The Effect of Corporate Social Responsibility Performance, Board of

Commissioners Effectiveness, and Women on The Board of

Commissioners Towards CEO Turnover

Bulan Dwi Utami and Ancella Anitawati Hermawan

Department of Accounting, Universitas Indonesia, Kampus FEB UI Depok, 16424, Indonesia

Keywords: CSR, Board of commissioners, Women, CEO turnover

Abstract: The purpose of this paper aims to seek the effect of corporate social responsibility (CSR) performance,

effectivenes, and women on the board of commissioner influence the likehood of CEO turnover. Measurement

of CSR performance based on Morgan Stanley Capital International (MSCI) ESG index contains with five

indicators. The effectiveness of the board of commissioners is measured using modified indicators developed

by Hermawan (2011) with four indicators. The composition of women members of the board of

commissioners is measured proportionally by comparing the number of women with the total number of

boards of commissioners. This study used 168 sample of companies who are listed on the Indonesia Stock

Exchange during 2012-2016. This test used logistic regression to measure the probability of changes the CEO.

The results of this study show that CSR performance and gender composition of women board of

commissioners have no significant effect on CEO turnover. While the effectiveness of the board of

commissioners has a significant influence of CEO turnover in Indonesia.

1 INTRODUCTION

CSR activities are described as marketing

operations implemented by companies to

demonstrate the contribution of social responsibility

effectively and concretely. CSR is a business

commitment to contribute to sustainable economic

development, working with employees, families,

local communities and the wider community to

improve the quality of life (World Business Council

for Sustainable Development, 2002).

Related to company performance, CSR

performance also become one of benchmark in

passing judgment to change CEO. Performance of

CSR is able to predict the tendency of a change of

CEO in line with company performance (Cooper

2017). The results of the research show that there is a

positive relationship between CSR performance with

CEO turnover. Where the better the performance of

CSR the more likely the CEO is replaced. The

foundation is based on a perceived stakeholder theory

which shows that strong CSR engagement can

increase the likelihood of change if the company's

performance is not good. This is because companies

with strong CSR have better governance and

management perspectives that are more in line with

shareholder objectives.

Good corporate governance is reflected in the

effectiveness of the board of commissioners.

Indonesian known forusing to a two-tier system with

the separation of duties between the board of directors

and the board of commissioners. With the supervisors

conducted by the board of commissioners are

expected that all activities will works effectively and

efficiently. So it can help the company achieve its

desired goals and in line with what is expected by the

stakeholders. In addition, due to the effectiveness of

the board of commissioners, stakeholders may

consider the recommendations ofreplacing CEO’s

regarding the performance during the period.

According to Mensi Klarbach (2014) the role and

impact of women within the organization is not only

a topic of concern to researchers but also an issue of

interest to policymakers. In previous research states

that women's representation has contributed to the

effectiveness of the council and was able to increase

Dwi Utami, B. and Anitawati Hermawan, A.

The Effect of Corporate Social Responsibility Performance, Board of Commissioners Effectiveness, and Women on The Board of Commissioners Towards CEO Turnover.

DOI: 10.5220/0008436700470055

In Proceedings of the 4th Sriwijaya Economics, Accounting, and Business Conference (SEABC 2018), pages 47-55

ISBN: 978-989-758-387-2

 2019 by SCITEPRESS – Science and Technology Publications, Lda. All rights reser ved

the board's monitoring activities in the company

(Ittonen et al., 2010). In addition, research conducted

by Francis et al. (2015) regarding gender within the

company indicates that there is a significant increase

in the number of women in the executive. On the basis

of the consideration of research on gender

composition of women on the Board of

Commissioners.

The literature confirms that the composition of the

board of commissioners is an important factor in

contributing to the effectiveness of the company's

performance. The greater diversity of board members

can enhance the company's ability to address the

needs and interests of different stakeholder groups

(Harjoto et al., 2015). BOC requires the best strategy

to align interests, and to manage potential conflicts

among stakeholders. Based on existing research, the

influence of gender diversity of the board of

commissioners, especially women members, can help

the selection of appropriate decisions for the

company.

In Indonesia’sn research on CEOs turnover are

not too much, the research tends to the company's

performance. Lindrianasari and Hartono (2013)

found a negative relationship between firm

performance and ownership change over the

probability of a CEO turnover. While Setiawan et al.

(2017) examines the change of both regular and non-

regular CEOs turnover, the results show that

Indonesian firms do not have significant differences

in CEO turnover. Therefore this research is expected

to be empirical evidence in Indonesia for the assertion

that better CSR performance, the board of

commissioners effectiveness, and woman on the

board of commissioners can lead to CEO turnover.

The paper is organized in the following structure.

In the next section, will discuss the existing literatur

about CSR, effectiveness, and women on the board

of commissioners. In the folllowing section, will

discuss the develop hypotheses. And the following

section, will discuss data and sample. Then, report

and discuss analyses about this research.

2 LITERATURE REVIEW AND

HYPOTHESES DEVELOPMENT

2.1 Corporate Social Responsibility

(CSR)

CSR is defined by Harjoto and Jo (2011) as how

the company manages the business process to

generate an overall positive impact on society and

refers to serving people, communities, and the

environment in ways that transcend the legal and

financial needs of a company. On the basis of that

indirectly indicates that CSR is an action and

investment that can achieve financial goals that is to

maximize shareholder wealth and focus on improving

some social goodness.

Harjoto and Jo (2011) outline several theories

used to explain why firms are involved in CSR and

how CSR can affect the performance and actions

taken by the company. First there is the entrenchment

theory that illustrates that CSR is a way for managers

to generate support from stakeholders.

Cespa and Cestone (2007) argue that CSR can

protect CEOs who do not work efficiently by using

stakeholders as an effective protection strategy.

Martinez-Ferrero and Garcia-Sanchez (2015) also

support that entrenchment theory that CSR has a role

in managerial discretion. This practice of managerial

policy implements good CSR practices although

accounting practices in bad companies can be covered

by compensating stakeholders. So it is concluded that

in entrenchment theory, CSR is used to cover

unnecessary actions and performance.

Furthermore, stakeholder theory, in which

Harjoto and Jo (2011) explain that CSR involvement

can reduce conflicts of interest between different

groups of managers, investors, and non-investor

stakeholders. This suggests that companies use CSR

to motivate managers to act in the interests of

shareholders and other stakeholder groups. Thus it is

expected to reduce agency problems among various

stakeholders. Cai et al., (2011) supports the

stakeholder theory in his research on CSR relations

and compensation. The study found that better social

performance pays fewer executives than companies

with poor CSR records.

So it can be concluded that CSR can be one of

indicators to predict the behavior of CEO and board

members. Behavior in question is either the attitude

or decision-making or risk that can affect the

operational performance of the company. The

performance of this company is often the subject of

research, because many studies have found a negative

relationship between performance and the possibility

of a change of CEO. Fiordelisi and Ricci (2014) argue

that corporate culture affects the relationship between

financial performance and CEO turnover. The

probability of a change of CEO has a positive

relationship with a competitive and creative culture.

In Indonesia, Lindrianasari and Hartono (2013) found

that CEO turnover occurred not because of the effects

of the company's performance. In his research ROA

SEABC 2018 - 4th Sriwijaya Economics, Accounting, and Business Conference

the company did not change well before and after the

change of CEO.

However, the study of Leker and Solomon (2000)

suggests that a coercive CEO shift has a positive

effect on the company's performance. Poorly

performing CEOs have the probability of being

forcibly discharged, so that the CEO who replaces

them is expected to improve their previous

performance. Cooper (2017) argues that in

stakeholder theory despite good or improved CSR

practices, corporate performance, especially

accounting practices, overall decreased it can increase

the chances of CEO turnover. This statement is

because companies with strong CSR are considered

to have better governance and management

perspectives that are more in line with shareholders.

So for the sake of aligning the interests of

shareholders the CEO can be replaced in the next

period. So hypothesis 1 is formulated as follows:

H1a: The performance of CSR increases the

probability of a CEO's replacement

2.2 Board of Commisioner

Effectiveness

The governance structure, in Indonesia there is its

own governance structure is set up in the Komite

Nasional Kebijakan Governance (KNKG). KNKG

there are several structures for listed companies such

as the GMS, board of commissioners, board of

directors, audit committee, internal audit, external

audit, and others. In this study focused on the

governance structure of the Board of Commissioners.

Board of commissioners has an important role in

corporate governance framework. The main task is to

be responsible for overseeing the management

policies and their implementation as well as an

advisor to the board of directors.

A variety of study has a lot to connect between the

board of commissioners effectiveness with a wide

range of subjects for research. In a good governance

mechanism it is said that the board of commissioners

has an important role that can affect the performance

of the company. It is said that the board of

commissioners who perform their functions

effectively can prevent management actions that

harm the company. Harjoto and Jo (2011) argue that

effective governance mechanisms including

independent board members can encourage CSR

engagement, thereby helping to reduce conflicts

between firms and stakeholders and positively affect

corporate value.

The characteristics of the board of commissioners

in Indonesia are different from the characteristics of

the board of directors in the United States and other

countries that adopted the one-tier system for the

board (Hermawan, 2011). Indonesia adopted a two-

tier system in which there is a separation of duties

between the board of commissioners and the board of

directors. So to measure of the board of

commissioners effectiveness need to consider the

following points.

2.2.1 Board Independence

To avoid bias in decision making, the board of

commissioners are required to have independent

characteristics during their obligations. Based on the

regulations of the Otoritas Jasa Keuangan (OJK)

No.33 / POJK.04 / 2014 the number of independent

commissioners shall be at least 30% of the total

members of the board of commissioners if its

members are more than two.

With the existence of an independent board of

commissioners based on these criteria is expected the

board can function effectively in carrying out its

duties. Research conducted by Johnson and Daily

(1996) shows that boards affect the outcome of the

company by carrying out supervisory functions,

resource allocation and strategic roles. Brick and

Chidambaran (2007) found that supervisory activities

undertaken by boards can increase firm value.

Because boards members can effectively identify the

opportunistic behavior of managers by monitoring to

ensure that organizational behavior is in line with the

interests of corporate stakeholders. Thus, with the

independence of the board of commissioners is

expected to oversee the implementation of corporate

performance, especially in the CSR performance.

2.2.2 Board Activities

The Board of Commissioners must follow the

applicable requirements for making informed

decisions, or take risks to be decided carefully. To

support the effectiveness of the duties of the board of

commissioners in conducting supervisory

management, a board meeting is held.

Commissioners are required to carry out regular

meetings attended by boards of commissioners and

directors to discuss any issues that occur in the

company. Such routine meetings shall be held at least

once in two months, based on POJK No.33 / POJK.04

/ 2014 and shall hold meetings with directors at least

three times a year.

There are several studies which consider that

board activity is an important dimension and that the

The Effect of Corporate Social Responsibility Performance, Board of Commissioners Effectiveness, and Women on The Board of

Commissioners Towards CEO Turnover

frequency of meetings affects the company's

operational performance (Vafeas, 1999). Anderson et

al. (2003) examined the effect of board activity as

measured by the number of meetings on earning

response coefficient and the results had a positive

effect. Therefore, the board activities represented by

the number of board meetings are important

characteristics to measure the effectiveness of the

board's role in overseeing management actions,

particularly those relating to the reporting process of

financial statements.

2.2.3 Board Size

The size or number of boards of commissioners

has an effect on the effectiveness of council

performance. In POJK No.33 / POJK.04 / 2014 on the

Board of Directors and Board of Commissioners of

Issuers or Public Companies, explained that at least

the number of members of the board of

commissioners consists of two members, one is an

independent commissioner.

Based on the research of Jensen (1993) statedthat

the size of the smaller board of commissioners will be

more effective in carrying out supervisory functions.

As for Yermack (1996) stating that the size of the

smaller board of commisioners has a higher corporate

value in the public eye. The assumption that the

number of boards of commissioners which tend to be

more able to conduct supervision properly, because

the smaller board could perform the maximum

supervision and can be free from free rider.

However, there are other studies argue that

themore of the board of commissioners members are

much better than the small size of the board of

commissioners. Dalton et al. (1999) suggests that

more board sizes allow for better relationships with

the environment and the experts on boards..

2.2.4 Board Competence

Furthermore, an important aspect in performing

the duties as a supervisor of corporate performance is

the competence of the board of commissioners.

KNKG (2006) sets out the requirements for the board

of commissioners by having integrity and capability

that qualified to perform the task effectively and

efficiently.

So the board of commissioners are required to

have knowledge of the company’s business. As well

as the experience the board of commissioners is very

important in carrying out supervision and provide

insert in the actions of the management to remain in

the company and shareholders objectives.

Various research has a lot to connect between the

effectiveness of the board of commissioners with

various research subjects. In good governance

mechanism, the board of commissioners has an

important role that can affect the performance of the

company. It is said that the board of commissioners

who perform their functions effectively can prevent

management actions that harm the company. Harjoto

and Jo (2011) argue that effective governance

mechanisms including independent board members

can encourage CSR engagement, thereby helping to

reduce conflicts between firms and stakeholders and

positively affect corporate value.

Based on Hermawan's (2011) study in accordance

with Zhou and Chen (2004) the effectiveness of the

board is influenced by several characteristics, such as

board independence, board activity, board size, and

board competence. With the effectiveness of the

board of commissioners is expected to be able to

supervise the company's performance so that the

results obtained by the company can benefit various

parties.

The more effective the performance of the board

of commissioners in carrying out its duties is as a

supervisor of management policies, and provide

advice to the board of directors of the company's

performance is expected to be better. In line with the

agency theory that companies that have better

governance and management perspectives are more

in line with shareholders. So the role of effectiveness

of the board of commissioners in overseeing is said to

improve corporate governance, so as to increase the

likelihood of a change of CEO. Hence hypothesis 2 is

formulated as follows:

H2a: The effectiveness of the board of

commissioners increases the probability of a

CEO turnover

2.3 Women on The Board of

Commissioners

Women's involvement in decision-making in

management can result in more creative and

innovative decisions, so that action can encourage

women to reach positions on the board. This is stated

by Bruke (1994) on increasing the number of women

members on the board. In addition, Burke (1997)

showed positive results from women participation on

the board, that there is a positive impact that women

employees feel more motivated to work and more

sensitive to women employee issues.

Correspondingly, Burgess and Tharenou (2002)

argue that more homogeneous boards make the same

SEABC 2018 - 4th Sriwijaya Economics, Accounting, and Business Conference

decisions. However, the more diverse boards tend to

minimize errors.

The diversity of members of the board of

commissioners with the presence of women said can

increase the board effectiveness and corporate

governance (Adams and Ferreira, 2009).

Theoretically confirms that the composition of the

board of commissioners is an important factor in

contributing to the effectiveness of corporate

performance. The greater diversity of board members

is able to improve the ability of companies to

understand the needs and interests of different

stakeholder groups (Harjoto et al., 2015). Board of

commissioners requires the best strategy to align

interests, and to manage potential conflicts among

stakeholders. Based on existing research, the

influence of gender diversity of the board of

commissioners can help the selection of appropriate

decisions for the company.

With the existence of a diversity of women

especially in the board of commissioners is expected

to trigger the optimal company's performance. It is

also said the diversity of board members can increase

the efficiency of corporate performance, so corporate

governance is expected to increase and the likehood

of CEO turnover increased. So the third hypothesis

that can be concluded is:

H3a: Women on the board of commissioners

increases the probability of a CEO turnover.

3 METHODOLOGY

The sample of this study is the entire company

listed on the Indonesia Stock Exchange (BEI) during

the year of 2012 until 2016 based on the following

criteria such as companies are not in the financial

industry, publish annual report year 2012-2016,

disclose CSR activities in annual reports, and there

was a changes of CEO in 2013-2016.

This research used binary response regression

model that is logit which is an adaptation model used

by Cooper (2017). In addition, there are modifications

to some of the variables used during the study. The

regression equation that will be used to test H1a, H2a,

and H3athatsis as follows:

Pr(𝑁𝐸𝑊)

𝑖𝑡

= 𝛽

+ 𝛽

𝐶𝑆𝑅𝑃

𝑖t−1

+ 𝛽

𝐵𝑂𝐶𝑆𝐶𝑂𝑅𝐸

𝑖t−1

+ 𝛽

𝐵𝑂𝐶𝑊𝑂𝑀

𝑖𝑡−1

+ 𝛽

𝑆𝐼𝑍𝐸

𝑖𝑡−1

+ 𝛽

𝐿𝐸𝑉

𝑖𝑡−1

+ 𝛽

𝑅𝑂𝐴

𝑖𝑡−1

+ 𝛽

𝐺𝑅𝑂𝑊𝑇𝐻𝐴𝑆𝑆

𝑖𝑡−1

+ 𝛽

𝐴𝐺𝐸

𝑖𝑡−1

+ ℯ

𝑖𝑡−1 (1)

So in this study the independent variables

measured by the company's performance years before

the turn of the CEO. Where Pr(NEW)it is probability

of CEO turnover at the time; CSRP

it-1

is score

previous year’s to measure the CSR performance;

BOCSCORE

it-1

is dummy variable with value 1 if the

board of commissioners effectiveness score in

previous year is greater than equal; BOCWOM

it-1

score that measure proportionally of women on board

of commissioner; SIZE

it-1

is measured as the log of

total assets; LEV

it-1

is measured as total debt divided

by total assets; ROA

it-1

as the measure of firm

profitability; GROWTHASS

it-1

is measured as the

changes of total assets that owned by the firm from

the previous year. AGE

it-1

is the number of years the

company is active since IPO.

The score for CSR performance is computed

based on checklist of certain characteristic factors to

assess the performance through content analysis. The

check list was compiled with reference to a list of

question prepared by MSCI ESG. There are seven

different categories, including community, diversity,

employee relations, environment, product, corporate

governance and human rights. For each category,

MSCI ESG conducts an objective assessment of the

company's positive performance indicators

(strengths) and negative indicators (concerns). The

assessment of CSR performance this study refers to

previous studies by using five indicators. Both

Cooper (2017), Rekker et al., (2013) and Greening

and Turban (2000) measure the CSR performance

using the KLD database but exclude corporate

governance and human rights indicators. The

performance of CSR for each company is assessed by

give 1 if the category is positive and -1 if the category

is negative. If the company does not meet the

assessment criteria specified for the indicator, then it

is assigned a value of 0.

Measured the board of commissioners

effectiveness by using the assessment method made

by Hermawan (2011) with modification, using a

checklist consisting of four indicators: independence,

number of members, activities, and competencies

board of commissioners. In the indicator contains

several questionnaires that have been prepared by

Hermawan (2011) with three judgments, among

others good, fair, and poor. The value obtained will

be accumulated in its entirety and divided by the

maximum total value that can be obtained for each

sample in order to test the validity of each question.

So that result value with scale 0 to 1, with max value

that is 1.

The measurement of the gender composition of

the board of commissioners is by looking at the

The Effect of Corporate Social Responsibility Performance, Board of Commissioners Effectiveness, and Women on The Board of

Commissioners Towards CEO Turnover

members of the board of commissioners that stated on

the company profile in the annual report. Lazzaretti et

al. (2013) and Alfraih (2017) measures composition

of women on the board by assigning a score of 1 if

there are female members and 0 if there are no female

members in the board of commissioners. However, in

this study the measurement using the proportion of

women divided by the number of existing board of

commissioners.

CEO turnover as a dependent variable is measured

by obtained from the company's annual financial

statements and or by comparing the names of CEOs

in two consecutive years according to Indonesian

Capital Market Directory (ICMD) and annual reports

(Adiasih and Kusuma, 2011; Setiawan et al., 2017).

The CEO turnover is considered to happened if the

name of the CEO is listed differently. Because of the

information usually do not contained in the GMS for

the CEO's turnover, this study defines that category

of successor happens when the CEO's tenur has not

been due to, not relected after one period, and the

CEO resigns. The turnover of information retrieved

from both the AGM or EGM.

4 RESULTS AND DISCUSSION

Based on sample criteria as described above, the

sample for this study is 168 companies, which

consists of 84which experienced CEOs turnover, after

that it’s done peer sampling to adjust the sample with

the same size of firms.

In table 1 presented information about descriptive

statistics on research observation. Before performing

data processing, data that has been compiled is

identified in advance to know the existence of data

outliers. To overcome the data outliers this study

gives upper limit and lower limit using winsorizing.

The identified data affected by the outliers will be

replaced by the largest or smallest value limits of the

observed values within the ± 3x standard deviation

range.

Table 1: Descriptive Statistics

Variable

Min

Max

Mean

Std.D

Pr(NEW)

0.5

0.501

CSRP

10.297

3.990

BOCSCORE

0.568

0.941

0.732

0.073

BOCWOM

0.667

0.087

0.148

SIZE

25.324

32.487

29.004

1.474

LEV

0.001

0.794

0.304

0.184

ROA

-0.374

0.608

0.032

0.114

GROWTHASS

-0.299

1.416

0.201

0.314

AGE

0.487

32.794

13.773

8.430

CSR performance generally stated by companies

in the annual report has an average value of 10.29.

This shows that CSR performance in some companies

is quite good. While the minimum value obtained

from the observation is 2 while the maximum value is

24. The proportion of two men on the board of

commissioners shows a maximum value of 0.667 and

a minimum value of 0 because there are companies

that do not have a board of commissioners who are

female.

Tabel 2: Logit Regression Test Results

Variable

Coef

P│z│

CSRP

-0.0024

-0.05

0.4795

BOCSCORE

4.4168

1.77

0.0385**

BOCWOM

-1.2526

-1.09

0.1375

SIZE

-0.0652

-0.52

0.3025

LEV

-0.6146

-0.63

0.2645

ROA

-4.0339

-2.33

0.01**

GROWTHASS

0.9558

1.68

0.0465**

AGE

0.0622

2.94

0.0015***

168

LR chi2 (8)

16.73

Prob > chi2

0.033

Pseudo R2

0.0718

*** Significant at α 1% (one tail)

** Significant at α 5% (one tail)

* Significant at a α 10% (one tail)

The logistic regression test resulted are reported

in Table 2. The result found that the higher the

performance of CSR will lower the company's

chances for CEO turnover. This is indicated by the

value of odds ratio of 0.99 and z -0.05 which is

defined as if there is an increase in CSR performance

then the decrease in the incidence of CEO turnover of

0.99 times. While P│z value is not significant

because it exceeds the significant level of 10%. So on

the basis of the first alternative hypothesis (H1a) in

this study is unacceptable or unproven. The results of

this study contrasted with the research of Cooper

(2017) which in his research showed that there is a

positive relationship to the change of CEO at a

significant level of 1%.

This study gives different results from previous

studies. Where the performance of CSR has a

negative direction value of -0.0024. Thus, this study

SEABC 2018 - 4th Sriwijaya Economics, Accounting, and Business Conference

tends to support entrenchment theory (Cespa and

Cestone, 2007; Martinez-Ferrero and Garcia-

Sanchez, 2015) where CSR performance is used as

management or managerial management protection if

firm performance decreases and minimizes the

chances of CEO shift. The performance of CSR in

this study cannot be a factor that led to the

replacement of company CEO.

In addition, there is no much difference between

CSR performance for companies that make a change

of CEO with no turnover. Overall the value of CSRP

is homogeneous and when assessed CSRP found that

many companies do not clearly stated CSR that has

been done in the annual report. Such as the

responsibility of the company environment in the use

of technology or waste.

The board of commissioners effectiveness in this

study found that with more effective performance or

an increase the board of commissioners effectiveness

it will increase the chances of a CEO turnover. The

opportunity is marked by a significant positive

relationship at the 5% level of 0.0385. So the second

alternative hypothesis (H2a) of this study is accepted.

This is in line with Harjoto and Jo (2011) stating that

effective governance mechanisms are capable of

performing well supervisory functions of

management activities.

With the board of commissioners effectiveness is

expected to be able to supervise the company's

performance so that companies can achieve corporate

objectives and maximize the desires of stakeholders.

In addition, if the board of commissioners perform its

functions effectively it can prevent fraudulent acts

(Hermawan, 2011).

The presence of women in the board of

commissioners is expected to improve the

performance of the board of commissioners and

corporate governance with its participation in

supervision. However, the results of this study

indicate that if the proportion of women in the board

of commissioners increases then will decrease the

chances of a change of CEO. The test results proved

to be insignificant at 0.275 which exceeded the

significant limit at the 10% level. So the third

alternative hypothesis (H3a) is not proven or not

accepted. This is inversely related to Adams and

Ferreira (2009) and Gul et al. (2012) which stated that

a high female composition can improve corporate

governance, thus increasing the chances of CEO

turnover.

Whereas the control variables there are three

variables that have a significant influence on CEO

turnover. The ROA variable has a significance level

of 5% as expected, the previous year’s performance

negatively impacts CEO turnover. The

GROWTHASS variable has a significant value of

0.0465 which means it is at the 5% level. Then the

AGE variable is at a significant level of 1% where the

value obtained is 0.0015. The SIZE and LEV

variables do not affect CEO turnover because the

significance value obtained exceeds 10% that is equal

to 0.3025 and 0.2645.

5 CONCLUSION

This study examines the relationship of CSR

performance, board of commissioners effectiveness,

and women on the board of commissioners towards

the CEO turnover. The main purpose of this study is

to provide an overview of CEO turnover in Indonesia

based on these three factors. The research model

refers to Cooper research (2017) with the

modification of the effectiveness and women on

board of commissioners. This research method used

logit regression as previous research using

unbalanced panel data of 168 in 2013-2016. In

accordance with the results of testing and analysis

concluded several conclusion.

First, the study covers 2012-2016, since CEO

turnover is calculated starting in 2013 and testing data

using the previous year. Most CEO turnover occurs

in 2013 and 2016 with the same number of 24

companies. While the lowest CEO turnover occurred

in 2014 of 17 companies. Regarding the change of

CEO of this study assess the criteria that have been

set at the beginning of the turnover occurs if the tenur

has not been due to, not elected CEO in the second

period with assumptions due to performance during

the tenure.

Second, based on the logistic regression this study

finds that only the board of commissioners

effectiveness has a significant effect on the turn of the

CEO with the possibility of occurring as many as 82

times. While the other two factors are the

performance of CSR and women on board of

commissioner not proven can influence the turn of

CEO. This is inversely proportional to previous

research. CSR performance is predicted to reduce

CEO turnover of 0.99 times while the female gender

composition of board of commissioners able to

reduce the turnover of CEO by 0.28 times. If further

investigated this insignificance occurring due to

similarities in CSR performance of companies in

Indonesia between companies that are experiencing

the CEO turnover with companies that do not

experience.

The Effect of Corporate Social Responsibility Performance, Board of Commissioners Effectiveness, and Women on The Board of

Commissioners Towards CEO Turnover

There are some implications of this study which

found the company with tenure CEO has been re-

appointed for many years. It should be a company

regulations thats runs maximum the tenur of the CEO,

so there is no CEO who is served too long in the

company. For investors, the choice to invest can be

seen both from the CSR performance, board of

commissioners performance, and the financial

performance of the company. The government should

make regulation standards about CSR companies that

discuss what things need to be implemented by the

company in detail. Then the rules on the CEO's tenur

need to be reaffirmed as there are companies that have

not changed the CEO since a long time ago.

In this study have several limitations in testing

that need to be refined in subsequent research. First

this study only uses a sample of companies

experiencing a change of CEO based on criteria if the

tenur has not been due to, and not elected CEO in the

second period. So the data collected is limited. In

addition, this study did not use the changed CEO

gender. Second, measured CSR performance is

difficult to do because in Indonesia there is no

institution that provides performance data of CSR

such as KLD Stats so that research on CSR uses

content analysis on secondary data. Third, In

matching companies that do not experience the CEO

turnover is done based on category of company

sectors that experienced a turnover and measured

with an equivalent company value.

Further studies are expected to use the overall

CEO turn of either voluntary or forced turnover. So

the results of the research can ensure the impact of

CSR performance on the turn of the CEO. To conduct

an assessment of CSR performance should use

indicators that have been tested that the resulting

value is able to reflect the company's actual CSR

performance. Further research can use other variables

that are able to predict the turn of the CEO in addition

to the effectiveness and gender composition of the

board of commissioners. Future research may use the

CEO's gender criteria that served as Cooper's study

(2017).

REFERENCES

Adams, R. and Ferreira, D. (2009), “Women in the

boardroom and their impact on governance and

performance”, Journal of Financial Economics, Vol. 94

No. 2, pp. 291-309.

Adiasih, P. And Kusuma, I. W. (2011), “Manjemen laba

pada saat pergantian CEO (dirut) di Indonesia”, Jurnal

Akuntansi dan Keuangan, Vol. 13 No. 2, pp. 67-79.

Alfraih, M.M. (2017) "Choosing an external auditor: does

the composition of boards of directors matter?",

International Journal of Law and Management, Vol. 59

Issue: 3, pp.394-412.

Anderson, R. and David. M. Reeb. (2003), ‘‘Founding

Family Ownership and Firm Performance: Evidence

from the S&P 500’’, Journal of Finance 58(3), 1301–

1327

Brown, D. and Anastasopoulos, V. (2002), Women on

Boards: Not Just the Right Thing But the “Bright”

Thing, The Conference Board of Canada, Ottawa.

Braun, P. (2010). Going green: Women entrepreneurs

and the environment. International Journal of Gender

and Entrepreneurship, 2, 245–259.

Burke, R.J. (1994), “Women on corporate board of

directors: views of Canadian chief executive officer”,

Women in Management Review, Vol. 9 No. 5, pp. 3-

10.

Burke, R.J. (1997), “Women on corporate board of

directors: a needed resource”, Journal of Business

Ethics, Vol. 9 No. 16, pp. 909-15.

Cai, Y., Jo, H. and Pan, C. (2011), “Vice or virtue? The

impact of corporate social responsibility on executive

compensation”, Journal of Business Ethics, Vol. 104

No. 2, pp. 159-173.

Cespa, G. and Cestone, G. (2007), “Corporate social

responsibility and managerial entrenchment”, Journal

of Economics and Management Strategy, Vol. 16 No.

3, pp. 741-771.

Cooper (2017) Elizabeth Cooper, (2017) "Corporate social

responsibility, gender, and CEO turnover", Managerial

Finance, Vol. 43 Issue: 5, pp.528-544.

Dalton, D. R., C.M. Daily, J.L. Johnson, and A.E. Ellstrand.

(1999), “Number of Directors and Financial

Performance: A Meta Analysis.” Academy of

Management Journal 42, pp. 674-686

Dikolli, S., Mayew, W. and Nanda, D. (2014), “CEO tenure

and the performance-turnover relation”, Review of

Accounting Studies, Vol. 19 No. 1, pp. 281-327.

Ellis, K.M. and Keys, P.Y. (2003), “Stock returns and the

promotion of workforce diversity”, working paper,

University of Delaware.

Fiordelisi, F. and Ricci, O. (2014), “Corporate culture and

CEO turnover”, Journal of Corporate Finance, Vol. 28

No. 10, pp. 66-82.

Greening, D. and Turban, D. (2000), “Corporate social

performance as a competitive advantage in attracting a

quality workforce”, Business and Society, Vol. 3, pp.

254-80.

Harjoto, M. and Jo, H. (2011), “Corporate governance and

CSR Nexus”, Journal of Business Ethics, Vol. 100 No.

1, pp. 45-67.

Harjoto, M. And Laksmana, I. (2015), “Board diversity and

corporate social responsibility”, Journal Business

Ethics, 132, pp. 641-660.

Hazarika, Sonali, Jonathan M. Karpoff, Rajarishi Nahata

(2009), Earnings Management and Forced CEO

Turnover: Empirical Evidence. Working Paper, New

York University.

SEABC 2018 - 4th Sriwijaya Economics, Accounting, and Business Conference

Hermawan, A.A. (2011). The Influence of Effective Board

of Commisioners and Audit Committee on The

Informativeness of Earnings: Evidence From

Indonesian Listed Firms. Asia Pacific Journal of

Accounting dan Finanace, Vol 2.

Intenational Finance Corporation. (2014), “The Indonesia

Corporate Governance Manual”, First Edition. Jakarta,

Indonesia.

Ittonen, K., Miettinen, J. and Vähämaa, S. (2010), “Does

female representation on audit committees affect audit

fees?”, Quarterly Journal of Finance and Accounting,

Vol. 49 Nos 3/4, pp. 113-139.

Jensen, M. and Meckling, W.H. (1976), “Theory of the

firm: managerial behaviour, agency costs and

ownership structure”, Journal of Financial Economics,

Vol. 3 No. 4, pp. 305-360.

Komite Nasional Kebijakan Governance. (2006),

“Pedoman umum good corporate governance

Indonesia”, Jakarta, Indonesia

Lazzaretti, K., Godoi, C.K., Camilo, S.P.O., Marcon, R.H.

(2013), “Gender diversity in the boards of directors of

Brazilian businesses’, Gender in Management: An

International Journal, Vo. 28 No. 2, pp. 94-110.

Lindrianasari dan Hartono (2013) Lindrianasari, Jogiyanto

Hartono, Supriyadi and Setiyono Miharjo. Change of

company ownership, CEO turnover and the origin of

CEO: case from Indonesia. J. Global Business

Advancement, Vol. 6, No. 1, 2013

Mensi-Klarbach, H. (2014) "Gender in top management

research: Towards a comprehensive research

framework", Management Research Review, Vol. 37

Issue: 6, pp.538-552

POJK No.33/POJK.04/2014. The Board Of Directors And

The Board Of Commissioners Of Issuers Or Public

Companies.

Rekker, S.A.C., Benson, K. and Faff, R. (2014), “Corporate

social responsibility and CEO compensation revisited:

do disaggregation, market stress, gender matter?”,

Journal of Economics and Business, Vol. 72,

March/April, pp. 84-103.

Setiawan, D., Phua, L. K., & Chee, H. K., Trinugroho, I.

(2017). CEO Turnover and Firm Performance In

Indonesia. Indonesian Capital Market Review 9 1-10.

Vafeas, Nikos. (1999), “Board Meeting Frequency and

Firm Performance.” Journal of Financial Economics

53, pp. 113-142.

World Business Council for Sustainable Development,

(2002). Corporate Social Responsibility: Making Good

Business Sense. World Business Council for

Sustainable Development: Geneva.

Yermack, David. (1996), “Higher Market Valuation of

Companies With A Small Board of Directors.” Journal

of Financial Economics 40, pp. 185-211.

The Effect of Corporate Social Responsibility Performance, Board of Commissioners Effectiveness, and Women on The Board of

Commissioners Towards CEO Turnover