Increasing investor confidence

Oct 13, 2025 by windailys.com 25 views

The Effect of CSR and GCG Disclosures on Corporate Value with Profitability as Moderating Empirical Study Variables in LQ45 Companies Listed on the IDX 2007-2010 Period

Introduction

In today's business landscape, Corporate Social Responsibility (CSR) and Good Corporate Governance (GCG) have become essential components of a company's strategy to achieve long-term success. CSR refers to a company's commitment to social responsibility and its impact on the environment, while GCG refers to the practices and policies that ensure a company's operations are transparent, accountable, and responsible. The disclosure of CSR and GCG practices has become a critical aspect of a company's value, as it reflects its commitment to social responsibility and good governance. This study aims to examine the effect of CSR and GCG disclosures on company value, with profitability as a moderation variable, in LQ45 companies listed on the Indonesia Stock Exchange (IDX) during the 2007-2010 period.

The Importance of CSR and GCG Disclosures

CSR and GCG disclosures have become essential for companies to demonstrate their commitment to social responsibility and good governance. These disclosures provide stakeholders with valuable information about a company's operations, management practices, and social and environmental impact. By disclosing CSR and GCG practices, companies can increase investor confidence, improve their reputation, and reduce risk. This, in turn, can lead to an increase in company value.

Research Methodology

This study uses a causal approach with purposive sampling technique. The research population includes all companies listed on the IDX and entered the LQ45 group during the 2007-2010 period. A sample of 17 companies was used for 4 years, producing a total observation of 68 companies. Data analysis was carried out using a multiple linear regression model with secondary data in the form of financial statements and sustainable reports. Hypothesis testing was conducted using the T test and F test.

Research Results

The results of this study show that the simultaneous and partial disclosure of CSR and GCG affected the company's value. However, profitability was not proven to be a moderation variable in the relationship between CSR and GCG disclosure and company value. This finding suggests that companies that are more transparent in the disclosure of CSR and GCG practices tend to have a higher company value.

Additional Analysis and Explanation

The results of this study can be explained by several factors:

Increasing investor confidence: Good CSR and GCG disclosure shows a company's commitment to social responsibility and good governance, which increases investor confidence in the company. This, in turn, leads to an increase in company value.
Improved company reputation: Companies that apply good CSR and GCG practices tend to have a better reputation in the public eye. A good reputation can increase the competitiveness of the company and attract quality customers, suppliers, and employees, ultimately leading to a positive impact on the company's value.
Risk reduction: A good application of GCG helps companies minimize risk and maximize long-term profitability. This makes the company more stable and attractive to investors, leading to an increase in company value.

The Role of Profitability

The results of this study also show that profitability does not act as a moderation variable in the relationship between CSR and GCG disclosure and company value. This indicates that profitability is not a determining factor in connecting CSR and GCG disclosures with company value.

Recommendation

This study suggests that companies in Indonesia continue to increase transparency and quality of CSR and GCG disclosure. This will increase investor confidence and lead to an increase in long-term company value. Further research is needed to investigate other factors that can moderate the relationship between CSR and GCG disclosure and company value, such as company internal factors, macroeconomic conditions, and government regulations.

Conclusion

This study provides empirical evidence that the disclosure of CSR and GCG has a positive effect on company value, although profitability is not proven to be a moderation variable. These findings provide important information for companies and other stakeholders in understanding the importance of transparency and accountability in encouraging long-term company value.

Implications for Practice

The findings of this study have several implications for practice:

Increased transparency: Companies should increase transparency in their CSR and GCG disclosures to demonstrate their commitment to social responsibility and good governance.
Improved reputation: Companies should strive to improve their reputation by applying good CSR and GCG practices.
Risk reduction: Companies should apply good GCG practices to minimize risk and maximize long-term profitability.

Limitations of the Study

This study has several limitations:

Sample size: The sample size of this study is relatively small, which may limit the generalizability of the findings.
Data source: The data used in this study is secondary data, which may be subject to errors and biases.
Time period: The time period of this study is relatively short, which may limit the ability to capture long-term effects.

Future Research Directions

Future research should investigate other factors that can moderate the relationship between CSR and GCG disclosure and company value, such as company internal factors, macroeconomic conditions, and government regulations. Additionally, further research should examine the impact of CSR and GCG disclosures on company value in different industries and countries.
Frequently Asked Questions (FAQs) about the Effect of CSR and GCG Disclosures on Corporate Value

Q: What is the main finding of this study?

A: The main finding of this study is that the disclosure of Corporate Social Responsibility (CSR) and Good Corporate Governance (GCG) has a positive effect on company value, although profitability is not proven to be a moderation variable.

Q: What is the significance of CSR and GCG disclosures?

A: CSR and GCG disclosures are essential for companies to demonstrate their commitment to social responsibility and good governance. These disclosures provide stakeholders with valuable information about a company's operations, management practices, and social and environmental impact.

Q: How do CSR and GCG disclosures affect company value?

A: CSR and GCG disclosures can increase investor confidence, improve a company's reputation, and reduce risk, ultimately leading to an increase in company value.

Q: What is the role of profitability in the relationship between CSR and GCG disclosure and company value?

A: The results of this study show that profitability does not act as a moderation variable in the relationship between CSR and GCG disclosure and company value. This indicates that profitability is not a determining factor in connecting CSR and GCG disclosures with company value.

Q: What are the implications of this study for companies?

A: The findings of this study have several implications for companies, including:

Increased transparency in CSR and GCG disclosures
Improved reputation through good CSR and GCG practices
Risk reduction through good GCG practices

Q: What are the limitations of this study?

A: This study has several limitations, including:

Sample size: The sample size of this study is relatively small, which may limit the generalizability of the findings.
Data source: The data used in this study is secondary data, which may be subject to errors and biases.
Time period: The time period of this study is relatively short, which may limit the ability to capture long-term effects.

Q: What are the future research directions?

A: Future research should investigate other factors that can moderate the relationship between CSR and GCG disclosure and company value, such as company internal factors, macroeconomic conditions, and government regulations. Additionally, further research should examine the impact of CSR and GCG disclosures on company value in different industries and countries.

Q: What are the practical implications of this study for stakeholders?

A: The findings of this study have several practical implications for stakeholders, including:

Investors: Increased transparency in CSR and GCG disclosures can increase investor confidence and lead to an increase in company value.
Employees: Good CSR and GCG practices can improve a company's reputation and create a positive work environment.
Customers: Companies that apply good CSR and GCG practices can improve their reputation and increase customer loyalty.

Q: What are the policy implications of this study?

A: The findings of this study have several policy implications, including:

Regulatory bodies: Regulatory bodies should encourage companies to increase transparency in CSR and GCG disclosures.
Government: Governments should establish policies and regulations that promote good CSR and GCG practices.
Industry associations: Industry associations should promote good CSR and GCG practices among their members.