company size cannot moderate the relationship between independent variables and CSR disclosure

Oct 13, 2025 by talynt.org 68 views

The Effect of Ownership Structure and Financial Performance on Corporate Social Responsibility Disclosure: Studies on Manufacturing Companies on the Indonesia

Introduction

Corporate Social Responsibility (CSR) has become a crucial aspect of business operations in recent years. Companies are expected to not only generate profits but also contribute to the well-being of society and the environment. However, the disclosure of CSR activities varies among companies, and several factors influence this disclosure. This study aims to investigate the effect of ownership structure, financial performance, and company size on the disclosure of CSR in manufacturing companies listed on the Stock Exchange Indonesia (IDX) for the 2012-2014 period.

Literature Review

Previous studies have shown that ownership structure, financial performance, and company size are significant factors influencing CSR disclosure. Ownership structure refers to the distribution of ownership among shareholders, including foreign ownership, institutional ownership, and management ownership. Financial performance, on the other hand, is measured by various indicators such as Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM). Company size is often measured by the total assets or market capitalization of the company.

Studies have shown that ownership structure can influence CSR disclosure. For instance, companies with high foreign ownership tend to have better CSR disclosure due to the pressure from foreign investors to adopt international standards (Al-Tuwaijri et al., 2004). Institutional ownership, on the other hand, has been found to have a positive effect on CSR disclosure, as institutional investors tend to prioritize long-term sustainability over short-term gains (Garcia-Sanchez et al., 2013).

Financial performance has also been found to have a significant effect on CSR disclosure. Companies with high profitability tend to be more active in uncovering CSR activities, as they have more resources to allocate to CSR initiatives (Orlitzky et al., 2003). Company size has also been found to influence CSR disclosure, as larger companies tend to have more resources and capabilities to engage in CSR activities (Margolis et al., 2009).

Methodology

This study uses a causal associative quantitative approach with secondary data obtained from the company's annual report on the website www.idx.co.id. The population of this study included 38 manufacturing companies listed on the IDX in the 2012-2014 period, and the entire population became the research sample. This produced 114 observations, which were analyzed using multiple linear regression models.

The model tested by classic assumptions such as normality tests, multicollinearity tests, heteroscedasticity tests, and autocorrelation tests. The results showed that simultaneously, the structure of ownership, financial performance, and company size affected CSR disclosure. However, partially, only ROA and NPM have proven to have a significant effect on CSR disclosure. Foreign ownership, institutional ownership, management ownership, and ROE do not show a significant effect on CSR disclosure.

Results

The results of this study indicate that the company's financial performance has a stronger influence on CSR disclosure compared to ownership structure. Companies with high profitability (ROA and NPM) tend to be more active in uncovering CSR activities. This can be explained because companies with good financial performance have more resources to allocate to CSR activities and also have a stronger motivation to build a positive image in the eyes of the public.

It is also important to note that company size cannot moderate the relationship between independent variables and CSR disclosure. That is, the influence of ownership structure and financial performance on CSR disclosure is not influenced by the company's size.

Implications

This research has several important implications. For investors, the results of this study show that financial performance is a stronger indicator to assess the company's commitment to CSR compared to ownership structure. For companies, these results show that improvement of financial performance can encourage companies to be more active in uncovering CSR activities.

Limitations

However, keep in mind that this research has several limitations. First, the data used in this study is only secondary data, so it is necessary to consider the potential bias that may occur. Second, this research is only conducted on manufacturing companies listed on the IDX, so the results of this study may not be generalized to all companies in Indonesia.

Conclusion

In conclusion, this study provides evidence that financial performance has a stronger influence on CSR disclosure compared to ownership structure. Companies with high profitability tend to be more active in uncovering CSR activities, and improvement of financial performance can encourage companies to be more active in CSR activities. However, company size does not moderate the relationship between independent variables and CSR disclosure.

Recommendations for Future Research

Subsequent research can be done by expanding research samples, using primary data, or adding other independent variables that may affect CSR disclosure. For instance, researchers can investigate the effect of governance structure, industry type, or environmental factors on CSR disclosure.

References

Al-Tuwaijri, S. A., Christensen, B. E., & Hughes, K. E. (2004). The relations between corporate performance and corporate social responsibility. Academy of Management Journal, 47(5), 554-566.

Garcia-Sanchez, I. M., Martinez-Ferrero, J., & Garcia-Sanchez, M. N. (2013). The effect of ownership structure on corporate social responsibility. Journal of Business Ethics, 117(2), 341-354.

Margolis, J. D., Elfenbein, H. A., & Walsh, J. P. (2009). Does corporate social responsibility lead to financial outcomes? A review of empirical evidence. Corporate Social Responsibility and Environmental Management, 16(5), 331-345.

Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization Studies, 24(3), 403-441.
Frequently Asked Questions: The Effect of Ownership Structure and Financial Performance on Corporate Social Responsibility Disclosure

Q: What is the main objective of this study?

A: The main objective of this study is to investigate the effect of ownership structure, financial performance, and company size on the disclosure of Corporate Social Responsibility (CSR) in manufacturing companies listed on the Stock Exchange Indonesia (IDX) for the 2012-2014 period.

Q: What are the key findings of this study?

A: The key findings of this study are that financial performance has a stronger influence on CSR disclosure compared to ownership structure. Companies with high profitability (ROA and NPM) tend to be more active in uncovering CSR activities. Additionally, company size does not moderate the relationship between independent variables and CSR disclosure.

Q: What are the implications of this study for investors?

A: The results of this study show that financial performance is a stronger indicator to assess the company's commitment to CSR compared to ownership structure. This means that investors can use financial performance as a proxy to evaluate a company's CSR activities.

Q: What are the implications of this study for companies?

A: The results of this study show that improvement of financial performance can encourage companies to be more active in uncovering CSR activities. This means that companies can improve their CSR disclosure by improving their financial performance.

Q: What are the limitations of this study?

A: The limitations of this study are that the data used is only secondary data, and the research is only conducted on manufacturing companies listed on the IDX. This means that the results of this study may not be generalized to all companies in Indonesia.

Q: What are the recommendations for future research?

A: The recommendations for future research are to expand the research sample, use primary data, or add other independent variables that may affect CSR disclosure. For instance, researchers can investigate the effect of governance structure, industry type, or environmental factors on CSR disclosure.

Q: What are the practical implications of this study?

A: The practical implications of this study are that companies can use financial performance as a proxy to evaluate their CSR activities. Additionally, companies can improve their CSR disclosure by improving their financial performance.

Q: What are the theoretical implications of this study?

A: The theoretical implications of this study are that financial performance has a stronger influence on CSR disclosure compared to ownership structure. This challenges the traditional view that ownership structure is the primary driver of CSR disclosure.

Q: What are the future research directions?

A: The future research directions are to investigate the effect of governance structure, industry type, or environmental factors on CSR disclosure. Additionally, researchers can use primary data to collect more accurate and reliable information.

Q: What are the policy implications of this study?

A: The policy implications of this study are that policymakers can use financial performance as a proxy to evaluate a company's CSR activities. Additionally, policymakers can encourage companies to improve their financial performance to improve their CSR disclosure.

Q: What are the implications for sustainability reporting?

A: The implications for sustainability reporting are that companies can use financial performance as a proxy to evaluate their CSR activities. Additionally, companies can improve their CSR disclosure by improving their financial performance.

Q: What are the implications for corporate governance?

A: The implications for corporate governance are that companies can use financial performance as a proxy to evaluate their CSR activities. Additionally, companies can improve their CSR disclosure by improving their financial performance.

Q: What are the implications for stakeholders?

A: The implications for stakeholders are that they can use financial performance as a proxy to evaluate a company's CSR activities. Additionally, stakeholders can encourage companies to improve their financial performance to improve their CSR disclosure.