Corporate Social Responsibility and Firm Risk: Controversial Versus Noncontroversial Industries

Eriandani, Rizky and Wijaya, Liliana Inggrit (2021) Corporate Social Responsibility and Firm Risk: Controversial Versus Noncontroversial Industries. The Journal of Asian Finance, Economics and Business, 8 (3). pp. 953-965. ISSN 2288-4645

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Abstract

This study aims to analyze the benefits of corporate social responsibility (CSR) performance on corporate risk in controversial and non-controversial industries. The hypothesis of this study is based on the conflicting effects of industry type on CSR and firm risk. The research sample consisted of 927 companies listed on the Indonesia Stock Exchange from 2016 to 2019. The main method for data processing was the ordinary least square method and subgroup analysis as a robustness test. The findings suggest that the performance of CSR can reduce corporate risk. However, the impact was only significant for non-controversial firms and weakened for controversial industries. These results support risk management and signaling theory. Firm risk in this study reflects the company's total risk, further research can categorize it into systematic and idiosyncratic risk. Besides, the number of samples of controversial industry research is not as much as non-controversial; further research can use paired samples. Regulators can use the results to create a new policy regarding CSR implementation. This study contributes to the existing literature by showing that the ability of social responsibility to reduce corporate risk only works in non-controversial industries. This result may be due to the controversial industry receiving negative stigma from its stakeholders.

Item Type:	Article
Uncontrolled Keywords:	Corporate Social Responsibility, Firm Risk, Controversial Industry, Systematic Risk, Perceived CSR
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HG Finance
Divisions:	Faculty of Business and Economic > Department of Accounting
Depositing User:	RIZKY ERIANDANI M.Ak. - 209174
Date Deposited:	19 Mar 2021 04:27
Last Modified:	08 Oct 2021 07:53
URI:	http://repository.ubaya.ac.id/id/eprint/39045

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