Corporate Social Responsibility, Financial Performance, and Risk in Indonesian Natural Resources Industry

Devie, and LIMAN, LOVINA PRISTYA and Tarigan, Josua and Jie, Ferry (2019) Corporate Social Responsibility, Financial Performance, and Risk in Indonesian Natural Resources Industry. [UNSPECIFIED]

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Abstract

Abstract Purpose - To have a deeper understanding about the CSR activities in IDX80 companies in Indonesia. This paper is made to highlight the correlation of Corporate Social Responsibility (CSR), dividend payout, and firms value with the role of dividend payout as the mediating variable in the indirect effect between CSR and firms value. Design/methodology/approach � CSR scores are measured by using the Global Reporting Initiative (GRI) Index, which totaled 91 indicators. Dividend payout is indicated by dividend payout ratio and dividend yield. Other than that, Tobin�s Q is used as an indicator for the firms value. Partial least squares analysis is conducted to have a research result towards 165 Indonesian firm-year in 55 companies in multiple sectors from 2015 to 2017. Findings - The result revealed that CSR has a negative impact towards the Dividend Payout and firms value. Meanwhile, dividend payout has a positive impact towards firms� value. Practical implications � The result suggests that in these companies, distributing more dividends has a positive impact towards the change in firms value. In contrast, investing in CSR activities will negatively affect Firms Value in these companies. Positive gains to the firm value can only be achieved by distributing more dividends rather than investing in CSR activities. Meanwhile, dividend payout cannot strengthen the relationship between CSR and firms� value. Originality/value - This report examines a deeper research about the prior studies that has not been done in Indonesia by using IDX80 industries which contributes to CSR and dividend payout literature as a tool to alter firms value. This is the first research in Indonesia which tests that Dividend Payout can be an intervening variable for the relation between CSR and Firms Value.

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