Identifying Company’s Ethical Behavior to Its Stakeholders: The Role of Board of Directors

Company business ethics covers not only social and environmental responsibility, but also the maintenance of the company’s relationship and commitment to its stakeholders. This study aims to examine the effect of board of directors’ (BOD) characteristics on disclosure of company ethics-to-stakeholder. The samples of this study are shariah compliant companies listed at the Indonesian stock exchange. The study used content analysis to measure the level of ethics-to-stakeholders disclosure. Data analysis uses panel data regression and shows that board education has positive influence, while size, nationality diversity, and meeting frequency of BOD do not influence company’s ethics-to-stakeholder disclosure. However, the findings show the high level of disclosure which indicate that the sharia compliant companies concern with ethical behaviour to their stakeholders. Different stakeholders have different interests, and it is the duty of BOD to accommodate all the interests. Rights and obligations of each party should be stated clearly to ensure that the agreement is based on mutually beneficial relationship.