The Impact of CSR & Financial Distress on Sri-Kehati Index Performance

Abstract

 This present study aims to determine the effect of corporate social responsibility (CSR) disclosure and financial distress on the financial performance of companies listed on the Sri Kehati index for the 2017-2021 period. To this end, a research sample consisting of 27 companies with a total of 135 observations was selected purposively, with secondary data presented in the financial statements and sustainability reports of each company gathered for hypothesis testing. Subsequently, multiple regression tests on panel data were conducted using Eviews 12. The results revealed that CSR, financial distress, leverage, and company size all significantly influenced financial performance. In particular, CSR was found to have a positive influence on ROE and ROA but a negative influence on Tobin's Q. In contrast, financial distress did not affect ROE but had a positive effect on ROA and Tobin's Q. Furthermore, leverage and company size as control variables did not affect ROA and Tobin's Q, with leverage negatively affecting ROE. In contrast, company size did not affect ROE.