies and stakeholders?

A10: The practical implications of this study are that companies and stakeholders should focus on improving audit quality, integrating CSR with a business strategy, managing financial leverage optimally, and investing in human capital to achieve better performance.

Conclusion

This Q&A article provides insights into the effect of audit quality, CSR, financial leverage, and human capital on the performance of manufacturing companies in Indonesia. The findings of this study can provide practical implications for companies and stakeholders on how to improve their performance and achieve better results.