The Effect of Corporate Social Responsibility on Company Value with Profitability as Moderating Variables in Mining Companies Listed on the Indonesia Stock Exchange
Introduction
Corporate Social Responsibility (CSR) has become a crucial aspect of business operations in recent years. It is a social obligation carried out by companies to contribute to the community and the surrounding environment. In this context, this study aims to analyze the effect of CSR on company value, as well as evaluating the role of profitability as a moderating variable in the relationship between CSR and company value, especially in mining companies listed on the Indonesia Stock Exchange (IDX).
Background of the Study
The mining industry is one of the sectors that often faces criticism related to environmental and social impacts of their business activities. As a result, companies in this sector are under increasing pressure to demonstrate their commitment to CSR. However, the relationship between CSR and company value is not yet fully understood, particularly in the context of the Indonesian mining industry.
Research Methodology
This study used a non-probability sampling technique, specifically the purposive sampling method, to select 38 mining companies listed on the IDX. Of these, 14 companies were selected that met the criteria designated as research samples. The data collected from these companies were then analyzed using statistical tests to determine the effect of CSR on company value.
Results of the Study
The results of this study show that CSR has a significant influence on the company's value measured by Price to Book Value (PBV). The statistical test results show that the t-count value (2,191) is greater than the t-table (1,681), and the significance value obtained is 0.035, which shows that the effect of CSR on PBV is significant.
However, this study also found that profitability measured by Return on Assets (ROA) has no significant influence on the relationship between CSR and PBV. In this case, the results of the regression analysis indicate that the t-count (1,589) is smaller than t-table (1,681) and the significance value obtained is 0.120, which means ROA does not significantly affect the relationship between CSR and company value.
Discussion
The results of this study show the importance of the role of CSR in increasing company value, especially in the mining sector which often faces criticism related to environmental and social impacts of their business activities. CSR is not just a moral obligation, but also a business strategy that can increase the company's reputation in the eyes of investors and the community. Increased company reputation will have a positive impact on PBV, which reflects the company's market value compared to the book value of its assets.
On the other hand, ROA's unpreparedness as a moderating variable shows that company profitability does not always affect the value obtained from CSR implementation. This can be caused by several factors, such as the nature of the mining industry which may be more influenced by market conditions and government regulations than by the company's financial performance itself.
Conclusion
In conclusion, CSR is proven to have a significant influence on the value of the company in the mining sector. By understanding this relationship, companies can take proactive steps in the implementation of CSR, which in turn will increase the company's value in the market. Therefore, mining companies need to pay attention and optimize their CSR program as part of a business strategy to attract investors and increase company value.
Recommendations
Based on the findings of this study, the following recommendations are made:
Mining companies should prioritize the implementation of CSR as part of their business strategy to increase company value.
Stakeholders, including investors and regulators, should assess the impact of CSR in a broader context, not only from the point of view of profitability.
Further research is needed to explore the relationship between CSR and company value in other industries and contexts.
Limitations of the Study
This study has several limitations, including:
The sample size was limited to 14 mining companies listed on the IDX.
The study only analyzed the effect of CSR on company value, and did not explore other potential outcomes of CSR implementation.
The study only used a non-probability sampling technique, which may not be representative of the entire population of mining companies listed on the IDX.
Future Research Directions
Future research should aim to explore the relationship between CSR and company value in other industries and contexts. Additionally, further research is needed to explore the potential outcomes of CSR implementation, including its impact on company reputation, employee engagement, and community development.
References
[List of references cited in the study]
Appendix
[Appendix containing additional data and tables]
Abstract
This study aims to analyze the effect of Corporate Social Responsibility (CSR) on company value, as well as evaluating the role of profitability as a moderating variable in the relationship between CSR and company value, especially in mining companies listed on the Indonesia Stock Exchange (IDX). The results of this study show that CSR has a significant influence on the company's value measured by Price to Book Value (PBV). However, profitability measured by Return on Assets (ROA) has no significant influence on the relationship between CSR and PBV. The study concludes that CSR is proven to have a significant influence on the value of the company in the mining sector.Frequently Asked Questions (FAQs) about the Effect of Corporate Social Responsibility on Company Value
Q: What is Corporate Social Responsibility (CSR)?
A: Corporate Social Responsibility (CSR) is a social obligation carried out by companies to contribute to the community and the surrounding environment. It is a business strategy that aims to create value for both the company and society.
Q: How does CSR affect company value?
A: The results of this study show that CSR has a significant influence on the company's value measured by Price to Book Value (PBV). This means that companies that prioritize CSR are likely to have a higher market value compared to their book value.
Q: What is the role of profitability in the relationship between CSR and company value?
A: The results of this study show that profitability measured by Return on Assets (ROA) has no significant influence on the relationship between CSR and PBV. This means that company profitability does not always affect the value obtained from CSR implementation.
Q: Why is CSR important for mining companies?
A: Mining companies often face criticism related to environmental and social impacts of their business activities. By prioritizing CSR, mining companies can demonstrate their commitment to sustainability and improve their reputation in the eyes of investors and the community.
Q: How can companies optimize their CSR program?
A: Companies can optimize their CSR program by:
Conducting a thorough analysis of their social and environmental impacts
Setting clear goals and objectives for their CSR program
Developing a comprehensive strategy for implementing CSR initiatives
Monitoring and evaluating the effectiveness of their CSR program
Q: What are the benefits of prioritizing CSR?
A: The benefits of prioritizing CSR include:
Improved reputation and brand image
Increased customer loyalty and retention
Enhanced employee engagement and motivation
Improved relationships with stakeholders and the community
Increased access to capital and investment
Q: What are the challenges of implementing CSR?
A: The challenges of implementing CSR include:
Limited resources and budget
Difficulty in measuring the effectiveness of CSR initiatives
Resistance from employees or stakeholders
Complexity of implementing CSR initiatives in a global or multicultural context
Q: How can companies measure the effectiveness of their CSR program?
A: Companies can measure the effectiveness of their CSR program by:
Conducting regular surveys and assessments of their social and environmental impacts
Monitoring and evaluating the effectiveness of their CSR initiatives
Setting clear goals and objectives for their CSR program
Developing a comprehensive strategy for implementing CSR initiatives
Q: What is the future of CSR?
A: The future of CSR is likely to be shaped by increasing pressure from stakeholders and regulators to prioritize sustainability and social responsibility. Companies that prioritize CSR are likely to be better positioned to adapt to changing market conditions and regulatory requirements.
Q: How can investors and regulators support CSR?
A: Investors and regulators can support CSR by:
Encouraging companies to prioritize CSR and sustainability
Providing incentives for companies that prioritize CSR
Developing and enforcing regulations that promote CSR and sustainability
Conducting regular assessments and evaluations of companies' CSR performance.