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The Influence of Regulation and Financial Performance on The Disclosure of Corporate Social Responsibility and Corporate Reputation Moderated by Ownership Structure

Author

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  • Median Wilestari

    (Economic and Business Faculty, As-Syafi'iyah Islamic University, Indonesia Author-2-Name: Akhmad Syakhroza Author-2-Workplace-Name: Indonesia University, Jakarta, Indonesia Author-3-Name: Chaerul D. Djakman Author-3-Workplace-Name: Indonesia University, Jakarta, Indonesia Author-4-Name: Vera Diyanty Author-4-Workplace-Name: Indonesia University, Jakarta, Indonesia Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

Objective - A study by Ernst and Young (2010) found that 84% of public companies believed that Corporate Social Responsibility (CSR) was an activity that had a positive impact on companies. However, only 11% of those companies disclosed their CSR in their annual reports. This article presents the findings of a study examining the effect of CSR regulation and corporate financial performance, as measured by corporate liquidity, profitability, leverage and firm value, on the disclosure level of the CSR of public companies in Indonesia, and its impact on corporate reputation. Methodology/Technique - Hypothesis tests with multiple regression were used with nonfinancial corporate categories listed on the Indonesian Stock Exchange between 2010 to 2018. Purposive sampling was used, with results from 217 sampled companies and 1953 datasets used in the model.Findings - The study reveals that there is a significant difference in the CSR disclosure of all corporate categories after the regulation of CSR was enacted as a mandatory in 2012. Financial performance measured through Cash Flow from Operations (CFO) and Debt to Equity Ratio (DER) had a positive significant influence on CSR disclosure. However, Return on Assets (ROA) and firm value have no influence. Family ownership as a moderating variable had a negative influence and weakened the association between CFO and CSR disclosure, whereas foreign ownership as a moderating variable had a negative influence and weakened the association between ROA and CSR disclosure. CSR disclosure had a positive influence on corporate reputation from the stakeholders' perception in terms of awards received by the company and the individual stock price index as an alternative measurement for reputation.Novelty - The impact of CSR disclosure on corporate reputation was analysed based on the alternative measurement of reputation. Ownership structure consisting of family ownership and foreign ownership were taken as the moderating variables in the correlation between financial performance and the disclosure of CSR.Type of Paper - Empirical.

Suggested Citation

  • Median Wilestari, 2021. "The Influence of Regulation and Financial Performance on The Disclosure of Corporate Social Responsibility and Corporate Reputation Moderated by Ownership Structure," GATR Journals afr194, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:afr194
    DOI: https://doi.org/10.35609/afr.2021.5.4(2)
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate Social Responsibility; Regulation; Financial Performance; Moderation; Ownership Structure Corporate Reputation.;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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