Proceedings of the 3rd International Conference on Economics, Business and Economic Education Science, ICE-BEES 2020, 22-23 July 2020, Semarang, Indonesia

Research Article

The Effect of Corporate Social Performance (CFP) on Corporate Financial Performance (CFP) in SOE and Non-SOE Companies in Indonesia

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  • @INPROCEEDINGS{10.4108/eai.22-7-2020.2307927,
        author={Muhammad Fadiel Sinaga and Junino  Jahja},
        title={The Effect of Corporate Social Performance (CFP) on Corporate Financial Performance (CFP) in SOE and Non-SOE Companies in Indonesia},
        proceedings={Proceedings of the 3rd International Conference on Economics, Business and Economic Education Science, ICE-BEES 2020, 22-23 July 2020, Semarang, Indonesia},
        publisher={EAI},
        proceedings_a={ICE-BEES},
        year={2021},
        month={5},
        keywords={corporate social performance corporate financial performance state-owned enterprise market competition},
        doi={10.4108/eai.22-7-2020.2307927}
    }
    
  • Muhammad Fadiel Sinaga
    Junino Jahja
    Year: 2021
    The Effect of Corporate Social Performance (CFP) on Corporate Financial Performance (CFP) in SOE and Non-SOE Companies in Indonesia
    ICE-BEES
    EAI
    DOI: 10.4108/eai.22-7-2020.2307927
Muhammad Fadiel Sinaga1,*, Junino Jahja1
  • 1: Universitas Indonesia, Indonesia
*Contact email: sinagafadiel@gmail.com

Abstract

This study analyzes the relationship between Corporate Social Performance and Corporate Financial Performance in State-Owned Enterprise (SOE) and non-SOE companies in Indonesia. The issue of CSR in developing countries is still left behind compared to developed countries in Europe and America. Previous research has shown how CSP can affect CFP is quite positive. the extent of the influence of CSR on financial performance will be measured using regression analysis. This research is a quantitative study using the Ordinary Least Square (OLS) method. Our data sources consist of companies listed on the IDX and have an ESG rating from 2013-2017. Besides, it will be seen the influence of the government in market competition, especially regarding SOE companies. The results show that CSP has a weak influence on the company's financial performance in all samples. In the case of Indonesia, state ownership does not influence the effect of CSP on CFP. In third model, this research show that CSP has a significant negative effect on the competitive industry group, but in concentrated industry shows that CSP has no significant effect on CFP. This study shows different result from many previous studies. This study has limitations because only a few state-owned companies in Indonesia have listed, furthermore too many companies in Indonesia did not have ESG rating during 2013-2017.