Board Governance, Business Ethics, and Firm Social Responsibility Disclosure

This paper wants to investigate the impact of board control on social responsibility disclosure. The duration of this study covers three years, i.e., from 2014 until 2016. The population is from public manufacturing companies in Indonesia, and the samples are taken by a simple random sampling method. To analyze the data, the regression model gets used. This research concludes that a positive influence of the supervising board size and the woman portion in this board on the firm social responsibility disclosure is available. Also, business ethics positively affect it.


INTRODUCTION
According to the stakeholder theory, firms exist to achieve their fund provider interests (stockholders and creditors) and other parties, such as the society around the firms (Ghozali & Chariri, 2007). Firms with social responsibility will obtain some benefits. They are the increase in market share, the product brand image, and investor magnetism in the capital market (Kotler & Lee, 2005).
The firms realize that to get attention from the investors related to this social responsibility issue, they have to use their governance devices. One of them gets associated with the role of supervising board (Said, Zainuddin, & Haron, 2009;Fernandez-Feijoo, Romero, & Ruiz, 2012;Setó-Pamies, 2013;Zhang, Zhu, & Dong, 2013;Giannarakis, 2014;Lone, Ali, & Khan, 2016;Nassem, Riaz, Rehman, Ikram, & Malik, 2017;Issa & Fang, 2019;Qa'dan & Suwaidan, 2019). This role is reflected by the supervising board size [see Said et al. (2009) Fauzan (2011) states the ethical business consideration becomes a motive for the firms to be responsible for society. As declared by Singh & Prasad (2017), the codes of conduct can be that measurement. However, the research investigating the relationship between ethics measured by these codes and firm social responsibility is infrequent. This situation inspires this study to use business ethics as one of the determinants of company social responsibility besides the supervising board size and female portion becoming this board in Indonesia's public manufacturing companies as an object.
The resource dependence theory explains that a sizeable supervising board number is needed to elevate the company performance because it contains many experts to handle the problems (Pfeffer, 1972). These experts must be having variety in their schooling and understanding of how to perform a responsibility for society (Adam, Almeida, & Ferreira, 2005). Therefore, the immense size of the supervisory board has a strong relationship with the increasing social responsibility, as shown by the study of Said et al. (2009), Lone et al. (2016, Nassem et al. (2017), as well as Qa'dan & Suwaidan (2019). Based on this explanation, we form hypothesis one in this manner. H1: The big supervising board size stimulates the company to perform societal responsibility.
The presence of women in the supervising board can induce the tendency to disclose more activities related to social responsibility (Bear, Rahman, & Post, 2010) because of their philanthropy (Ibrahim & Angelidis, 1994), distinctive leadership type, practiced involvement, various background (Issa & Fang, 2019). Unlike man, the woman implements her ethical standard more aggressively. She does not tolerate the practice of the opportunistic of managers; therefore, she can effectively increase the monitor on what the managers do, as illuminated by Luo, Xiang, & Huang (2017) H2: The large portion of the woman becoming a supervising board stimulates the firm to perform societal responsibility.

Business ethics and firm social responsibility
Business ethics and communal duty are essential to make firms sustainable in the future (Ferrell, Harrison, Ferrell, & Hair, 2019). Additionally, Fauzan (2011) explains that business ethics is the basis for the firm to realize social responsibility. To act ethically, the firm needs the codes of conduct (Singh & Prasad, 2017). The survey of Andjarwati & Budiadi (2008) on the entrepreneurs acting as the manager having a small business in the food industry demonstrates that business ethics positively affects the social firm duty. Similarly, Prasetyono (2011) finds a positive association when investigating public manufacturing firms' secretary perception in Indonesia. Based on this explanation, we form hypothesis three in this manner. H3: Business ethics stimulates the firm to perform societal responsibility.

The Variables in This Study
This study has five variables. One of them, the firm social responsibility, functions as an explained variable. The rest, consisting of board governance, business ethics, and company size, performs as an explaining variable. a.
To measure the firm social responsibility disclosure (CSRD), we follow the way utilized by Qa'dan & Suwaidan (2019). Their research uses 42 required items based on GRI version 4, classified into four information: environment, human resources, communal participation, the goods-and-services given to customers. Furthermore, they divide the total existing items by 42 to measure the disclosure ratio. b.
We measure the board governance by the supervising board size ( c. To measure business ethics, we use total conduct codes (CC) disclosed by the firms by denoting Singh & Prasard (2017). To make the value proportional, we divide the sum of firm statements by the largest number of one firm becoming the sample (see equation 1).

Method to grab the sample
The >.>? = 56.32 ≈ 56 firms. Furthermore, we work with a simple random sampling method. After grabbing samples, the names of firms are in Appendix 1.

Descriptive Statistics
This research has 168 observations, i.e., 56 firms multiplied by three years. Furthermore, the descriptive statistics for all variables can be looked at in Table 1. From the statistical hypothesis testing, it can be inferred some evidence as follows. Firstly, the big supervising board size can stimulate the company to perform societal responsibility. The people becoming the supervisory board are so smart that they can think of the activities needed to serve the firm community obligation. To execute these activities, they need to communicate with top managers. Therefore, these events can be announced in its annual report. Thus, this study confirms the study of Said et al. (2009), Lone et al. (2016, Nassem et al. (2017), and Qa'dan & Suwaidan (2019).
Secondly, the large portion of the woman becoming a supervising board can stimulate the firm to perform societal responsibility. This situation shows that the females, with her high humanity, can elevate many good relationships with the stakeholders and concern for the community around the firms. Therefore, this study verifies the study of Fernandez-Feijoo et al. (2012), Setó-Pamies (2013), Zhang et al. (2013), Lone et al. (2016), and Issa & Fang (2019).
Thirdly, business ethics can stimulate the firm to perform societal responsibility. In this research, we use the firm codes of conduct to measure business ethics. These codes are useful as the guidance that managers and employees have to obey and proven as a good proxy because of a positive impact. Therefore, the other researchers can use it in their further investigation. By only considering the positive effect, without the measurement, this study affirms the study of Andjarwati & Budiadi (2008) and Prasetyono (2011).
By referring to the discussion, this study suggests that firms should have a giant supervising board, not above 13 (see the maximum number of SBS in Table 1), by considering the company size. Besides, the company controlling shareholders can place more females on the supervising board because they care about society. Additionally, the employees and managers must implement the codes of conduct to reflect their care to the community.

IV. Conclusion
This research goal is to investigate the influence of the supervising board size, the woman portion in this board, and business ethics on social responsibility disclosure. By utilizing the years 2014, 2015, and 2016 as time observation, 56 manufacturing companies as the sample from the capital market of Indonesia, and the regression model to analyze the data, this study summarizes some evidence. 1. The big supervising board size can stimulate the company to perform societal responsibility.

2.
The large portion of the woman becoming a supervising board can stimulate the firm to perform societal responsibility.

3.
Business ethics can stimulate the firm to perform societal responsibility.
This study has some boundaries, like the short duration: three years, the utilization of one industry: manufacturing, and the number of determining factors. This situation provides the chance for the next academics to improve them. Firstly, they can add the years as the time observation to be longer, for instance, five or ten years. Secondly, they can occupy firms from non-financial industries so that the conclusion can be extended. Finally, they can augment the determinants by utilizing the outside supervisory board portion, the total audit committee members and board summits, the domestic and foreign institutional possession, managerial ownership, profitability, and leverage.