The Link between Corporate Social Performance and Financial Performance: Evidence from Indonesian Companies

Issues in Social and Environmental Accounting, Vol. 1, No. 1, pp. 149-159, June 2007

12 Pages Posted: 21 Oct 2009

See all articles by Hasan Fauzi

Hasan Fauzi

Sebelas Maret University

Lois S. Mahoney

Eastern Michigan University

Azhar Abdul Rahman

Universiti Utara Malaysia

Date Written: October, 15 2009

Abstract

This study examines the relationship of corporate social performance (CSP) to corporate financial performance (CFP) to determine if CSP is related to firm performance. Additionally, it examines whether firm size or industry affects the relationships between CSR and CSP. This study advances the literature as it examines this relationship for companies in a developing country, Indonesia, along with examining the impact of moderating variables on this relationship. Two models were developed: the first model was derived using slack resource theory and the second model was developed using the good management theory. Through the examination of 383 firms, the result of the study failed to find a significant relationship between CSP and CFP in either model. Further analysis, using the slack resource theory, did find that company size had a significant positive moderating effect on the relationship between CSP and CFP.

Keywords: Corporate Social performance, financial performance, content analysis, stakeholder

JEL Classification: M14, M19, M41, M49

Suggested Citation

Fauzi, Hasan and Mahoney, Lois S. and Abdul Rahman, Azhar, The Link between Corporate Social Performance and Financial Performance: Evidence from Indonesian Companies (October, 15 2009). Issues in Social and Environmental Accounting, Vol. 1, No. 1, pp. 149-159, June 2007. Available at SSRN: https://ssrn.com/abstract=1489181

Hasan Fauzi (Contact Author)

Sebelas Maret University ( email )

Jl. Ir. Sutami 36A
Kentingan
Surakarta, Jawa Tengah 57126
Indonesia

Lois S. Mahoney

Eastern Michigan University ( email )

Eastern Michigan University
Ypsilanti, Michigan, 48197
Ypsilanti, MI 48197
United States

HOME PAGE: http://www.cob.emich.edu

Azhar Abdul Rahman

Universiti Utara Malaysia ( email )

Sintok, Kedah 06010
Malaysia

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