A Comparative Study on Financial Performance of the Participants in Indonesia Sustainability Reporting Awards

Hatane Semuel(1), Saarce Elsye Hatane(2), Cyndy Fransisca(3), Josua Tarigan(4), Jean-Marc Dautrey(5),


(1) Universitas Kristen Petra, Department of Marketing, Surabaya, Indonesia
(2) Universitas Kristen Petra, Department of Business Accounting, Surabaya, Indonesia
(3) Universitas Kristen Petra, Department of Business Accounting, Surabaya, Indonesia
(4) Universitas Kristen Petra, Department of International Business Accounting, Surabaya, Indonesia
(5) Stamford International University, Bangkok, Thailand

Abstract

The main objective of this research is to analyze the financial performance of companies that have participated in Indonesia Sustainability Reporting Awards (ISRA) competitions in 2009–2017, both regularly and temporarily. This study also analyzes the differences in financial performance in terms of industrial sector factors and the number of workers. This research applies secondary data, which is carried out with independent t–test and multivariate test. Companies that consistently participate in ISRA competitions have a smaller level of leverage, and more exceptional ability to generate operating cash. Companies with fewer than two thousand employees are more productive than companies with ten thousand employees. However, when the number of employees is more than ten thousand people, productivity managing assets is even better. It seems that investors appreciate small companies more. Compared to companies in the banking sector, companies in the manufacturing and non–manufacturing industries have more substantial debts, more productive assets, and higher stock market values. It seems that investors appreciate this ISRA competition more for non–banking companies.

Keywords

corporate social responsibility, financial performance, Indonesia Sustainability Reporting Awards, sustainability report

Full Text:

PDF

References

Anas, A., Rashid, H. M. A., & Annuar, H. A. (2015). The Effect of Award on CSR Disclosures in Annual Reports of Malaysian PLCs. Social Responsibility Journal, 11(4), 831–852. https://doi.org/10.1108/SRJ-02-2013-0014

Asmeri, R., Alvionita, T., & Gunardi, A. (2017). CSR Disclosures in the Mining Industry: Empirical Evidence from Listed Mining Firms in Indonesia. Indonesian Journal of Sustainability Accounting and Management, 1(1), 16–22. https://doi.org/10.28992/ijsam.v1i1.23

Bae, K.-H., Kang, J.-K., & Wang, J. (2011). Employee Treatment and Firm Leverage: A Test of the Stakeholder Theory of Capital Structure. Journal of Financial Economics, 100(1), 130–153. https://doi.org/10.1016/j.jfineco.2010.10.019

Bajic, S., & Yurtoglu, B. (2018). Which Aspects of CSR Predict Firm Market Value? Journal of Capital Markets Studies, 2(1), 50–69. https://doi.org/10.1108/JCMS-10-2017-0002

Bilbao-Terol, A., Arenas-Parra, M., Alvarez-Otero, S., & Cañal-Fernández, V. (2019). Integrating Corporate Social Responsibility and Financial Performance. Management Decision, 57(2), 324–348. https://doi.org/10.1108/MD-03-2018-0290

Chakroun, R., Matoussi, H., & Mbirki, S. (2017). Determinants of CSR Disclosure of Tunisian Listed Banks: A Multi-Support Analysis. Social Responsibility Journal, 13(3), 552–584. https://doi.org/10.1108/SRJ-04-2016-0055

Chtourou, H., & Triki, M. (2017). Commitment in Corporate Social Responsibility and Financial Performance: A Study in the Tunisian Context. Social Responsibility Journal, 13(2), 370–389. https://doi.org/10.1108/SRJ-05-2016-0079

Cormier, D., Ledoux, M., & Magnan, M. (2011). The Informational Contribution of Social and Environmental Disclosures for Investors. Management Decision, 49(8), 1276–1304. https://doi.org/10.1108/00251741111163124

de Villiers, C., & Marques, A. (2016). Corporate Social Responsibility, Country-Level Predispositions, and the Consequences of Choosing a Level of Disclosure. Accounting and Business Research, 46(2), 167–195. https://doi.org/10.1080/00014788.2015.1039476

Duff, A. (2017). Corporate Social Responsibility as a Legitimacy Maintenance Strategy in the Professional Accountancy Firm. The British Accounting Review, 49(6), 513–531. https://doi.org/10.1016/j.bar.2017.08.001

El Ghoul, S., Guedhami, O., Kwok, C. C. Y., & Mishra, D. R. (2011). Does Corporate Social Responsibility Affect the Cost of Capital? Journal of Banking and Finance, 35(9), 2388–2406. https://doi.org/10.1016/j.jbankfin.2011.02.007

Giannarakis, G. (2014). The Determinants Influencing the Extent of CSR Disclosure. International Journal of Law and Management, 56(5), 393–416. https://doi.org/10.1108/IJLMA-05-2013-0021

GRI. (2013). G4 Sustainability Reporting Guidelines. Amsterdam: Global Reporting Initiative.

Hasan, R., & Yun, T. M. (2017). Theoretical Linkage between Corporate Social Responsibility and Corporate Reputation. Indonesian Journal of Sustainability Accounting and Management, 1(2), 80–89. https://doi.org/10.28992/ijsam.v1i2.32

Hsu, F. J., & Chen, Y.-C. (2015). Is a Firm’s Financial Risk Associated with Corporate Social Responsibility? Management Decision, 53(9), 2175–2199. https://doi.org/10.1108/MD-02-2015-0047

Hussain, N. (2015). Impact of Sustainability Performance on Financial Performance: An Empirical Study of Global Fortune (N100) Firms (Working Paper Series No. 1/2015).

Izzo, M. F., & di Donato, F. (2012). The Relation between Corporate Social Responsibility and Stock Prices: An Analysis of the Italian Listed Companies. SSRN.

Jamali, D. (2014). CSR in Developing Countries through an Institutional Lens. In G. Eweje (Ed.), Corporate Social Responsibility and Sustainability: Emerging Trends in Developing Economies (Critical Studies on Corporate Responsibility, Governance and Sustainability) (8th ed., pp. 21–44). Emerald Publishing Limited. https://doi.org/10.1108/S2043-905920140000008005

Jizi, M. (2017). The Influence of Board Composition on Sustainable Development Disclosure. Business Strategy and the Environment, 26(5), 640–655. https://doi.org/10.1002/bse.1943

Khojastehpour, M., & Johns, R. (2014). The Effect of Environmental CSR Issues on Corporate/Brand Reputation and Corporate Profitability. European Business Review, 26(4), 330–339. https://doi.org/10.1108/EBR-03-2014-0029

Kim, H.-R., Lee, M., Lee, H.-T., & Kim, N.-M. (2010). Corporate Social Responsibility and Employee–Company Identification. Journal of Business Ethics, 95(4), 557–569. https://doi.org/10.1007/s10551-010-0440-2

Kim, Y., Li, H., & Li, S. (2014). Corporate Social Responsibility and Stock Price Crash Risk. Journal of Banking and Finance, 43, 1–13. https://doi.org/10.1016/j.jbankfin.2014.02.013

Kurniawan, P. S. (2018). An Implementation Model of Sustainability Reporting in Village-Owned Enterprise and Small and Medium Enterprise. Indonesian Journal of Sustainability Accounting and Management, 2(2), 90–106.

Lin, C.-S., Chang, R.-Y., & Dang, V. (2015). An Integrated Model to Explain How Corporate Social Responsibility Affects Corporate Financial Performance. Sustainability, 7(7), 8292–8311. https://doi.org/10.3390/su7078292

Macharia, P. I., & Gatuhi, S. K. (2013). Effect of Financial Performance Indicators on Market Price of Shares in Commercial Banks of Kenya. International Journal of Management and Business Studies, 3(3), 57–60.

Mahbuba, S., & Farzana, N. (2013). Corporate Social Responsibility and Profitability: A Case Study on Dutch Bangla Bank Ltd. International Journal of Business and Social Research, 3(4), 139–145.

Martin, R., Yadiati, W., & Pratama, A. (2018). CSR disclosure and Company Financial Performance: Do High and Low–Profile Industry Moderate the Result? Indonesian Journal of Sustainability Accounting and Management, 2(1), 15–24.

Mehralian, G., Nazari, J. A., Zarei, L., & Rasekh, H. R. (2016). The Effects of Corporate Social Responsibility on Organizational Performance in the Iranian Pharmaceutical Industry: The Mediating Role of TQM. Journal of Cleaner Production, 135, 689–698. https://doi.org/10.1016/j.jclepro.2016.06.116

NCSR. (2019). Asia Sustainability Reporting Rating (Asia SR Rating) 2018. Retrieved March 5, 2019, from https://www.ncsr-id.org/2019/02/12/sustainability-reporting-awards-sra-2018/

Nyarku, K. M., & Oduro, S. (2019). The Mediating Effect of Supplier Relationship Management on CSR and Marketing Performance Relationship. Indonesian Journal of Sustainability Accounting and Management, 3(1), 1–13. https://doi.org/10.28992/ijsam.v3i1.58

Nyeadi, J. D., Ibrahim, M., & Sare, Y. A. (2018). Corporate Social Responsibility and Financial Performance Nexus: Empirical Evidence from South African Listed Firms. Journal of Global Responsibility, 9(3), 301–328. https://doi.org/10.1108/JGR-01-2018-0004

Pérez, A., Martínez, P., & del Bosque, I. R. (2013). The Development of a Stakeholder-Based Scale for Measuring Corporate Social Responsibility in the Banking Industry. Service Business, 7(3), 459–481. https://doi.org/10.1007/s11628-012-0171-9

Reddy, K., & Gordon, L. W. (2010). The Effect of Sustainability Reporting on Financial Performance: An Empirical Study using Listed Companies. Journal of Asia Entrepreneurship and Sustainability, 6(2), 19–42.

Rhou, Y., Singal, M., & Koh, Y. (2016). CSR and Financial Performance: The Role of CSR Awareness in the Restaurant Industry. International Journal of Hospitality Management, 57, 30–39. https://doi.org/10.1016/j.ijhm.2016.05.007

Romero, S., Fernandez-Feijoo, B., & Ruiz, S. (2014). Perceptions of Quality of Assurance Statements for Sustainability Reports. Social Responsibility Journal, 10(3), 480–499. https://doi.org/10.1108/SRJ-10-2012-0130

SAM. (2012). The Sustainability Yearbook 2012. Zurich: SAM Sustainable Asset Management USA, Inc.

Sekaran, U., & Bougie, R. (2016). Research Methods for Business: A Skill Building Approach (7th ed.). Chichester: John Wiley & Sons, Inc.

Servaes, H., & Tamayo, A. (2013). The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness. Management Science, 59(5), 1045–1061. https://doi.org/10.1287/mnsc.1120.1630

Sheikh, S. (2018). Corporate Social Responsibility, Product Market Competition, and Firm Value. Journal of Economics and Business, 98, 40–55. https://doi.org/10.1016/j.jeconbus.2018.07.001

SWAOnline. (2013). Perusahaan Pembuat Laporan Keberlanjutan Kian Banyak di Indonesia. Retrieved February 10, 2019, from https://swa.co.id/swa/trends/business-research/perusahaan-pembuat-laporan-keberlanjutan-kian-banyak-di-indonesia

Syamni, G., Wahyuddin, Damanhur, & Ichsan. (2018). CSR and Profitability in IDX Agricultural Subsectors. In Proceedings of MICoMS 2017 (Emerald Reach Proceedings Series) (1st ed., pp. 511–517). Emerald Publishing Limited. https://doi.org/10.1108/978-1-78756-793-1-00034

Verwijmeren, P., & Derwall, J. (2010). Employee Well-Being, Firm Leverage, and Bankruptcy Risk. Journal of Banking and Finance, 34(5), 956–964. https://doi.org/10.1016/j.jbankfin.2009.10.006

Zaccheaus, S. A., Oluwagbemiga, O. E., & Olugbenga, O. M. (2014). Effects of Corporate Social Responsibility Performance (CSR) on Stock Prices: Empirical Study of Listed Manufacturing Companies in Nigeria. IOSR Journal of Business and Management, 16(8), 112–117.

Dimension

Altmetric

PlumX


DOI: https://doi.org/10.28992/ijsam.v3i1.84

Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.