CORPORATE SOCIAL RESPONSIBILITY AND FINANCIAL PERFORMANCE: EVIDENCE FROM INDONESIAN BANKING SECTOR
Date
2018-01-04Author
Bidhari, Sandhika Cipta
Wardhanie, Ayouvi Poerna
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Show full item recordAbstract
Corporate social responsibility (CSR) has the potential to make positive contributions to the
development of society and businesses. Organizations are beginning to see the benefits from
setting up strategic CSR agendas. The increasing attention to CSR is based on its capability to
influence firm’s long term performance, especially financial performance. There are more
Indonesian companies participating in caring communities, and contributing to the community
with specific actions to publicize their CSR related activities. Previous empirical studies have
indicated an unclear relationship between CSR and financial performance. Most of studies
focuses on manufacturing sector, whereas many industry have indirect relevancy with CSR,
example banking sector. This study uses quantitative methods with positivism approach.
Research objects were 15 banking companies listed at Indonesia Stock Exchange based on
population criteria with observation period 2008-2011. This study uses secondary data derived
from annual reports and financial statements. Data analysis uses Path Analysis. Research
results show CSR affects on all financial performance measurement namely Return on Assets
(ROA) and Return on Equity (ROE). These results reinforce the accumulating body of
empirical support for the positive impact of CSR on financial performance. This research
implication is banking companies need to increase quality of CSR, both from implementation
dan information disclosure. This quality improvement provides an opportunity for company to
increase its profits primarily from financial side. CSR is a long-term investment that can give
an advantage if done consistently. CSR can be used to address interest conflicts among
stakeholders so firm value will interact positively. Good financial performance also
demonstrates good firm value.
Collections
- LSP-Conference Proceeding [1874]