Abstract
In today’s business environment, the maximization of shareholders wealth is not the only objective of a company. By engaging in the Corporate Social Responsibility (CSR) program, companies are also responsible for the interest of stakeholders and society at large. CSR disclosure is believed to improve financial performance. In State Owned Enterprises (SOE), however, the validity of this relationship has been called into question. In this paper, the main objective is to investigate the influence of CSR disclosure on financial performance in SOE. In relation to the measurement of financial performance, this study takes into account three indicators: Return on Equity (ROE), Earning Per Share (EPS), and Net Profit Margin (NPM). In this study, data from state owned enterprises, which were listed on the Indonesian Stock Exchange from the period of 2011 to 2015, were analyzed using simple regression method. The data used in this study took the form of financial and sustainability report issued by state owned enterprises. The results show that the disclosure of CSR has a significant positive effect on ROE. The CSR disclosure also has a significant positive effect on EPS. In contrast, the disclosure of CSR has no effect on NPM. In the context of State Owned Enterprises, the research demonstrates that there is positive relationship between CSR disclosure and financial performance. This paper contributes to our understanding of state owned enterprises in Indonesia; a research area which has to date been neglected by scholars.
Highlights
Dalam lingkungan bisnis saat ini, maksimalisasi kekayaan pemegang saham bukan satu-satunya tujuan perusahaan
Independent variables in this study are the disclosure of Corporate Social Responsbility (CSR) as measured by the Corporate
Because Chi-square probability value is greater than α = 5%, Ho is accepted so that it can be concluded that the model has no problem of heteroscedasticity
Summary
Independent variables in this study are the disclosure of CSR as measured by the Corporate. Social Responsibility Index (CSRI) by looking at the six performance indicators consisting of 91 indicators based on GRI version 4.0. Index obtained from the analysis of sustainable disclosure by the company. Six performance indicators contained in the GRI 4.0 which include Community consisting of 11 items; and 6) product responsibility consisting of 9 indicators. In determining the index of CSR in every company uses techniques based on tabulation checklist. CSR disclosure by giving a score of 0 and 1. Where the value 0 for items not disclosed and a value of 1 for the items disclosed by the company. If the company disclose CSR activities in full, the maximum value is achieved which is 91 items.
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