An Overview of Legitimacy Theory on the Influence of Company Size and Industry Sensitivity towards CSR Disclosure

International Journal of Applied Business and Economic Research (IJABER). Vol. 14, No. 5, p. 3013-3023, 2016

11 Pages Posted: 5 Jan 2017

Date Written: May 3, 2016

Abstract

The issue about CSR disclosure increases rapidly, while the research related to CSR disclosure found dissimilar results. The purpose of this study was to analyze the effect of industry sensitivity and company’s size on CSR disclosure based on legitimacy theory. The 117 manufacturing companies listed in Indonesian Stock Exchange were used as the sample. CSR disclosure was measured by using the Global Reporting Initiative (GRI) index 4.0 version, which has not been widely used in previous studies. The methods used in this study were descriptive analysis and multiple regression analysis. The results support legitimacy theory that states there is a social contract between the company and the society. More specifically, high profile industry (oil and gas, agriculture, mining, fisheries, chemical, automotive, consumer goods, food and beverage, paper, pharmaceuticals, plastics and construction) disclose CSR broader than low profile industry. The larger companies will encourage them to expand their disclosure of social responsibility. Further research can use more varied measurement for CSR Disclosure because this paper uses only a score of 0 and 1. Weighting scale which can be used for each item of criteria such as 0 (undisclosed), 1 (otherwise disclosed in this narrative), 2 (if expressed in narrative and numbers).

Keywords: CSR Disclosure, Industry Sensitivity, Size, GRI 4.0 Version, Legitimacy Theory

Suggested Citation

Solikhah, Badingatus, An Overview of Legitimacy Theory on the Influence of Company Size and Industry Sensitivity towards CSR Disclosure (May 3, 2016). International Journal of Applied Business and Economic Research (IJABER). Vol. 14, No. 5, p. 3013-3023, 2016, Available at SSRN: https://ssrn.com/abstract=2893283

Badingatus Solikhah (Contact Author)

Universitas Negeri Semarang ( email )

Kampus Sekarang, Gunungpati
Semarang, ID Jawa Tengah 50229
Indonesia
+6285221897670 (Phone)
+62248508015 (Fax)

HOME PAGE: http://unnes.ac.id/

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