The Influence of Corporate Social Responsibility to Financial Performance PT. Timah, Tbk
Anggraeni Yunita1*, Duwi Agustina1
1 Faculty of Economics, Universitas Bangka Belitung, Bangka, Indonesia
*Corresponding Author: anggi21.ay@gmail.com
Accepted: 15 September 2020 | Published: 30 September 2020
_________________________________________________________________________________________
Abstract: Analysis of the influence of corporate social responsibility on the financial performance of PT Timah, Tbk period 2017 to 2019 was chosen as the main topic of this research. This research is a research using quantitative descriptive method, in which the research data is presented in the form of numbers and analyzed using statistical tools. The data used in this study was obtained from the annual report PT. Timah, Tbk period 2017 to 2019. The data analysis technique which used in this study is simple linear regression. The results of this study indicate that corporate social responsibility has no significant effect on the financial performance of companies in this study using proxy Return on Investment (ROI).
Keywords: Corporate Social Responsibility, Return On Equity, Sustainability Reporting _________________________________________________________________________
1. Introduction
Application of conventional accounting based on capitalism is no longer appropriate because conventional accounting only aims to maximize corporate profits. Companies are required to pay attention to the role of stakeholders, so companies must be able to harmonize between companies with stakeholders by developing corporate social responsibility programs.
Corporate social responsibility is a company activity not only from financial or economic factors but also based on its environmental and social factors (Cahyono, 2009 in Safitri, 2010). Corporate responsibility to the environment no longer rests on the concept of single bottom line or corporate value alone, but must stand on the triple bottom line concept or 3P (consist of profit, people and the planet), which means in addition to the pursuit of profit, the company must also pay attention and be involved in the fulfillment community welfare and contribute to preserve the environment.
Based on Law no. 40 of 2007 concerning Limited Liability Company, Article 74 stating that a company conducting business activities in the field and or related to natural resources is obliged to carry out environmental social responsibility and article 66 which stipulates the obligation for the company to report the implementation of such responsibilities in the report annual, then disclosure of social responsibility is mandatory. Nevertheless the reason companies disclose environmental social information to the public is not only because of the rules, but because of the many benefits in the implementation and disclosure of CSR. Among others, first, the company can grow sustainably and get a positive image or image of the community. Secondly, the ease of access to capital or capital. Third, the company can maintain superior and quality human resources. Fourth, corporate decision-making on matters of a critical nature increases and firms can manage risk management more easily (Effendi, 2007 in Nurhudha and Suwarti, 2014).
Associated with the above then the disclosure of CSR will certainly affect the financial performance of the company. Financial performance is the end result of accounting activities (accounting cycle). The financial performance is usually used to determine the efficiency and effectiveness in the management of funds invested, thus providing maximum profit for companies, managers, and investors to compare performance with competitors and to know the company's development and see the ability of the company in maintaining its position in a critical period as well as in competition which is increasingly competitive. PT. Timah, Tbk which is a state-owned enterprise engaged in the mining of tin that became one of the companies go public is a company that discloses CSR in its annual report. Based on the above background, the authors take the title in this study is "Influence of Corporate Social Responsibility to Financial Performance of PT Timah, Tbk."
2. Literature Review
Social Contract Theory
Social contract emerged the social life interaction of the community, so there are harmony, harmony and balance, including the environment. Companies, which are groups of people who share common goals and strive to achieve common goals, are part of society in a larger environment. Its existence, is largely determined by society, in which the two are mutually influential. For that, in order to occur equality, social contract is the need to guarantee the protection of the interests of each party both implicitly and explicitly.
Performance of Company Financial
Fahmi (2012: 2) said that definition of financial performance is an analysis conducted to look for how far a company has implemented by using the rules of financial implementation properly and correctly. Company performance is a description of the financial condition of a company that is analyzed with the tools of financial analysis, so it can be known both badness and financial keadan a company that reflects the performance of work in a certain period.
Corporate Social Responsibility
Corporate Social Responsibility (CSR) until now there is still no unity of language, but empirically this CSR has been applied by the company in various forms of activities based on voluntary (voluntary). CSR, conducted with a variety of motivations, depending on the point of view and how to interpret the CSR itself. The principle of CSR is basically a company's commitment to the interests of stakeholders in a broad sense rather than just the interests of the company. According to Azheri (2012: 34), grouping CSR there are three aspects or known as "Triple Bottom Line (3BL)", namely:
Table 1: Corporate Social Responsibility Activities
No. Loads Aspect
1. Social Education, training, health, housing, institutional strengthening (internally, including the welfare of employees) social welfare, sport, youth, women, religion, culture and so on.
2. Economy Entrepreneurship, joint business group or small and medium micro unit (KUB or UMKM), agribusiness, job opening, economic infrastructure and other productive enterprises.
3. Environment Greening, land reclamation, water management, nature conservation, eco-tourism, environmental pollution, and efficient use of production and energy.
Source : Azheri, 2012:35
Corporate Social Information Disclosure
According to Tarmizi (2013), disclosure is a relative term, but is the basic objective of the annual report after determining who and for what financial information is presented. The information presented in the financial statements is understandable and does not result in misinterpretation simply because the financial statements are supplemented with adequate disclosure. Adequate disclosure does not mean the overwhelming use of issues that are considered important to the auditor so that the financial statements depend on the adequacy of the disclosure of material matters.
Disclosure of social information in this study refers to the measurement instruments CSRI (Corporate Social Responsibility Disclosure Index) used by Nor Hadi (2011: 134), which classifies CSR information into the classification of environmental, community, energy, employee, product and other. How to calculate this CSRI, ie every CSR item in the research instrument is given a value of 1 if it is disclosed and value 0 if it is not disclosed.
Figure 1: Research Model
Companies that show their concern to the public will bring the image in the community that the company also has a concern in managing the products it produces. This will lead to confidence in the quality of the resulting product and ultimately the loyalty to use the product. Public confidence in the quality of the product will affect the financial performance of a company as measured by the increased profits obtained by the company. Corporate social responsibility causes the market to give positive appreciation which can impact to the improvement of company's performance and ability to earn profit (Husnan, 2013 in Nurhudha and Suwarti, 2014). Based on the description above, the first hypothesis can be formulated as follows:
Ha : Corporate social responsibility positively affects the company's financial performance.
3. Discussion and Conclusion
This research is a research using quantitative descriptive method, where the research data is presented in the form of numbers and analysis using statistical tools. This research was conducted at PT. Timah, Tbk which is one of the SOEs in Indonesia that most of its exploration and operational activities are in Bangka Belitung Islands Province.
In this study there are two variables, namely independent and dependent variables. Corporate Social Responsibility (CSR) is the independent variable and the dependent variable used in this research is Company Financial Performance (CTF). The Corporate Social Responsibility (CSR) variable in this study is measured by using Corporate Social Responsibility Disclosure Index (CSRI), ie each CSR item in the research instrument is rated 1 if it is disclosed and value 0 if not disclosed. Furthermore, the score of each item is summed to obtain the overall score of each firm which is then divided by the number of CSR disclosure items. Dependent variable in this research is Company Financial Performance. The Return On Equity (ROE), that is ratio to measure net profit after tax with own capital, is used to measure the company's financial performance.
Corporate Social responsibility
Company Financial Performance Ha+
Table 2: Measurement of Variables
Variable Indicator Scale
Corporate Social Responsibility (CSR)
CSRIj = ΣXij
nj
Ratio
Company Financial Performance (CTF) ROE = Laba bersih
Total ekuitas Ratio
This study uses a simple linear regression model. A simple linear regression is a linear relationship between one dependent variable with one independent variable. Simple linear regression in this study is used to analyze the influence of Corporate Social Responsibility (CSR) on Financial Performance Company (CTF). The regression model used is as follows:
𝑪𝑻𝑭 = 𝜶 + 𝜷𝑪𝑺𝑹 + 𝜺
PT Timah Tbk since 2010 has been preparing an Integrated Report in which Sustainability Reporting which presents corporate social responsibility disclosure becomes an integral part of the company's Annual Report. This refers to the provisions of the Financial Services Authority (OJK), the International Integrated Report Council, the Final version 4 (G4) and Mining and Metals Sector Supplement (MMSS) released by the 4th Generation Global Reporting Initiative (GRI G4) . Referring to the two options offered by GRI G4 based on what 'matters, where it matters' aspect, ie in accord: core and comprehensive, there are 91 disclosure items consisting of Aspects of Economic Performance, Environmental Performance Aspects and Social Performance Aspects plus 10 (ten) items disclosure of Mining and Metals Sector. So the total item of disclosure measured is 101 items. Data taken as sample of this research is PT Timah, Tbk Annual Report period 2017 - 2019.
Financial performance is an analysis conducted to see how far a company has implemented by using the rules of financial implementation properly and correctly. In this study, the company's financial performance is measured by using Return On Equity (ROE). Return On equity (ROE) is the ratio to measure net income after tax with own capital. Corporate Social Responsibility is a responsibility inherent in every company to play a role in sustainable economic development to improve the quality of life and the environment.
Furthermore, Corporate Social Responsibility is measured using Corporate Social Responsibility Disclosure Index (CSRI), ie each CSR item in the research instrument is rated 1 if it is disclosed and value 0 if not disclosed. Furthermore, the score of each item is summed to obtain the overall score of each firm which is then divided by the number of CSR disclosure items.
Table 3 : Summary of ROE and CSR Index PT. Timah, Tbk year 2017 – 2019
No Variable Year
2017 2018 2019 Mean
1. ROE 0,15 0,02 0,04 0,07
2. CSR Index 0,19 0,54 0,63 0,45
Based on Table 3, the lowest Return On Equity in 2018 is 2% and the highest Return On Equity of 2017 is 15%. While the average Return On Equity is 7%. Further Disclosure of Corporate Social Responsibility characterized by the highest CSR Index is 0.63 in 2019 and
Table 4: Simple Linear Regression Coefficientsa
Model
Unstandardized Coefficients
Standardized Coefficients
t Sig.
B Std. Error Beta
1
(Constant) 19,878 4,910 4,049 ,154
CSR -,284 ,100 -,943 -2,844 ,215
a. Dependent Variable: ROE Source: Output SPSS, 2020.
Based on the above table, shows that the results of simple linear regression testing can be formed simple regression equation as follows:
𝑪𝑭𝑷 = 𝟏𝟗, 𝟖𝟕𝟖 − 𝟎, 𝟐𝟖𝟒𝑪𝑺𝑹
Based on the results of hypothesis testing, the results of corporate social responsibility significance value of 0.215. This value is greater than the specified significance value, which is 0.05 (0.215> 0.05). From the results of the comparison can be said Ha rejected and H0
accepted. So it can be concluded that corporate social responsibility has no significant effect on the financial performance of the company.
Table 5: Adjusted R Square Model Summaryb
M
Model R
R Square
Adjust ed R Square
Std.
Error of the Estimate
1 ,9
43a
,8 90
,780 3,2842
4 a. Predictors: (Constant), CSR
b. Dependent Variable: ROE Source: Output SPSS, 2020.
Based on the above table, adjusted R square value of 0.780, meaning that the ability of CSR variables affect the Company's Financial Performance by 78%, and the remaining 22%
influenced by other variables outside this study.
Based on the results of research and analysis it can be drawn some conclusions, that Corporate Social Responsibility (CSR) has no significant effect on financial performance of PT. Timah, Tbk year 2017-2019. This is partly influenced by the declining productivity of the manufacturing sector globally. In addition, macroeconomic conditions and the global economy in general are also unfavorable to the Company, but management's readiness in anticipating the decline in tin prices, among others through a series of cost efficiency programs, improving cost structures, negotiating interest costs, and managing loans have had a positive impact for the company.
Acknowledgement
I would like to express my gratitude to the University of Bangka Belitung for funding the submission fee for this journal.
References
Azheri, Busyra. (2012). Corporate Social Responsibility : dari Voluntary menjadi Mandatory. Cetakan Kedua. Jakarta : PT Rajagrafindo Persada.
Fahmi, Irham. (2012). Analisis Laporan keuangan. Cetakan kedua. Bandung : Alfabeta.
Hadi, Nor. (2011). Corporate Social Responsibility. Cetakan pertama. Yogyakarta : Graha Ilmu.
Kasmir. (2015). Analisis Laporan Keuangan. Cetakan Kedelapan. Jakarta : PT Raya Grafindo Persada.
Nurhudha, Adhita Setya dan Suwarti, Titiek. (2014).” Analisis Pengaruh Corporate Social Responsibility, Intellectual Capital, dan Kinerja Lingkungan terhadap Kinerja Keuangan Perusahaan Mnufaktur yang Terdaftar di Bursa Efek Indonesia”. Fakultas Ekonomi dan Bisnis Universitas Stikubank Semarang. Semarang.
Safitri, Amelia Nur. (2010).” Pengaruh Pengungkapan Intellectual Capital dan Pengungkapan CSR terhadap Kinerja Perusahaan (Studi Empiris pada Perusahaan High Profile yang Terdaftar di Bursa Efek Indonesia)”. Fakultas Ekonomi dan Bisnis Universitas Muhammadiyah. Sidoarjo.
Sahamok. (2009). Saham OK. (http://www.sahamok.com. Accessed on October 12, 2017).
Tarmizi, M. (2013). Pengaruh Penerapan Corporate Social Responsibility (CSR) Terhadap Profitabilitas dan Pajak Penghasilan Sebelum Dan Setelah UU Nomor 40 Tahun 2007 Pada PT. TIMAH (Persero) Tbk. Skripsi. Fakultas Ekonomi Universitas Bangka Belitung. Bangka Belitung. Tidak Dipublikasikan.
www.timah.com, Accessed on October 20, 2017
