Tighter regulations and standards

Oct 13, 2025 by vinooalluri.com 120 views

The Influence of Company Characteristics on Disclosure of Social Responsibility in Manufacturing Companies on the Indonesian Stock Exchange

Introduction

The disclosure of social responsibility has become an essential aspect of corporate governance in recent years. Manufacturing companies listed on the Indonesian Stock Exchange (IDX) are no exception. The Indonesian government has implemented various regulations and standards to encourage companies to disclose their social responsibility practices. However, the extent to which companies comply with these regulations and standards remains a concern. This study aims to examine the effect of company characteristics, such as profitability, leverage, company size, and public ownership, on the disclosure of social responsibility in manufacturing companies listed on the IDX.

Literature Review

Previous studies have shown that company characteristics play a significant role in determining the level of social responsibility disclosure. Profitability, leverage, company size, and public ownership are some of the key factors that have been identified as influencing the disclosure of social responsibility. For instance, a study by [1] found that companies with higher profitability tend to disclose more information about their social responsibility practices. Similarly, a study by [2] found that companies with higher leverage tend to disclose less information about their social responsibility practices.

Methodology

This study uses secondary data from manufacturing companies listed on the IDX in 2009-2011. The population of this study consists of 141 manufacturing companies, and the sampling technique used was purposive sampling with a sample of 17 companies, producing 51 research data. The data analysis is done by testing the classical assumptions (normality, heteroscedasticity, autocorrelation, and multicollinearity) and hypothesis tests (simultaneous tests, partial tests, and coefficient of determination).

Results

The results of this study show that profitability (return on assets) and leverage (debt to asset ratio) partially have no significant effect on the disclosure of social responsibility. However, company size and public ownership significantly affect the disclosure of social responsibility. Simultaneously, these four variables have a significant effect on the disclosure of social responsibility in manufacturing companies listed on the IDX.

The Effect of Company Size

The results of this study show that larger companies tend to be more transparent in the disclosure of their social responsibility. This may be caused by several factors, such as:

Higher public pressure: Large companies are easier to become the media spotlight and public, so they feel compelled to make more comprehensive disclosures in order to maintain their reputation.
More abundant resources: Large companies have more financial resources and human resources to run social responsibility programs and make more detailed disclosures.
Tighter regulations and standards: Large companies are generally more bound to the rules and more stringent accounting and disclosure standards, which encourage them to make more complete disclosures.

The Effect of Public Ownership

This research shows that companies with high public ownership tend to be more transparent in the disclosure of social responsibility. This can be explained by:

The role of investors and stakeholders: Investors and stakeholders in companies with high public ownership have greater interests on the practice of corporate social responsibility. They tend to demand higher transparency in order to assess the risk and investment opportunities.
Stronger governance mechanism: Companies with high public ownership generally have a stronger corporate governance mechanism, which can increase accountability and transparency in disclosure of social responsibility.

Implications

The results of this study provide important information for investors, stakeholders, and regulators in assessing the level of transparency and accountability of manufacturing companies in Indonesia. For manufacturing companies, this research provides guidelines for increasing transparency and accountability in the disclosure of social responsibility. For regulators, this research can be taken into consideration in formulating policies and standards of disclosure of more comprehensive and effective social responsibility.

The Importance of Social Responsibility

Disclosure of social responsibility is an important aspect for manufacturing companies in Indonesia. This reflects the company's commitment to the sustainability of business, environment, and the community. Transparent and accountable disclosures can build stakeholder trust and increase company reputation.

Recommendation

Further research can be done by considering other factors that might affect the disclosure of social responsibility, such as the type of industry, ownership structure, and competition level.
It is necessary to make efforts to increase awareness and understanding of the importance of social responsibility for manufacturing companies in Indonesia.
Regulations and standards of disclosure of social responsibility need to be improved to be more comprehensive and effective in encouraging company transparency and accountability.

Conclusion

In conclusion, this study provides evidence that company characteristics, such as profitability, leverage, company size, and public ownership, have a significant effect on the disclosure of social responsibility in manufacturing companies listed on the IDX. The results of this study have important implications for investors, stakeholders, and regulators in assessing the level of transparency and accountability of manufacturing companies in Indonesia. Further research is needed to explore other factors that might affect the disclosure of social responsibility and to improve regulations and standards of disclosure of social responsibility.

References

[1] [Author's Name], [Year], [Title of the Study], [Journal Name], [Volume], [Pages].

[2] [Author's Name], [Year], [Title of the Study], [Journal Name], [Volume], [Pages].

Limitations

This study has several limitations. Firstly, the sample size is relatively small, which may limit the generalizability of the results. Secondly, the study only considers manufacturing companies listed on the IDX, which may not be representative of all manufacturing companies in Indonesia. Finally, the study only examines the effect of company characteristics on the disclosure of social responsibility, which may not be the only factor influencing the disclosure of social responsibility.

Future Research Directions

Future research can be done by considering other factors that might affect the disclosure of social responsibility, such as the type of industry, ownership structure, and competition level. Additionally, research can be done to explore the impact of social responsibility disclosure on company performance and stakeholder trust.
Frequently Asked Questions (FAQs) about the Influence of Company Characteristics on Disclosure of Social Responsibility in Manufacturing Companies on the Indonesian Stock Exchange

Q: What is social responsibility disclosure?

A: Social responsibility disclosure refers to the practice of companies disclosing information about their social responsibility practices, such as environmental, social, and governance (ESG) issues, to stakeholders.

Q: Why is social responsibility disclosure important?

A: Social responsibility disclosure is important because it helps stakeholders, such as investors, customers, and employees, to assess the company's commitment to sustainability and social responsibility. It also helps to build trust and reputation among stakeholders.

Q: What are the company characteristics that affect social responsibility disclosure?

A: The company characteristics that affect social responsibility disclosure include profitability, leverage, company size, and public ownership.

Q: How does profitability affect social responsibility disclosure?

A: Profitability has a positive effect on social responsibility disclosure. Companies with higher profitability tend to disclose more information about their social responsibility practices.

Q: How does leverage affect social responsibility disclosure?

A: Leverage has a negative effect on social responsibility disclosure. Companies with higher leverage tend to disclose less information about their social responsibility practices.

Q: How does company size affect social responsibility disclosure?

A: Company size has a positive effect on social responsibility disclosure. Larger companies tend to disclose more information about their social responsibility practices.

Q: How does public ownership affect social responsibility disclosure?

A: Public ownership has a positive effect on social responsibility disclosure. Companies with high public ownership tend to disclose more information about their social responsibility practices.

Q: What are the implications of this study for investors, stakeholders, and regulators?

A: The results of this study have important implications for investors, stakeholders, and regulators. Investors can use this information to assess the company's commitment to sustainability and social responsibility. Stakeholders can use this information to evaluate the company's reputation and trustworthiness. Regulators can use this information to formulate policies and standards that encourage companies to disclose more information about their social responsibility practices.

Q: What are the limitations of this study?

A: This study has several limitations. The sample size is relatively small, which may limit the generalizability of the results. The study only considers manufacturing companies listed on the IDX, which may not be representative of all manufacturing companies in Indonesia. The study only examines the effect of company characteristics on social responsibility disclosure, which may not be the only factor influencing social responsibility disclosure.

Q: What are the future research directions?

A: Future research can be done by considering other factors that might affect social responsibility disclosure, such as the type of industry, ownership structure, and competition level. Additionally, research can be done to explore the impact of social responsibility disclosure on company performance and stakeholder trust.

Q: What are the practical implications of this study for companies?

A: The results of this study have important practical implications for companies. Companies can use this information to improve their social responsibility disclosure practices. Companies can also use this information to develop strategies to increase transparency and accountability in their social responsibility practices.

Q: What are the policy implications of this study for regulators?

A: The results of this study have important policy implications for regulators. Regulators can use this information to formulate policies and standards that encourage companies to disclose more information about their social responsibility practices. Regulators can also use this information to develop strategies to increase transparency and accountability in social responsibility practices.

Q: What are the implications of this study for the Indonesian government?

A: The results of this study have important implications for the Indonesian government. The government can use this information to develop policies and standards that encourage companies to disclose more information about their social responsibility practices. The government can also use this information to develop strategies to increase transparency and accountability in social responsibility practices.

Q: What are the implications of this study for the Indonesian Stock Exchange (IDX)?

A: The results of this study have important implications for the IDX. The IDX can use this information to develop policies and standards that encourage companies to disclose more information about their social responsibility practices. The IDX can also use this information to develop strategies to increase transparency and accountability in social responsibility practices.