Corporate Social Responsibility (CSR) and Risk Taking: Evidence from Indonesia

Abstract

In this paper, we investigate the effect of Corporate Social Responsibility (CSR) on risk taking in Indonesia. We hand collect CSR and other corporate governance data from 2016-2017 for publicly listed firms on the Indonesian Stock Exchange (IDX). The results, based on 820 firm-year observations, suggest that CSR activity is negatively related to corporate’s risk. This means the presence of CSR activity is positively perceived by stakeholders. Therefore, it reduces operating and market risks of the company. Also, we test for endogeneity and the main findings remain similar.