The effects of corporate social responsibility on financial performance on Indonesian public
listed tobacco companies
Volume 4, Issue 6 Siti Maimunah Yahya Senawat, Srihadi Winarningsih Zarkasyi, Ida Farida Abdul Gafur
Published online: 15 December 2018 Article Views: 33
Abstract
This research aims to examine the effect of Corporate Social Responsibility (CSR) information revealed in the company’s annual report on company financial performance. CSR is proxies in an independent variable which are Economy performance (X1), Environment Performance (X2) and Social Performance (X3). On the other hands, financial performance is proxies by four dependent variables, which are the Current Ratio (Y1), Debt Ratio (Y2), Net Profit Margin (Y3) and Return on Assets (Y4) on tobacco listed in Indonesia Stock Exchange. Research method used is panel data analysis using EViews 9 software. Purposive sampling is chosen, and three companies are used as the sample. Data used in this research is an annual financial report of tobacco sub-sector companies audited in the 2010-20117 period. Based on the examination report CSR can only explain one of four financial performance measurements, that is Debt Ratio around 62.6%. Meanwhile, for other financial performance measurements such as the Current Ratio, Net Profit Margin and Return on Asset, CSR has not explained. All and all it can be concluded that CSR activity cannot quite describe company’s financial performance. It can be seen through hypothesis testing result (test-F, test-t) as well as the measurement of data panel model goodness as in determination coefficient (R-Square). The findings are helpful for policymakers to improve the financial performance of the organizations.
References
Branco, M. C., & Rodrigues, L. L. (2008). Factors influencing social responsibility disclosure by portuguese companies. Journal of Business Ethics, 83(4), 685-701. doi:https://doi.org/10.1007/s10551-007-9658-z
Carroll, A. B., & Shabana, K. M. (2010). The business case for corporate social responsibility: A review of concepts, research and practice. International Journal of Management Reviews, 12(1), 85-105. doi:https://doi.org/10.1111/j.1468-2370.2009.00275.x
Dianita, M. (2015). Role of the internal auditor influence and good corporate governance in banking financial performance against state owned corporation. International Journal of Business and Administrative Studies, 1(4), 176- 179. doi:https://doi.org/10.20469/ijbas.10006-4
Fahmi, I. (2013). Organizational behavior theory, applications, and cases. Bandung, Indonesia: Alfabeta.
Fahmi, I. (2015). Strategy and application management. Bandung, Indonesia: Alfabeta.
Global Reporting Initiative. (2012). Public sector sustainability reporting. Retrieved from https://bit.ly/2Gc2wzM (accessed on 14 July, 2017)
Hang, H. T. T. (2015). The effect of capital structure on corporate performance: Evidence in Vietnam. International Journal of Business and Administrative Studies, 1(2), 68-77. doi:https://doi.org/10.20469/ijbas.10004-2
Ikatan Akuntan Indonesia. (1998). Financial accounting standards. Retrieved from https://bit.ly/2rcDQQL (accessed on 14 June, 2016)
Jennifer Ho, L.-C., & Taylor, M. E. (2007). An empirical analysis of triple bottom-line reporting and its determinants: Evidence from the United States and Japan. Journal of International Financial Management & Accounting, 18(2), 123-150. doi:https://doi.org/10.1111/j.1467-646x.2007.01010.x
Ketsiri, K., & Pajongwong, P. (2016). Knowledge and understanding of accountants toward rules for calculating net income for corporate income tax by section 65 ter in Thailand. International Journal of Business and Economic Affairs, 1(1), 67-73. doi:https://doi.org/10.24088/ijbea-2016-11009
Kotler, P., & Lee, N. (2008). Corporate social responsibility: Doing the most good for your company and your cause. John Wiley & Sons.
Mohamed, W. S., & Arafa, I. M. (2016). Investigating corporate social responsibility disclosure by banks from institutional theory perspective. Journal of Administrative and Business Studies, 2(6), 280-293. doi:https://doi.org/10.20474/jabs-2.6.3
Republic Indonesia. (2007). Limited liability law no. 40. Retrieved from https://bit.ly/2MDt4LF (accessed on 14 July, 2008)
Reverte, C. (2009). Determinants of corporate social responsibility disclosure ratings by Spanish listed firms. Journal of Business Ethics, 88(2), 351-366. doi:https://doi.org/10.1007/s10551-008-9968-9
Servaes, H., & Tamayo, A. (2013). The impact of corporate social responsibility on firm value: The role of customer awareness. Management Science, 59(5), 1045-1061. doi:https://doi.org/10.1287/mnsc.1120.1630
Velasques, M. (2012). Business ethics. New Jersey, NJ: Pearson.
Yoo, J., Lee, M. K., & Lee, W. S. (2016). Asymmetrical corporate responses to economic information: Applying the firm size effect. Journal of Administrative and Business Studies, 2(1), 29-34. doi:https://doi.org/10.20474/jabs-2.1.4
Yusuf, E. Z., Williams, L., & Yuwono, Y. (2007). Marketing management: Indonesian case study. Lembaga Manajemen Pusat Pengembangan Manajemen (PPM): Penerbit Pusat .
To Cite this article
Senawat, S. M. Y., Zarkasyi, S. W., & Gafur, I. F. A. (2018). The effects of corporate social responsibility on financial performance on Indonesian public listed tobacco companies. International Journal of Business and Administrative Studies, 4(6), 267-279. doi: https://dx.doi.org/10.20469/ijbas.4.10004-6
