Increased pressure from institutional and foreign owners

Oct 13, 2025 by vinooalluri.com 147 views

Analysis of the Effect of Ownership Structure and Industry Types on the Level of Disclosure of Corporate Social Responsibility

Introduction

In recent years, the importance of corporate social responsibility (CSR) has become increasingly prominent in the business world. Companies are expected to not only generate profits but also contribute to the well-being of society and the environment. One way companies demonstrate their commitment to CSR is through disclosure, which involves reporting their CSR activities and performance to stakeholders. However, the level of CSR disclosure varies significantly among companies, and several factors can influence this variation. This study aims to analyze the effect of institutional ownership, foreign ownership, public ownership, and the type of industry on the level of CSR disclosure, with company size, leverage, and profitability as control variables.

Background

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a wide range of companies listed on it. The IDX has implemented various regulations and guidelines to promote CSR disclosure among listed companies. However, despite these efforts, the level of CSR disclosure remains a concern. This study aims to contribute to the understanding of the factors that influence CSR disclosure in Indonesia, particularly in the context of the IDX.

Methodology

This study uses secondary data from the annual reports of all manufacturing companies listed on the IDX in 2015. The data includes information on CSR disclosure, institutional ownership, foreign ownership, public ownership, company size, leverage, and profitability. The analysis method applied is multiple linear regression, with hypothesis testing including the adjusted R square test, F statistical test, and statistical test t.

Results

The results of the analysis show that the type of industry has a significant influence on the level of CSR disclosure. Conversely, institutional ownership, foreign ownership, and public ownership do not show a significant effect on the level of CSR disclosure. These findings indicate that companies operating in certain industrial sectors tend to be more open in reporting their CSR activities compared to others.

Discussion

The results of this study have several implications for CSR disclosure in Indonesia. Firstly, the type of industry plays a major role in determining how far the company feels encouraged to report their CSR activities. Companies in sectors that are closer to the community, such as the health or education sector, may be more likely to express their CSR activities compared to sectors oriented to high technology products.

Institutional and foreign ownership is often assumed to be able to encourage companies to be more responsible in the disclosure of CSR, because institutional owners are expected to pay attention to long-term sustainability. However, the results of this study indicate that there is no significant effect of this type of ownership on CSR disclosure. This may be caused by a lack of pressure from institutional or foreign owners to report CSR or maybe also because of their focus more on the financial aspects of the company.

Control variables such as company size, leverage, and profitability also play an important role in analyzing CSR disclosures. Generally, larger companies have more resources to implement CSR programs and tend to be more capable of reporting these activities. On the other hand, companies with high profitability may have more incentives to invest in CSR to increase their reputation in the eyes of the public.

Conclusion

This study emphasizes the importance of understanding the dynamics between ownership structure, type of industry, and CSR disclosure. Further research can be carried out to explore other factors that can influence CSR disclosure, as well as to see how future policy and regulation development can affect this practice in Indonesia. The findings of this study can also contribute to the development of CSR disclosure guidelines and regulations in Indonesia, which can help to promote transparency and accountability among listed companies.

Recommendations

Based on the findings of this study, several recommendations can be made:

Industry-specific CSR disclosure guidelines: The IDX can develop industry-specific CSR disclosure guidelines that take into account the unique characteristics of each industry.
Increased pressure from institutional and foreign owners: Institutional and foreign owners can play a more active role in promoting CSR disclosure among listed companies.
CSR disclosure training and education: The IDX can provide training and education programs for listed companies on CSR disclosure, which can help to improve their understanding and implementation of CSR practices.
Regular CSR disclosure monitoring: The IDX can establish a regular monitoring system to ensure that listed companies are complying with CSR disclosure regulations and guidelines.

Limitations

This study has several limitations that should be noted:

Sample size: The sample size of this study is limited to manufacturing companies listed on the IDX in 2015.
Data availability: The data used in this study is secondary data, which may not be comprehensive or up-to-date.
Methodology: The analysis method applied in this study is multiple linear regression, which may not be the most suitable method for analyzing CSR disclosure.

Future Research Directions

Several future research directions can be explored:

CSR disclosure in other industries: This study focuses on manufacturing companies, but CSR disclosure can also be analyzed in other industries, such as finance, healthcare, and education.
CSR disclosure in other countries: This study focuses on Indonesia, but CSR disclosure can also be analyzed in other countries, such as the United States, China, and Europe.
CSR disclosure and firm performance: This study focuses on CSR disclosure, but CSR disclosure can also be analyzed in relation to firm performance, such as financial performance and stock market performance.

Conclusion

In conclusion, this study provides insights into the factors that influence CSR disclosure in Indonesia, particularly in the context of the IDX. The findings of this study can contribute to the development of CSR disclosure guidelines and regulations in Indonesia, which can help to promote transparency and accountability among listed companies. Further research can be carried out to explore other factors that can influence CSR disclosure, as well as to see how future policy and regulation development can affect this practice in Indonesia.
Frequently Asked Questions (FAQs) on Corporate Social Responsibility (CSR) Disclosure

Q: What is Corporate Social Responsibility (CSR) Disclosure?

A: CSR disclosure refers to the practice of reporting a company's social, environmental, and economic performance to stakeholders, including shareholders, customers, employees, and the general public.

Q: Why is CSR Disclosure important?

A: CSR disclosure is important because it helps to promote transparency and accountability among companies, which can lead to improved social and environmental outcomes. It also helps to build trust between companies and their stakeholders, which can lead to increased customer loyalty and improved reputation.

Q: What are the benefits of CSR Disclosure?

A: The benefits of CSR disclosure include:

Improved reputation and brand image
Increased customer loyalty and retention
Better risk management and reduced regulatory risks
Improved access to capital and reduced financing costs
Enhanced employee engagement and retention
Improved social and environmental outcomes

Q: What are the challenges of CSR Disclosure?

A: The challenges of CSR disclosure include:

Lack of standardization and consistency in reporting
Limited availability of data and information
High costs and resource requirements
Difficulty in measuring and reporting social and environmental impacts
Limited stakeholder engagement and participation

Q: How can companies improve their CSR Disclosure?

A: Companies can improve their CSR disclosure by:

Developing a clear and comprehensive CSR strategy and policy
Establishing a CSR reporting framework and guidelines
Collecting and analyzing data and information on social and environmental impacts
Engaging with stakeholders and incorporating their feedback and concerns
Using technology and digital tools to enhance reporting and disclosure

Q: What are the key indicators of CSR Disclosure?

A: The key indicators of CSR disclosure include:

Governance and management structure
Social and environmental policies and practices
Stakeholder engagement and participation
Reporting and disclosure practices
Performance metrics and targets

Q: How can investors and stakeholders assess CSR Disclosure?

A: Investors and stakeholders can assess CSR disclosure by:

Reviewing annual reports and sustainability reports
Analyzing CSR reporting frameworks and guidelines
Evaluating stakeholder engagement and participation
Assessing performance metrics and targets
Conducting site visits and audits

Q: What are the regulatory requirements for CSR Disclosure?

A: The regulatory requirements for CSR disclosure vary by country and industry, but generally include:

Disclosure of social and environmental impacts
Reporting on stakeholder engagement and participation
Compliance with international standards and frameworks
Transparency and accountability in reporting and disclosure

Q: How can companies ensure that their CSR Disclosure is credible and reliable?

A: Companies can ensure that their CSR disclosure is credible and reliable by:

Developing a clear and comprehensive CSR strategy and policy
Establishing a CSR reporting framework and guidelines
Collecting and analyzing data and information on social and environmental impacts
Engaging with stakeholders and incorporating their feedback and concerns
Using technology and digital tools to enhance reporting and disclosure

Q: What are the future trends and developments in CSR Disclosure?

A: The future trends and developments in CSR disclosure include:

Increased use of technology and digital tools
Greater emphasis on stakeholder engagement and participation
Development of new reporting frameworks and guidelines
Increased focus on sustainability and environmental impacts
Greater emphasis on transparency and accountability in reporting and disclosure.