Does mandatory CSR provide long-term benefits to shareholders?

Purpose – Mandatory corporate social responsibility (CSR) aims to protect the long-term benefit of
shareholders; therefore, this study aims to seek empirical evidence for the benefit of mandatory CSR from
the perspective of shareholders.
Design/methodology/approach – Consistent with the objective of this study, the long-term shareholder
benefit is measured using the sustainability perspective. Companies listed on the Indonesia Stock
Exchange that have at least five years of CSR implementation, as its mandate and have retroactive
earnings data for minimum six years before the observation year are selected as the study’s sample.
Findings – The findings support that mandated CSR protects long-term shareholder value; there is a
significant association between CSR and sustainable shareholder value. Industry profiles are an essential
aspect of the association model. The results are robust through testing the association for various
scenarios of time.
Research limitations/implications – This study uses a singlemeasurement of shareholder value based
only on accounting measurement. Further, due to limitations in accessing internal company data, this
study relies on annual reporting information tomeasure CSR implementation.
Originality/value – This study is the first to provide empirical evidence of the long-term benefit of
mandatory CSR from the shareholders’ perspective. This study also contributes to the existing literature
by evaluating the success of mandatory CSR in developing countries. Those that successfully
implemented mandatory CSR can serve as a model for other developing countries interested in creating
similar policies to encourage socially responsible companies.