Corporate social responsibility reporting of agriculture companies: evidence from Indonesia

Abstract

This research investigates the extent of corporate social responsibility (CSR) reporting of agriculture companies listed on the Indonesia Stock Exchange (IDX). Specifically, this research attempts to compare the level of CSR reporting before and after the issuance of The Capital Market and Financial Institution Supervisory Agency (Bapepam LK) Regulation No X.K.6 in 2012 related to the content of CSR disclosure in the corporate annual report. This research also examines company characteristics, which may influence the extent of corporate CSR reporting, namely, profitability and firms size. The annual report of 12 agriculture companies for three years (2011 to 2013) was used as a sample. The CSR reporting level was analyzed using content analysis based on an index under the Global Reporting Initiative (GRI) G3 sustainability framework. The index consists of voluntary and mandatory disclosure under the X.K.6 regulation. The paired-sample t-test indicates that the CSR disclosure level increased in 2012, immediately after the regulation issuance (significant at 5 per cent level). When this study categorizes the disclosure into mandatory and voluntary, the results suggest that both disclosures after the new rule are greater than those before the rule comes. These results indicate that the new rule’s issuance imposes companies to do more CSR activities, thereby improving the company’s annual report’s disclosure level. In terms of factors influencing CSR reporting, size positively influence CSR reporting in the agriculture industry. The result indicates that the larger the firm, the more resources available for the firm to do CSR activities reported in the company annual report.