Corporate Social Responsibility (CSR) Performance and Accrual Quality: Case study on Firms Listed on Indonesia Stock Exchange (IDX)

Research on the impact of corporate social responsibility (CSR) performance to the financial
performance have been widely studied previously. However, there were a few studies investigate the
effect of CSR on accrual quality which is one of the attributes of earning quality. The aim of this study
is to examine the affect of CSR toward accrual quality in the context of Indonesia, where the
empirical results of the benefits of CSR implementation are still scant.
Research samples are all listed companies in Indonesia Stock Exchange (IDX) in miscellaneous
industry sector for period 2009 to 2013. There are 92 firm years included in this study. CSR is
measured by scoring CSR activities of the firm based on GRI Index guideline version 3.1, whereas
attributes of earning quality used in this study is accrual quality. We include two control variables in
this research model i.e. firm size and leverage.
The results show that CSR performance do not explain the changes in accrual quality. Leverage has
no effect on accrual quality as well. On the other hand firm size has a significant effect on CSR
performance however the sign of association is contrary with the expected.