Corporate Social Responsibility and Governance as Determinants of Firm Value: Evidence from Indonesian Manufacturing Firms

Shanti Lysandra; Tri Widyastuti; Zulkifli Zulkifli

doi:10.32535/ijabim.v11i2.4660

Corporate Social Responsibility and Governance as Determinants of Firm Value: Evidence from Indonesian Manufacturing Firms

Shanti Lysandra, Tri Widyastuti, Zulkifli Zulkifli

Abstract

Manufacturing firms continuously struggle to maximize firm value while balancing long-term sustainability through robust governance and ethical practices. This research investigates the core drivers of firm value, examining the specific mediating paths of Corporate Social Responsibility (CSR) and Good Corporate Governance (GCG). Utilizing a quantitative, causal-descriptive framework, the study evaluated annual financial datasets from manufacturing corporations listed on the Indonesia Stock Exchange (IDX) spanning the 2017–2019 period. The results show that Return on Assets (b = 0.028, p < 0.05) and Total Asset Turnover (b = 0.002, p < 0.05) positively affect Corporate Social Responsibility, whereas Debt-to-Asset Ratio (b = -0.001, p < 0.05) and Debt-to-Equity Ratio (b = -0.004, p < 0.05) have negative effects. CSR significantly mediates the effects of ROA, DAR, DER, and TATO on firm value, while GCG significantly mediates the effects of ROA, DER, and TATO on firm value; the DAR through GCG path is not significant. Ultimately, strategic social initiatives and structural governance act as vital catalysts that translate raw financial decisions into premium market returns, offering crucial risk-assessment benchmarks for modern investors.

Keywords

Corporate Social Responsibility; Debt to Asset Ratio; Debt to Equity Ratio; Good Corporate Governance; Price-to-Book Value; Return on Assets; Total Asset Turnover

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DOI: https://doi.org/10.32535/ijabim.v11i2.4660