The association between corporate social responsibility disclosure of cigarette company and company’s financial performance

Amelia Desy Ratna Yuwita,Devi Sulistyo Kalanjati,Y.Y Abdul Talib,S Ishak,R.H Raja Mohd Ali,A Ahmi,D Abdul Kadir,M.H Mohd Sharif,F.H Rusly

doi:10.1051/shsconf/20173404004

Amelia Desy Ratna Yuwita, Devi Sulistyo Kalanjati + Show 7 more

Open Access

https://doi.org/10.1051/shsconf/20173404004

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Journal: SHS Web of Conferences	Publication Date: Jan 1, 2017
License type: cc-by

Affiliation: Airlangga University

Abstract

This research examines the association between Corporate Social Responsibility (CSR) disclosure and financial performances-Return on Assets (ROA), Return on Equity (ROE), and Stock Return-within the cigarette companies listed on Indonesian Stock Exchange. This research used 3 cigarettes companies; PT Gudang Garam Tbk., PT Hanjaya Mandala Sampoerna Tbk., and PT Bentoel Internasional Investama. Simple linear regression is used to examine the association between CSR disclosure and the cigarettes companies’ financial performance. The study reveals that the disclosure of CSR only has positive influences toward Return on Assets; yet, it does not correlate with the Return on Equity and Stock Return.

Highlights

According to Act No 40 2007 on Limited Liability Company (Perseroan Terbatas-PT) in Article 74 par (1), a company which conducts activities in the field and/or related to the natural resources is required to implement the Social and Environmental Responsibility
This study examines the relationship of Corporate Social Responsibility (CSR) disclosure and corporate performances; Return on Assets (ROA), Return on Equity (ROE), and Stock Returns in companies engaged in the tobacco sector which listed on the Indonesia Stock Exchange during 2007-2014
It means that the results indicate that the improvement of CSR information disclosure makes cigarettes companies has a chance to improve its management efficiency at using its assets to generate earnings (ROA), in a short term it will not affect their efficiency to generate profits from its shareholders investments in the company (ROE) nor affecting an investor’s decision to invest on them

Summary

Introduction

According to Act No 40 2007 on Limited Liability Company (Perseroan Terbatas-PT) in Article 74 par (1), a company which conducts activities in the field and/or related to the natural resources is required to implement the Social and Environmental Responsibility. This study examines the relationship of CSR disclosure and corporate performances; ROA, ROE, and Stock Returns in companies engaged in the tobacco sector which listed on the Indonesia Stock Exchange during 2007-2014. Cigarettes companies are choosen because they have been criticized a lot by the community in general, because of the direct impact of their products are considered to be adverse to the human health In this case, whether the disclosure of CSR has association with ROA, ROE and the stock return is important to be analyzed. The companies of the cigarette industry are playing two competing roles Being those whose main operating activities have a negative impact to social health but on the other side, their CSR activities are quite significant and well known in Indonesia. The main focus in this research is to examine the associations between the CSR activities and the company’s financial performance

Methodology

Findings

Conclusion