Implementation of Corporate Social Responsibility to Increase the Value of Companies Listed on the SRI Kehati Index Indonesia

Eddy Winarso

A chapter in Corporate Social Responsibility from IntechOpen

Abstract: Corporate social responsibility (CSR) is the latest issue that must be observed by business people in carrying out their business processes from raw materials to the end consumers who have implemented CSR properly. And, the company must promote superior products that its produces are environmentally friendly and do not damage the environment. Investors will see the technical and fundamental analyses of the company whether they have implemented regulations and government policies in producing their products, and then buy shares from the company because they have confidence that companies that implement CSR will increase the company's value and have a good brand image so that the market responds positively. As well as the roles of government and society as regulators of laws, and the public who observe the implementation of CSR must be responsive and must inform if there are violations committed by business practitioners against CSR. Based on the analysis by the author, it turns out that CSR has no effect on company's value as measured by the price-to-book value (PBV). CSR implemented based on the GRI G4 is still below 50% of the 79 items that must be disclosed in the financial statements, which means that the company has not fully implemented CSR based on GRI G4 in its business processes, which obtained an average of 41.45%; but there are those who have applied it close to 100%, namely, PT Timah (Pesero) Tbk with an average CSR of 89.62%. But the PBV is low at 1.55. In contrast, PT Unilever Indonesia CSR is at an average of 41.43% but the PBV is 46.09, meaning that in this study CSR has no effect on firm value. CSR is implemented by companies not because of the awareness of the company or its responsibilities but only because of regulations issued by the government in order to complete and manage permits obtained easily.

Keywords: CSR; company value; Sri Kehati Index; PBV; GRI (search for similar items in EconPapers)
JEL-codes: M14 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ito:pchaps:214674

DOI: 10.5772/intechopen.93482

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