The Association Between Corporate Social Responsibility And Corporate Financial Performance

Abstract

The objectives of this study is to investigate the association between CSR and Corporate Fi
nancial Performance (CFP). This study investigates 800 firms listed on Indonesian Stock Ex
change in 2010 - 2012. Financial performance is measured by accounting-based approach and 
stock-market-based approach. While, CSR practices is measured by Corporate Social Disclo
sure Index (CSRDI). Thus, the association was analyzed under multivariate linear regression 
by considering time difference. Firm size, growth, and risk are included as control variables. 
This study finds: (1) CSR provides positive impact on the financial performance until one next 
period; (2) financial performance measured by ROA influence positively CSR only the next 
two years; (3) there is significant positive relationship between firm size and CSR. The paper 
has implications in enhancing the understanding of company performance through understand
ing the association between CSR and CFP.This may increase the understanding of the associa
tion between CSR and CFP. The findings of this study contribute to the literature and regulator 
on CSR.