Exploring the effect of other financial performance indicators

Oct 13, 2025 by vinooalluri.com 140 views

The Effect of Financial Performance on Corporate Social Responsibility (CSR) Disclosures in Real Estate and Property Companies Listed on the Indonesia Stock Exchange in 2010-2012

Introduction

In the business world, the relationship between financial performance and corporate social responsibility (CSR) is often the focus of attention. This study aims to study and obtain empirical evidence of the effect of the company's financial performance on CSR disclosures in the annual financial statements of the company's real estate and property companies listed on the Indonesia Stock Exchange (IDX) in 2010 to 2012. The significance of this study lies in its ability to provide insights into the relationship between financial performance and CSR disclosure, which can have a profound impact on the decision-making process of investors and company management.

Background

Corporate social responsibility (CSR) has become an essential aspect of business operations in recent years. CSR refers to the company's commitment to social and environmental issues, which can have a positive impact on the company's reputation and long-term sustainability. However, the relationship between CSR and financial performance is complex, and there is ongoing debate about the extent to which financial performance influences CSR disclosure. This study aims to contribute to this debate by examining the effect of financial performance on CSR disclosure in real estate and property companies listed on the IDX.

Methodology

This study uses associative research methods with secondary data taken from 19 companies that sampled the population of 45 companies. The sampling method used is purposive sampling. The data obtained were analyzed statistically using classic assumptions and hypothesis testing with multiple linear regression methods. The financial performance indicators used in this study are Return on Asset (ROA) ratio, Return on Equity (ROE), Net Profit Margin (NPM) ratio, and Debt to Equity (DER) ratio.

Results

The results showed that simultaneously or partially, financial performance did not have a significant influence on CSR disclosure. This can be seen from the significance value of the financial performance indicator which is quite high, namely: ROA ratio of 0.756 (> 0.05), ROE ratio of 0.317 (> 0.05), NPM ratio of 0.340 (> 0.05), and DER 0.511 ratio ( > 0.05). In other words, the hypothesis proposed in this study is acceptable.

Discussion

This study provides an important insight into how real estate and property companies operate in the context of social responsibility. Although good financial performance can be considered as a foundation for companies to invest in CSR programs, the results of this study indicate that financial achievements are not always in line with CSR disclosure. One possibility that can explain this finding is that companies often experience pressure from various parties, both from internal and external stakeholders. In some cases, companies may prefer to prioritize short-term increases rather than making sustainable investments in CSR programs. In addition, the costs associated with disclosure are often a barrier for companies to show their commitment to social responsibility.

Implications

The results of this study have important implications for company management, investors, and academics. For company management, these results highlight the need for awareness of the importance of integration of financial performance and CSR. On the other hand, for investors, this information can help in making investment decisions, given that minimal CSR disclosure can show a lack of company commitment to sustainable practices. This study also opens space for further research to explore other factors that might affect CSR disclosure in the real estate and property industry.

Conclusion

In conclusion, this study provides empirical evidence of the effect of financial performance on CSR disclosure in real estate and property companies listed on the IDX. The results show that financial performance does not have a significant influence on CSR disclosure. This study highlights the need for further research to explore other factors that might affect CSR disclosure in the real estate and property industry. The findings of this study also have important implications for company management, investors, and academics.

Recommendations

Based on the findings of this study, the following recommendations are made:

Company Management: Company management should be aware of the importance of integration of financial performance and CSR. They should prioritize sustainable investments in CSR programs and disclose their commitment to social responsibility.
Investors: Investors should consider CSR disclosure as an important factor in making investment decisions. Minimal CSR disclosure can show a lack of company commitment to sustainable practices.
Academics: Academics should continue to explore other factors that might affect CSR disclosure in the real estate and property industry.

Limitations

This study has several limitations. Firstly, the sample size is relatively small, which may limit the generalizability of the findings. Secondly, the study only examines the effect of financial performance on CSR disclosure in real estate and property companies listed on the IDX. Further research is needed to explore the effect of financial performance on CSR disclosure in other industries.

Future Research Directions

This study opens space for further research to explore other factors that might affect CSR disclosure in the real estate and property industry. Some potential research directions include:

Exploring the effect of other financial performance indicators: This study only examines the effect of ROA, ROE, NPM, and DER on CSR disclosure. Further research can explore the effect of other financial performance indicators on CSR disclosure.
Examining the effect of non-financial performance indicators: This study only examines the effect of financial performance indicators on CSR disclosure. Further research can examine the effect of non-financial performance indicators on CSR disclosure.
Investigating the effect of CSR disclosure on financial performance: This study examines the effect of financial performance on CSR disclosure. Further research can investigate the effect of CSR disclosure on financial performance.

Conclusion

Q: What is the main objective of this study?

A: The main objective of this study is to examine the effect of financial performance on CSR disclosures in the annual financial statements of real estate and property companies listed on the Indonesia Stock Exchange (IDX) in 2010 to 2012.

Q: What are the financial performance indicators used in this study?

A: The financial performance indicators used in this study are Return on Asset (ROA) ratio, Return on Equity (ROE), Net Profit Margin (NPM) ratio, and Debt to Equity (DER) ratio.

Q: What are the results of this study?

A: The results of this study show that simultaneously or partially, financial performance does not have a significant influence on CSR disclosure. This can be seen from the significance value of the financial performance indicator which is quite high, namely: ROA ratio of 0.756 (> 0.05), ROE ratio of 0.317 (> 0.05), NPM ratio of 0.340 (> 0.05), and DER 0.511 ratio ( > 0.05).

Q: What are the implications of this study?

A: The results of this study have important implications for company management, investors, and academics. For company management, these results highlight the need for awareness of the importance of integration of financial performance and CSR. On the other hand, for investors, this information can help in making investment decisions, given that minimal CSR disclosure can show a lack of company commitment to sustainable practices.

Q: What are the limitations of this study?

A: This study has several limitations. Firstly, the sample size is relatively small, which may limit the generalizability of the findings. Secondly, the study only examines the effect of financial performance on CSR disclosure in real estate and property companies listed on the IDX. Further research is needed to explore the effect of financial performance on CSR disclosure in other industries.

Q: What are the future research directions?

A: This study opens space for further research to explore other factors that might affect CSR disclosure in the real estate and property industry. Some potential research directions include:

Exploring the effect of other financial performance indicators: This study only examines the effect of ROA, ROE, NPM, and DER on CSR disclosure. Further research can explore the effect of other financial performance indicators on CSR disclosure.
Examining the effect of non-financial performance indicators: This study only examines the effect of financial performance indicators on CSR disclosure. Further research can examine the effect of non-financial performance indicators on CSR disclosure.
Investigating the effect of CSR disclosure on financial performance: This study examines the effect of financial performance on CSR disclosure. Further research can investigate the effect of CSR disclosure on financial performance.

Q: What are the practical implications of this study?

A: The practical implications of this study are that company management should be aware of the importance of integration of financial performance and CSR. They should prioritize sustainable investments in CSR programs and disclose their commitment to social responsibility. Investors should also consider CSR disclosure as an important factor in making investment decisions.

Q: What are the theoretical implications of this study?

A: The theoretical implications of this study are that it contributes to the existing literature on the relationship between financial performance and CSR disclosure. The study provides empirical evidence of the effect of financial performance on CSR disclosure in real estate and property companies listed on the IDX.

Q: What are the future research opportunities?

A: The future research opportunities are to explore other factors that might affect CSR disclosure in the real estate and property industry. Some potential research opportunities include:

Examining the effect of CSR disclosure on financial performance: This study examines the effect of financial performance on CSR disclosure. Further research can investigate the effect of CSR disclosure on financial performance.
Investigating the effect of CSR disclosure on company reputation: This study examines the effect of financial performance on CSR disclosure. Further research can investigate the effect of CSR disclosure on company reputation.
Exploring the effect of CSR disclosure on stakeholder engagement: This study examines the effect of financial performance on CSR disclosure. Further research can explore the effect of CSR disclosure on stakeholder engagement.