Proceedings of the Asia Pacific Business and Economics Conference (APBEC 2018)

Corporate Social Responsibility (CSR) Disclosure and Investors’ & Creditors’ Required Return: Evidence from Indonesia

Authors
Ain Hajawiyah, Ancella A. Hermawan
Corresponding Author
Ancella A. Hermawan
Available Online July 2019.
DOI
10.2991/apbec-18.2019.61How to use a DOI?
Keywords
Cost of equity; cost of debt; Corporate social responsibility (CSR); disclosure
Abstract

This study investigates the relation between corporate social responsibility (CSR) and the required rate of return (cost of capital), both cost of equity and cost of debt. Up to 690 observations of listed companies in Indonesia for the years 2013–2015 are studied using multiple regression analysis. The CSR disclosure score is measured using a percentage of the keyword coverage in a company’s annual report with NVivo software. This study also uses a manual indexing procedure according to the GRI G4 list items to check its robustness. The results show that previous year’s cost of equity and cost of debt motivate companies to disclose CSR extensively in the current year. After disclosing CSR more extensively, it is not proven that companies gain benefit in the form of lower cost of equity and cost of debt in the next year. Investors and creditors do not perceive CSR disclosure as a means of reducing asymmetric information or as an information risk. CSR disclosure per se may not be perceived as risk-reducing activities by investors and creditors, and thus, does not guarantee lower cost of capital.

Copyright
© 2019, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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Volume Title
Proceedings of the Asia Pacific Business and Economics Conference (APBEC 2018)
Series
Advances in Economics, Business and Management Research
Publication Date
July 2019
ISBN
10.2991/apbec-18.2019.61
ISSN
2352-5428
DOI
10.2991/apbec-18.2019.61How to use a DOI?
Copyright
© 2019, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Cite this article

TY  - CONF
AU  - Ain Hajawiyah
AU  - Ancella A. Hermawan
PY  - 2019/07
DA  - 2019/07
TI  - Corporate Social Responsibility (CSR) Disclosure and Investors’ & Creditors’ Required Return: Evidence from Indonesia
BT  - Proceedings of the Asia Pacific Business and Economics Conference (APBEC 2018)
PB  - Atlantis Press
SP  - 435
EP  - 440
SN  - 2352-5428
UR  - https://doi.org/10.2991/apbec-18.2019.61
DO  - 10.2991/apbec-18.2019.61
ID  - Hajawiyah2019/07
ER  -