Corporate Philanthropy Disclosure of State-Owned Enterprises in Indonesia

Agung Nur Probohudono,Raja Adzrin Raja Ahmad,Indra Kristianto Pambudi,Nur Chayati

doi:10.28992/ijsam.v4i2.185

Abstract

Corporate philanthropy is becoming big in businesses and a major strategic issue for firms as they actively aim to be socially responsible organizations. This study aims to measure the extent of corporate philanthropy disclosure (CPD) and the impacts of foreign ownership, managerial ownership, the proportion of independent directors, and company size on CPD in annual reports of state-owned enterprises (SOEs) in Indonesia. The level of CPD in this study was measured using an index adapted from earlier research and regulation. Annual reports of 153 SOEs for 2010–2012 were examined to measure the extent of CPD and investigate its potential determinant factors. Study results indicate that company size has a significant positive effect on CPD and managerial ownership has a moderate effect. In addition, the results also show that the control variable, public company (Perum), has a significant effect on CPD in SOEs in Indonesia. The average CPD rate is only 63.00%, which indicates that CPD has been commonly disclosed in annual reports. The findings regarding corporate philanthropy in annual reports should be a concern to regulatory authorities and standard-setters in Indonesia.

Highlights

Earlier research studies interpret that there exists belief that ethical business cultures contribute to long-term business prospect that can build positive moral capital (Eger et al, 2019)
This study aims to measure the extent of corporate philanthropy disclosure (CPD) and the impacts of foreign ownership, managerial ownership, the proportion of independent directors, and company size on corporate philanthropy practices in annual reports of state-owned enterprises (SOEs) in Indonesia
This study indicates that the level of CPD of Indonesian SOEs is high with an average of 63% (10 items) and a maximum of 93.75% disclosure

Summary

Introduction

Earlier research studies interpret that there exists belief that ethical business cultures contribute to long-term business prospect that can build positive moral capital (Eger et al, 2019) This action reflects on corporations’ investment in philanthropic projects, which establish a connection between the top of the pyramid of corporate social responsibility and wider stakeholder interests (Carroll & Shabana, 2010; Ismail, 2009). Gao et al (2017) argue that corporate philanthropy is a dominant corporate response to social needs Charitable programs, such as education, the arts, health care, and disaster relief (Godfrey, 2005; Wang & Qian, 2011), have received much attention from business academia during the past few decades. Earlier research studies indicate that the reporting of corporate charitable donations has received very limited attention in the academic literature (Campbell & Slack, 2008; Griffin & Mahon, 1997; Peloza, 2009)

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