Abstract
Research Aims: this study aims to examine the relationship between corporate social responsibility (CSR) engagement and firm value, with a focus on LQ45 companies listed consecutively on the Indonesia Stock Exchange from 2018 to 2022. Additionally, it investigates the moderating role of profitability in this relationship. Design/ methodology/ approach: The study employs panel data analysis using financial data from LQ45 companies over a five-year period (2018–2022). CSR, leverage, liquidity, profitability, and firm value are measured and analyzed to evaluate direct and moderating effects. Research Findings: CSR does not significantly enhance firm value, and in some cases, it negatively affects it, suggesting that the costs associated with CSR may outweigh its benefits in markets where short-term financial performance is prioritized. Regarding the moderating role of profitability in the CSR-firm value relationship; the results indicate no significant moderating effect. Despite this, the inclusion of profitability in the model improves explanatory power, highlighting the complexity of the CSR-profitability-firm value relationship. Theoretical Contribution/ Originality: These findings challenge shareholder theory, particularly in developing markets, where CSR may be perceived as a non-value-adding expense. Firms in such markets should consider CSR strategies to local conditions and prioritize financial sustainability. Future research should explore external factors, such as stakeholder perceptions and regulatory environments, that influence CSR effectiveness.
Published Version
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