COMPANY PROFITABILITY LEVEL AND CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE: EVIDENCE FROM INDONESIA

Abstract

Currently it is widely agreed that profitable firms will more likely engage in corporate social responsibilities (CSR). Basically, most companies are willing to perform, report and disclose their CSR when they are profitable. But this research aims to investigate deeper whether the level of profitability itself influences corporate social responsibility disclosure. The division into high and low level profitability groups is achieved by using the median on companies’ profitability level. That allows to determine the impact of other factors on CSR disclosure in both types of companies. The samples used are listed companies on the Indonesia Stock Exchange (IDX) from 2010 to 2013. The annual report as the main source was used to extract and measure all variables for the study. CSR disclosure information was based on GR3 guidelines. This paper employed multiple regression to analyze the data.  The results show that higher profitability level companies do not show a significant relationship with CSR disclosure, whereas companies with lower profitability are significantly but negatively related to CSR. This research concludes that higher profitability companies do not consider profit as a reason to perform their social duties and the lower profitability level group suggests that more profit means less CSR disclosure. It turns out also that company size is the main influencer for CSR disclosure.