DOES CORPORATE SOCIAL RESPONSIBILITY MATTER?

A STUDY OF ENVIRONMENTAL DISCLOSURE AND FIRM FINANCIAL PERFORMANCE

Abstract

This study analyzes the causality of environmental performance and environmental disclosure on the financial performance of manufacturing companies listed on the Indonesia Stock Exchange, and examine the role of Corporate Social Responsibility (CSR) as a moderating variable in the model. This study uses a Partial Least Square-based moderation regression analysis technique applied to data from three research periods. The findings indicate that environmental performance has a positive effect on the financial performance of manufacturing companies in the short term, but its effect becomes negative in the long term. However, environmental disclosure does not have a positive effect on financial performance, indicating that environmental disclosures made by companies are perceived as a greenwashing strategy by investors. In addition, CSR as a moderating variable is unable to strengthen the effect of environmental performance on financial performance. However, CSR can moderate the effect of environmental disclosure on financial performance in the long term, with a negative impact in the next one year but becoming positive in the next two years.