IDEAS home Printed from https://ideas.repec.org/p/gtr/gatrjs/afr194.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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)
    as

    Download full text from publisher

    File URL: http://gatrenterprise.com/GATRJournals/AFR/pdf_files/AFR-Vol-5(4)/2.Median%20Wilestari.pdf
    Download Restriction: http://gatrenterprise.com/GATRJournals/online_submission.html
    File URL: https://libkey.io/https://doi.org/10.35609/afr.2021.5.4(2)?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hoje Jo & Maretno Harjoto, 2011. "Corporate Governance and Firm Value: The Impact of Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 103(3), pages 351-383, October.
    2. Huang, Xiaobei “Beryl†& Watson, Luke, 2015. "Corporate social responsibility research in accounting," Journal of Accounting Literature, Elsevier, vol. 34(C), pages 1-16.
    3. Mahoney, Lois S. & Thorne, Linda & Cecil, Lianna & LaGore, William, 2013. "A research note on standalone corporate social responsibility reports: Signaling or greenwashing?," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 24(4), pages 350-359.
    4. van der Laan Smith, Joyce & Adhikari, Ajay & Tondkar, Rasoul H. & Andrews, Robert L., 2010. "The impact of corporate social disclosure on investment behavior: A cross-national study," Journal of Accounting and Public Policy, Elsevier, vol. 29(2), pages 177-192, March.
    5. Won Oh & Young Chang & Aleksey Martynov, 2011. "The Effect of Ownership Structure on Corporate Social Responsibility: Empirical Evidence from Korea," Journal of Business Ethics, Springer, vol. 104(2), pages 283-297, December.
    6. X. Meng & S. Zeng & C. Tam, 2013. "From Voluntarism to Regulation: A Study on Ownership, Economic Performance and Corporate Environmental Information Disclosure in China," Journal of Business Ethics, Springer, vol. 116(1), pages 217-232, August.
    7. Wang, David Han-Min & Yu, Tiffany Hui-Kuang & Chiang, Chia-Hsin, 2016. "Exploring the value relevance of corporate reputation: A fuzzy-set qualitative comparative analysis," Journal of Business Research, Elsevier, vol. 69(4), pages 1329-1332.
    8. Yongtao Hong & Margaret Andersen, 2011. "The Relationship Between Corporate Social Responsibility and Earnings Management: An Exploratory Study," Journal of Business Ethics, Springer, vol. 104(4), pages 461-471, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Idris Gautama So & Hasnah Haron & Anderes Gui & Elfindah Princes & Synthia Atas Sari, 2021. "Sustainability Reporting Disclosure in Islamic Corporates: Do Human Governance, Corporate Governance, and IT Usage Matter?," Sustainability, MDPI, vol. 13(23), pages 1-23, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mahfuja Malik, 2015. "Value-Enhancing Capabilities of CSR: A Brief Review of Contemporary Literature," Journal of Business Ethics, Springer, vol. 127(2), pages 419-438, March.
    2. Chiang, Wen-Chyuan & Shang, Jennifer & Sun, Li, 2017. "Broad bond rating change and irresponsible corporate social responsibility activities," Advances in accounting, Elsevier, vol. 39(C), pages 32-46.
    3. Jannik Gerwanski & Othar Kordsachia & Patrick Velte, 2019. "Determinants of materiality disclosure quality in integrated reporting: Empirical evidence from an international setting," Business Strategy and the Environment, Wiley Blackwell, vol. 28(5), pages 750-770, July.
    4. Wan Nordin Wan-Hussin & Ameen Qasem & Norhani Aripin & Mohd Shazwan Mohd Ariffin, 2021. "Corporate Responsibility Disclosure, Information Environment and Analysts’ Recommendations: Evidence from Malaysia," Sustainability, MDPI, vol. 13(6), pages 1-27, March.
    5. Chune Young Chung & Sang Jun Cho & Doojin Ryu & Doowon Ryu, 2019. "Institutional blockholders and corporate social responsibility," Asian Business & Management, Palgrave Macmillan, vol. 18(3), pages 143-186, July.
    6. Dong, Weijia & Dong, Xinyang & Lv, Xin, 2022. "How does ownership structure affect corporate environmental responsibility? Evidence from the manufacturing sector in China," Energy Economics, Elsevier, vol. 112(C).
    7. Isabel‐Maria García‐Sánchez & Nazim Hussain & Sana Akbar Khan & Jennifer Martínez‐Ferrero, 2020. "Managerial entrenchment, corporate social responsibility, and earnings management," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(4), pages 1818-1833, July.
    8. He, Feng & Guo, Xinyao & Yue, Pengpeng, 2024. "Media coverage and corporate ESG performance: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 91(C).
    9. Lars Moratis & Max van Egmond, 2018. "Concealing social responsibility? Investigating the relationship between CSR, earnings management and the effect of industry through quantitative analysis," International Journal of Corporate Social Responsibility, Springer, vol. 3(1), pages 1-13, December.
    10. Fayez A. Elayan & Jingyu Li & Zhefeng Frank Liu & Thomas O. Meyer & Sandra Felton, 2016. "Changes in the Covalence Ethical Quote, Financial Performance and Financial Reporting Quality," Journal of Business Ethics, Springer, vol. 134(3), pages 369-395, March.
    11. El Ghoul, Sadok & Guedhami, Omrane & Wang, He & Kwok, Chuck C.Y., 2016. "Family control and corporate social responsibility," Journal of Banking & Finance, Elsevier, vol. 73(C), pages 131-146.
    12. Isabel‐María García‐Sánchez & Emma García‐Meca, 2017. "CSR Engagement and Earnings Quality in Banks. The Moderating Role of Institutional Factors," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(2), pages 145-158, March.
    13. Yuming Zhang & Fan Yang, 2021. "Corporate Social Responsibility Disclosure: Responding to Investors’ Criticism on Social Media," IJERPH, MDPI, vol. 18(14), pages 1-27, July.
    14. Mohammed Abdullah Ammer & Meqbel Mishary Aliedan & Mansour Abdullah Alyahya, 2020. "Do Corporate Environmental Sustainability Practices Influence Firm Value? The Role of Independent Directors: Evidence from Saudi Arabia," Sustainability, MDPI, vol. 12(22), pages 1-21, November.
    15. Waseem Akhter & Arshad Hassan, 2024. "Does corporate social responsibility mediate the relationship between corporate governance and firm performance? Empirical evidence from BRICS countries," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 566-578, January.
    16. Saier Su & Fei Zhu & Haibo Zhou, 2022. "A Systematic Literature Review on Ownership and Corporate Social Responsibility in Family Firms," Sustainability, MDPI, vol. 14(13), pages 1-25, June.
    17. Abdulaziz A. Alomran & Kholod F. Alsahali, 2023. "The Role of Long-Term Institutional Ownership in Sustainability Report Assurance: Global Evidence," Sustainability, MDPI, vol. 15(4), pages 1-17, February.
    18. Jieun Chung & Charles H. Cho, 2018. "Current Trends within Social and Environmental Accounting Research: A Literature Review," Accounting Perspectives, John Wiley & Sons, vol. 17(2), pages 207-239, June.
    19. Sumon Kumar Das & Md Khalilur Rahman & Songita Roy, 2024. "Does ownership type affect sustainability reporting disclosure? Evidence from an emerging market," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 21(1), pages 52-68, March.
    20. Nam Chul Jung & Hyun Ah Kim, 2019. "The Effect of Listing Period on Corporate Social Responsibility: Evidence from Korea," Sustainability, MDPI, vol. 11(8), pages 1-15, April.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gtr:gatrjs:afr194. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prof. Dr. Abd Rahim Mohamad (email available below). General contact details of provider: http://gatrenterprise.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.