THE EFFECT OF FINANCIAL PERFORMANCE ON CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE: STUDY OF INDONESIA’S MANUFACTURING COMPANIES LISTED IN INDONESIA STOCK EXCHANGE IN THE YEAR 2015-2017

Abstract

This research relied on an abundant phenomenon of the CSR disclosure on companies’ annual report in the manufacturing sector since the CSR concept was more on the business organization agenda, due to its ability to increase the competitiveness of a firm, especially in the manufacturing sector as one of the major sectors which dominate the business environment in Indonesia. In addition, this research aimed to examine the effect of financial performance on corporate social responsibility disclosure by conducting a quantitative study of Indonesia’s manufacturing companies listed in Indonesia Stock Exchange in the year 2015-2017. This issue attracted the researcher to deeply examine on the relationship between the companies’ financial performance and CSR disclosure in their annual reports, by considering the companies’ financial performance measurement including the company’s profitability (Return on Equity), Leverage (Debt to Assets), and Firm Size. To examine those measurement, this research also used the adoption of General Reporting Initiative (GRI) as a based on the checklist of Corporate Social Responsibility disclosure items that companies had been disclosed in their annual report. In this research, data were collected by obtaining the 146 companies’ annual report YEAR 2015-2017 of all manufacturing companies that listed in Indonesia Stock Exchange via the website www.idx.co.id and analyzes the annual report to determine the suitable companies and all the data regarding the characteristics of the purposive sampling method. 30 manufacturing companies which fulfill all the criteria included as the samples to obtain the data for this research. As the result, this research showed that all of the variables of company’s profitability (Return on Equity), Leverage (Debt to Assets), and Firm Size affected the Corporate Social Responsibility Disclosure.