Browse > Article
http://dx.doi.org/10.13106/jafeb.2021.vol8.no3.1249

The Role of Corporate Social Responsibility on the Relationship between Financial Performance and Company Value  

UTAMI, Elok Sri (Department of Management, Faculty of Economics and Business, Universitas Jember)
HASAN, Muhamad (Department of Management, Faculty of Economics and Business, Universitas Jember)
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.3, 2021 , pp. 1249-1256 More about this Journal
Abstract
This study investigates the company value determinant by observing the effect of financial performance and Corporate Social Responsibility (CSR) and its role in moderating performance achievement. The macro-economy variables such as inflation and interest rate are also used as the controlling variable. This research employs the sample of manufacturing companies of the food and beverage sub-sector listed on the Indonesia Stock Exchange. This study used panel data from 2013 to 2017, with the moderating regression analysis. The result shows that the profitability of the current or previous period affects the company's value. CSR and company size affect the company value at the next period shows that stock price, which reflects the investor's perception today, will be affected by the CSR, Size, and Return On Asset of the previous year. CSR also shows that it can be the substitute for profitability since a company that performs CSR is the one that has a good performance. The regression moderating model and the profitability of the previous period have a higher explanatory power than the higher R square value in explaining company value.
Keywords
Company Value; Financial Performance; Corporate Social Responsibility;
Citations & Related Records
연도 인용수 순위
  • Reference
1 Allouche, J., & Laroche, P. (2005). A Meta-analytical investigation of the relationship between corporate social and financial performance. Revue de Gestion Des Ressources Humaines, 57, 18-31.
2 Aupperle, K. E., Carroll, A. B., & Hatfield, J. D. (1985). An Empirical Examination of the Relationship between Corporate Social Responsibility and Profitability. Academy of Management Journal, 28(2), 446-463. https://doi.org/10.5465/256210   DOI
3 Bromiley, P., & Marcus, A. (1989). The deterrent to dubious corporate behavior: Profitability, probability, and safety recall. Strategic Management Journal, 10(3), 233-250. https://doi.org/10.1002/smj.4250100304   DOI
4 Chapple, W., & Moon, J. (2005). Corporate social responsibility (CSR) in Asia a seven-country study of CSR Web site reporting. Business and Society, 44(4), 415-441. https://doi.org/10.1177/0007650305281658   DOI
5 Teoh, S. H., Welch, I., & Wazzan, C. P. (1999). The effect of socially activist investment policies on the financial markets: Evidence from the South African boycott. Journal of Business, 72(1), 35-89. https://doi.org/10.1086/209602.   DOI
6 Tilt, C. A. (1994). The Influence of External Pressure Groups on Corporate Social Disclosure. Accountability Journal, 7(4), 47-72.   DOI
7 Wright, P., & Ferris, S. P. (1997). Agency conflict and corporate strategy: The effect of divestment on corporate value. Strategic Management Journal, 18(1), 77-83. https://doi.org/10.1002/(sici)1097-0266(199701)18:1<77::aid-smj810>3.3.co;2-i.   DOI
8 Elouidani, A., & Zoubir, F. (2015). Corporate social responsibility and financial performance. African J. of Accounting, Auditing and Finance, 4(1), 74. https://doi.org/10.1504/ajaaf.2015.071749   DOI
9 Fernandez-Guadano, J. (2015). Measuring the economic performance of socially responsible companies. Zbornik Radova Ekonomskog Fakulteta u Rijeci: Casopis Za Ekonomsku Teoriju i Praksu, 33(2), 207-233. https://doi.org/10.18045/zbefri.2015.2.207   DOI
10 Frank, M. Z., & Goyal, V. K. (2009). Capital structure decisions: Which factors are reliably important? Financial Management, 38(1), 1-37. https://doi.org/10.1111/j.1755-053X.2009.01026.x   DOI
11 Graves, S. B., & Waddock, S. A. (1994). Institutional Owners and Corporate Social Performance. Academy of Management Journal, 37(4), 1034-1046. https://doi.org/10.2307/256611   DOI
12 Griffin, J. J., & Mahon, J. F. (1997). The corporate social performance and corporate financial performance debate: Twenty-five years of incomparable research. Business and Society, 36(1), 5-31. https://doi.org/10.1177/000765039703600102   DOI
13 Guadano, J. F., & Pedroza, J. H. S. (2018). Impact of Corporate Social Responsibility on value creation from a stakeholder perspective. Sustainability, 10(6), 1-10. https://doi.org/10.3390/su10062062   DOI
14 Mathews, M. R. (1997). Twenty-five years of social and environmental accounting research: Is there a silver jubilee to celebrate? In: Accounting, Auditing & Accountability Journal (Vol. 10).   DOI
15 Chen, R. C. Y., & Lee, C.-H. (2017). The influence of CSR on firm value: an application of panel smooth transition regression on Taiwan. Applied Economics, 49(34), 3422-3434. https://doi.org/10.1080/00036846.2016.1262516   DOI
16 Cornell, B., & Shapiro, A. C. (1987). Corporate Stakeholders and Corporate Finance. Financial Management, 16(1), 5. https://doi.org/10.2307/3665543   DOI
17 Gunawan, I. M. A., Pituringsih, E., & Widyastuti, E. (2018). The Effect of Capital Structure, Dividend Policy, Company Size, Profitability and Liquidity on Company Value (Study At Manufacturing Companies Listed on Indonesia Stock Exchange 2014-2016). International Journal of Economics, Commerce and Management, VI(6), 405-442.
18 Kanwal, M., Khanam, F., Nasreen, S., & Hameed, S. (2013). Impact of Corporate Social Responsibility on the Firm'S Financial Performance. IOSR Journal of Business and Management, 14(5), 67-74. https://doi.org/10.9790/487x-1456774   DOI
19 Luthfiah, A. A., & Suherman, S. (2018). The Effects of Financial Performance Toward Firm Value with Ownership Structure As Moderating Variable (The Study on Manufacturing Companies Listed in Indonesia Stock Exchange in the Period of 2012-2016). Journal of Business and Behavioural Entrepreneurship, 2(1), 18-27. https://doi.org/10.21009/jobbe.002.1.03   DOI
20 Marshall, S. D., & Ramsay, I. (2011). Stakeholders and Directors' Duties: Law, Theory and Evidence. SSRN Electronic Journal, 35, 291. https://doi.org/10.2139/ssrn.1402143   DOI
21 Meizari, A., & Viani, T. O. (2017). Effect of Profitability, Size and Debt Policy to Company Value ( Study on Business-27 Company Listed On BEI ). In: 3rd International Conferences on Information Technology and Business (ICITB), 7 December 2017.
22 Memon, P. A., Rus, D. R. B. M., & Ghazali, D. Z. B. (2015). Dynamism of Capital Structure: Evidence from Pakistan. Journal of International Business and Economics, 3(1), 52-63. https://doi.org/10.15640/jibe.v3n1a7   DOI
23 Pham, H. C., Ngo, D. A., Le, H. T., & Nguyen, T. T. (2020). Corporate social responsibility and the pricing of seasoned equity offerings: Does executive firm-related wealth matter? Journal of Asian Finance, Economics and Business, 7(8), 297-308. https://doi.org/10.13106/JAFEB.2020.VOL7.NO8.297   DOI
24 Mulyana, A., & Saputra, M. (2017). The Influence of Liquidity, Profitability and Leverage on Profit Management and Its Impact on Company Value in Manufacturing Company Listed on Indonesia Stock Exchange Year 2011-2015. International Journal of Managerial Studies and Research, 6(1), 8-14. https://doi.org/10.20431/2349-0349.0601002   DOI
25 Murdayanti, Y., Ulupui, I. G. K. A., Pahala, I., Indriani, S., & Surherman, S. (2020). Corporate Governance and Value Relevance in Indonesia Manufacturing Companies. Journal of Asian Finance, Economics and Business, 7(11), 335-346. https://doi.org/10.13106/jafeb.2020.vol7.no11.335   DOI
26 Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A metaanalysis. Organization Studies, 24, 403-433. https://doi.org/10.1177/0170840603024003910   DOI
27 Pirsch, J., Gupta, S., & Grau, S. L. (2007). A framework for understanding corporate social responsibility programs as a continuum: An exploratory study. Journal of Business Ethics, 70(2), 125-140. https://doi.org/10.1007/s10551-006-9100-y   DOI
28 Rosikah, P.D.K., Muthalib, D. A., Azis, M. I., & Rohansyah, M. (2018). Effects of Return on Asset, Return On Equity , Earning Per Share on Corporate Value. The International Journal of Engineering and Science (IJES, 7(3), 6-14. https://doi.org/10.9790/1813-0703010614   DOI
29 Sudiyatno, B., Puspitasari, E., Suwarti, T., & Asyif, M. M. (2020). Determinants of Firm Value and Profitability: Evidence from Indonesia. The Journal of Asian Finance, Economics and Business, 7(11), 769-778. https://doi.org/10.13106/jafeb.2020.vol7.no11.769.   DOI