Impact of Corporate Social Responsibility Toward Firm Value and Profitability

Abstract

Corporate Social Responsibility is business contribution to sustainable development, that corporate behaviour not only needed to ensure return to shareholders but also other stakeholders interest. In order to have a long-run business, corporation need to pay attention to 3P (profit, people and planet). Application of CSR is treated as an investment, as there are many benefit from CSR. In Indonesia, CSR currently is an obligation only for corporation in natural resources-related business. Our paper examined 30 selected listed Indonesia corporation (not in natural resources business) to examine relationship between CSR to firm value and profitability. Based on our research, using double linear regression model and usage of GRI as measurement of CSR activity we find out that there is no significant relationship between CSR and firm value (measured by Tobin’s Q). We also find same evidence for relationship between CSR and profitability (ROA, ROE and NPM).