Asia Pacific Journal of Business Review

Kyung Hee University Management Research Institute (경희대학교 경영연구원)
권호 표지
DOI QR코드

DOI QR Code

Dimensions of Corporate Social Responsibility and Market Performance: Evidence from the Indonesia Stock Exchange

  • Received : 2018.10.10
  • Accepted : 2019.02.27
  • Published : 2019.02.28
Download PDF
⟨ Previous Next ⟩

Abstract

This study aims to examine the relationship between certain dimensions of Corporate Social Responsibility (CSR) with market performance, measured by Tobin's Q, on companies within various industries in Indonesia. This study disaggregates CSR into 7 dimensions: environment, energy, occupational safety and health, employee, product, community, and general. Samples consisted of 385 companies listed on the Indonesia Stock Exchange (IDX) during 2007-2014. OLS analysis shows that CSR contributes greatly to the formation of market performance of consumer goods, agriculture, and miscellaneous industries. The dimensions of CSR contribute differently to the formation of Q ratios in different industries. We also found that there are differences in the speed of effect of several dimensions of CSR on the formation of market performance; some CSR dimensions give immediate effect while others are lagged.

Keywords

References

  1. Backhaus, K. B., Stone, B. A., & Heiner, K. (2002). Exploring the Relationship between Corporate Social Performance and Employer Attractiveness. Business & Society, 41, 292-318. https://doi.org/10.1177/0007650302041003003
  2. Brammer, S. & Millington, A. (2008). Does it pay to be different? An analysis of the relationship between corporate social and financial performance. Strategic Management Journal, 29(12), 1325-1343. https://doi.org/10.1002/smj.714
  3. Chen, L., Feldmann, A., Tang, O. (2015). The relationship between disclosures of corporate social performance and financial performance: Evidences from GRI reports in manufacturing industry. International Journal of Production Economics, 170, 445-456. https://doi.org/10.1016/j.ijpe.2015.04.004
  4. Feng, Z, Wang, M., Huangc, H. (2015). Equity Financing and Social Responsibility: Further International Evidence. The International Journal of Accounting, 50, 247-280. https://doi.org/10.1016/j.intacc.2015.07.005
  5. Garcia-Castro, R., Miguel A. Arino, M.A., Canela, M.A. (2010). Does social performance really lead to financial performance? Accounting for endogeneity. Journal of Business Ethics, 92(1), 107-126. https://doi.org/10.1007/s10551-009-0143-8
  6. Gilley, K.M., Worrell, D.L., Davidson III, W.N., El-Jelly, A. (2000). Corporate Environmental Initiatives and Anticipated Firm Performance: The Differential Effects of Process-Driven Versus Product-Driven Greening Initiatives. Journal of Management, 26(6), 1199-1216. https://doi.org/10.1177/014920630002600607
  7. Griffin, J. & Mahon, J. (1997). The Corporate Social Performance and Corporate Financial Performance debate: 25 Years of Incomparable Research. Business & Society, 36(1), 5-31. https://doi.org/10.1177/000765039703600102
  8. Hackston, D., Milne, M.J. (1996). Some determinants of social and environmental disclosures in New Zealand companies. Accounting, Auditing & Accountability Journal, 9(1), 77-108. https://doi.org/10.1108/09513579610109987
  9. Inoue, Y. & Lee, S. (2011). Effect of Different Dimensions of Corporate Social Responsibility on Corporate Financial Performance in Tourism-Related Industries. Tourism Management, 32, 790-804. https://doi.org/10.1016/j.tourman.2010.06.019
  10. Kemper, J., Schilke, O., Reimann, M., Wang, X., Brettel, M. (2013), Competition-motivated corporate social responsibility. Journal of Business Research, 66(10), 1954-1963. https://doi.org/10.1016/j.jbusres.2013.02.018
  11. Ki-Hoon Lee, K., Min, B. (2015). Green R&D for eco-innovation and its impact on carbon emissions and firm performance. Journal of Cleaner Production, 108, 534-542. https://doi.org/10.1016/j.jclepro.2015.05.114
  12. Miroshnychenko, I., Barontini, R., Testa, F. (2017). Green practices and financial performance: A global outlook. Journal of Cleaner Production, 147, 340-351. https://doi.org/10.1016/j.jclepro.2017.01.058
  13. Muhammad, N., Scrimgeour, F., Reddy, K., Abidin, S. (2015). The relationship between environmental performance and financial performance in periods of growth and contraction: evidence from Australian publicly listed companies. Journal of Cleaner Production, 102, 324-332. https://doi.org/10.1016/j.jclepro.2015.04.039
  14. Orlitzky, M., Schmidt, F.L., Rynes, S.L. (2003). Corporate Social and Financial Performance: A Meta-analysis. Organization Studies, 24(3), 403-441. https://doi.org/10.1177/0170840603024003910
  15. Pantea, M., Gligor, D., Anis, C. (2014), Economic determinants of Romanian firms' financial performance. Procedia Social and Behavioral Sciences, 124, 272-281. https://doi.org/10.1016/j.sbspro.2014.02.486
  16. Panwar, R., Nybakk, E., Hansen, E., Pinkse, J. (2016). The Effect of Small Firms' Competitive Strategies on Their Community and Environmental Engagement. Journal of Cleaner Production, 129, 578-585. https://doi.org/10.1016/j.jclepro.2016.03.141
  17. Peng, M.W., Luo, Y. (2000), Managerial ties and firm performance in a transition economy: The nature of a micro-macro link. Academy of Management Journal, 43(3), 486-501. https://doi.org/10.2307/1556406
  18. Porter, M. E., & Kramer, M. R. (2006). Strategy and society: the link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78-92.
  19. Przychodzen, J., Przychodzen, W. (2015). Relationships between eco-innovation and financial performance evidence from publicly traded companies in Poland and Hungary. Journal of Cleaner Production, 90, 253-263. https://doi.org/10.1016/j.jclepro.2014.11.034
  20. Rodgers, W., Choy, H.L., Guiral, A. (2013). Do Investors Value a Firm's Commitment to Social Activities? Journal of Business Ethics, 114, 607-623. https://doi.org/10.1007/s10551-013-1707-1
  21. Sauaia, A.C.A., & Castro Junior, F.H.F. (2002). Is the Tobin's q a good indicator of a company's performance? Developments in Business Simulation and Experiential Learning, 29, 301-307.
  22. Sembiring, E.R. (2005, September). Karakteristik perusahaan dan pengungkapan tanggung jawab sosial: Studi empiris pada perusahaan yang tercatat di Bursa Efek Jakarta. (Company characteristics and disclosures of social responsibility: Empirical study on company listed in Bursa Efek Jakarta), National Accounting Seminar, Solo, Indonesia.
  23. Song, H., Zhao, C., Zeng, J. (2017). Can environmental management improve financial performance? An empirical study of A-shares listed companies in China. Journal of Cleaner Production, 141, 1051-1056. https://doi.org/10.1016/j.jclepro.2016.09.105
  24. Sudana, I.M. (2011). Manajemen Keuangan Perusahaan, Teori dan Praktik (Corporate Finance, Theory and Practice). Erlangga; Jakarta.
  25. Tang, Z., Hull, C.E., Rothenberg, S. (2012). How Corporate Social Responsibility Engagement Strategy Moderates the CSR-Financial Performance Relationship. Journal of Management Studies, 49(7), 1274-1303. https://doi.org/10.1111/j.1467-6486.2012.01068.x
  26. Weber, O., Koellner, T., Habegger, D., Steffensen, H, and Ohnemus, P. (2008). The relation between the GRI indicators and the financial performance of firms. Progress in Industrial Ecology - An International Journal, 5(3), 236-254. https://doi.org/10.1504/PIE.2008.019127