The Effect Of Profitability Of Company Size And Leverage On Corporate Social Responsibility Disclosure Based On The Global Reporting Intiral Indicator (Empirical Study Of Insurance Companies Listed On The Indonesia Stock Exchange In 2017-2020)

Feb 27, 2025 by ADMIN 244 views

The Effect of Profitability, Company Size, and Leverage on Corporate Social Responsibility Disclosure

Introduction

Corporate Social Responsibility (CSR) has become a crucial aspect of a company's operations, as it helps maintain good relations with the community and the public. In practice, companies are required to convey information about CSR activities carried out, usually published in the Annual Report and Sustainability Report. This study aims to examine the effect of profitability, company size, and leverage on CSR disclosure based on the Global Reporting Initiative (GRI) indicator. This empirical study was conducted on insurance companies listed on the Indonesia Stock Exchange from 2017 to 2020.

The Importance of Corporate Social Responsibility

CSR is an activity carried out by the company to maintain good relations with the community or the public. In today's business environment, companies are expected to not only generate profits but also contribute to the well-being of society. CSR activities can take many forms, such as environmental conservation, community development, and social welfare programs. By engaging in CSR activities, companies can enhance their reputation, improve their relationships with stakeholders, and ultimately contribute to the betterment of society.

Research Methodology

This study includes 10 insurance companies using the nonprobability sampling method. Data collection is done by observing financial statements and annual reports issued by each company. The analysis technique used is multiple linear regression, which helps in determining the relationship between independent variables (profitability, company size, and leverage) with dependent variables (CSR disclosure).

Research Result

From the results of the analysis conducted, it was found that:

Profitability has a negative and insignificant effect on CSR disclosure.
Company size also shows a negative and insignificant effect on CSR disclosure.
Leverage shows a negative and insignificant effect on CSR disclosure.

Additional Analysis and Explanation

Although in general the results of the study show that profitability, company size, and leverage do not have a significant effect on CSR disclosure, it is essential to understand some of the factors that may be the cause.

Profitability: Usually, more profitable companies are expected to contribute more to CSR. However, in the context of this research, there may be other factors that dominate the company's decisions in the disclosure of CSR. For example, some companies may prefer to invest their profits in increasing operational efficiency or short-term growth rather than focusing on CSR activities.
Company size: Large companies may have more resources for CSR expenditure, but that does not mean they will reveal these activities more openly. Sometimes, large companies choose to maintain their corporate image and may not reveal all CSR activities as a whole.
Leverage: In this case, companies with a high level of debt may be more worried about compliance with their financial obligations rather than involving themselves in CSR activities. Greater financial risk often directs companies to focus more on financial stability rather than actively participating in social activities.

Conclusion

This study provides an important insight into the disclosure of CSR in the insurance industry in Indonesia. Although there is no significant relationship found between profitability, company size, and leverage with CSR disclosure, this raises further questions about other factors that might affect company decisions in carrying out their social responsibility. Further research is needed to dig deeper about this dynamics and to understand how companies can be better in applying CSR principles transparently and responsibly.

Implications of the Study

This study has several implications for stakeholders in the industry, as well as for academics and researchers who want to study more deeply about corporate social responsibility and the factors that influence it. Firstly, the study highlights the importance of CSR disclosure in the insurance industry in Indonesia. Secondly, the study suggests that other factors, such as company culture, leadership, and stakeholder pressure, may play a more significant role in determining CSR disclosure. Finally, the study emphasizes the need for further research to understand the dynamics of CSR disclosure and to develop effective strategies for promoting CSR practices in the industry.

Recommendations for Future Research

Based on the findings of this study, several recommendations can be made for future research. Firstly, researchers can investigate the role of company culture and leadership in determining CSR disclosure. Secondly, researchers can examine the impact of stakeholder pressure on CSR disclosure. Finally, researchers can develop and test effective strategies for promoting CSR practices in the industry.

Limitations of the Study

This study has several limitations that should be acknowledged. Firstly, the study is limited to insurance companies listed on the Indonesia Stock Exchange from 2017 to 2020. Secondly, the study uses a nonprobability sampling method, which may limit the generalizability of the findings. Finally, the study relies on secondary data, which may be subject to limitations and biases.

Conclusion

In conclusion, this study provides an important insight into the disclosure of CSR in the insurance industry in Indonesia. Although there is no significant relationship found between profitability, company size, and leverage with CSR disclosure, this raises further questions about other factors that might affect company decisions in carrying out their social responsibility. Further research is needed to dig deeper about this dynamics and to understand how companies can be better in applying CSR principles transparently and responsibly.
Frequently Asked Questions (FAQs) about the Effect of Profitability, Company Size, and Leverage on Corporate Social Responsibility Disclosure

Q: What is Corporate Social Responsibility (CSR)?

A: CSR is an activity carried out by a company to maintain good relations with the community or the public. It involves contributing to the well-being of society through various activities, such as environmental conservation, community development, and social welfare programs.

Q: What is the Global Reporting Initiative (GRI) indicator?

A: The GRI is a framework for reporting on CSR activities. It provides a set of indicators that companies can use to measure and report their CSR performance.

Q: What is the purpose of this study?

A: The purpose of this study is to examine the effect of profitability, company size, and leverage on CSR disclosure based on the GRI indicator. The study aims to provide insights into the factors that influence CSR disclosure in the insurance industry in Indonesia.

Q: What are the research findings?

A: The study found that profitability, company size, and leverage do not have a significant effect on CSR disclosure. However, the study suggests that other factors, such as company culture, leadership, and stakeholder pressure, may play a more significant role in determining CSR disclosure.

Q: What are the implications of the study?

A: The study has several implications for stakeholders in the industry, as well as for academics and researchers who want to study more deeply about corporate social responsibility and the factors that influence it. The study highlights the importance of CSR disclosure in the insurance industry in Indonesia and suggests that other factors may play a more significant role in determining CSR disclosure.

Q: What are the limitations of the study?

A: The study has several limitations that should be acknowledged. The study is limited to insurance companies listed on the Indonesia Stock Exchange from 2017 to 2020. The study uses a nonprobability sampling method, which may limit the generalizability of the findings. Finally, the study relies on secondary data, which may be subject to limitations and biases.

Q: What are the recommendations for future research?

A: Based on the findings of this study, several recommendations can be made for future research. Researchers can investigate the role of company culture and leadership in determining CSR disclosure. Researchers can examine the impact of stakeholder pressure on CSR disclosure. Finally, researchers can develop and test effective strategies for promoting CSR practices in the industry.

Q: What are the practical implications of the study?

A: The study has several practical implications for companies in the insurance industry in Indonesia. The study suggests that companies should focus on developing a strong CSR culture and leadership that can drive CSR disclosure. The study also suggests that companies should engage with stakeholders to understand their expectations and concerns about CSR disclosure.

Q: What are the future directions for research?

A: The study provides several future directions for research. Researchers can investigate the role of technology in promoting CSR disclosure. Researchers can examine the impact of regulatory requirements on CSR disclosure. Finally, researchers can develop and test effective strategies for promoting CSR practices in the industry.

Q: What are the contributions of the study?

A: The study contributes to the existing literature on CSR disclosure by providing insights into the factors that influence CSR disclosure in the insurance industry in Indonesia. The study also contributes to the development of effective strategies for promoting CSR practices in the industry.

Q: What are the limitations of the study in terms of generalizability?

A: The study is limited to insurance companies listed on the Indonesia Stock Exchange from 2017 to 2020. The study uses a nonprobability sampling method, which may limit the generalizability of the findings. Finally, the study relies on secondary data, which may be subject to limitations and biases.

Q: What are the future research directions in terms of CSR disclosure?

A: The study provides several future research directions in terms of CSR disclosure. Researchers can investigate the role of company culture and leadership in determining CSR disclosure. Researchers can examine the impact of stakeholder pressure on CSR disclosure. Finally, researchers can develop and test effective strategies for promoting CSR practices in the industry.