CSR and Profitability in IDX Agricultural Subsectors

Abstract

Abstract Purpose – The purpose of this study is to examine the effect of corporate social responsibility (CSR) on profitability in agricultural sector companies, especially the agricultural sub-sector in the Indonesia Stock Exchange (IDX). These sub-sectors are designated as one sub-plantation group with one value and another valuable sub-sector. This study uses secondary data of financial statements for the period 2015–2016 accessed on the following website: www.idx.co.id. Design/Methodology/Approach – The data analysis method used in this research, using dummy regression method with an independent variable, is called Corporate Social Responsibility (CSR); Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM) are used as dependent variables. Besides this, this study included a sub-sector variable in agricultural sector as a dummy variable. Findings – This study found that the ability to explain CSR is greater by the ROE on plantation companies. These findings indicate that CSR has a signal for investors when investing in capital markets. Research Limitations/Implications – This study had restrictiveness in model that was used only profitability ratio as an independent variable. This study also used during a two-year period. Alongside that, the next study is needed to search in other sectors by entering a sector variable as a dummy variable. Practical Implications – Implementation of CSR was a solution for company to repair organizational and financial performance. So, Properly Company Management uncertainly implement CSR on their environment. Originality/Value – All sub-sectors in agriculture in the IDX did not have different viewpoints for the implementation of a CSR program to their environment.