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