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The Importance of Corporate Social Responsibility in Improving Corporate Value: Case Study of Public Companies in Indonesia

Author

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  • Supriyati

    (Department of Accounting, STIE Perbanas University, Surabaya, Indonesia)

  • Gunasti Hudiwinarsih

    (Department of Accounting, STIE Perbanas University, Surabaya, Indonesia)

Abstract

Corporate value is a quality measure that indicates the consistency and sustainability of a company. Good corporate value can only be attained if the company has consistent financial performance, and that value will be used by decision makers inside or outside the company as the guide before making action. Attaining good corporate value should need comprehensive strategies integrated with company operation. Among those strategies is non-financial activity or social responsibility. This research expects that the disclosure of social responsibility by the company will adorn corporate image and give good impact on profitability (with ROA and ROE as proxies) and corporate value (with PBV and TBQ as proxies). This research is aimed to examine the effectof social responsibility disclosure on profitability and corporate value. Data testing was conducted using robust regression test and applied on 1306 data of public companies that are listed at Indonesia Stock Exchange on period 2015-2018. It has been robustly with MM Model and result of the test shows that social responsibility affects profitability and corporate value.

Suggested Citation

  • Supriyati & Gunasti Hudiwinarsih, 2020. "The Importance of Corporate Social Responsibility in Improving Corporate Value: Case Study of Public Companies in Indonesia," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(3), pages 121-130, July.
    • Handle: RePEc:rbs:ijfbss:v:9:y:2020:i:3:p:121-130
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    References listed on IDEAS

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    6. Siti Nuryanah & Sardar M. N. Islam, 2015. "Corporate Governance and Financial Management," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-43561-3, December.
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