CSR

THE EFFECT OF CORPORATE CHARACTERISTICS AND CONSTRUCTION DIRECTION ON CORPORATE SOCIAL RESPONSIBILITY (CSR) DISCLOSURE INDONESIA ANNUAL REPORT 

Recently, there is more and more talk about Corporate Social Responsibility in the world. in print and electronic media, seminars or conferences. Increasingly, companies around the world also claim that they have fulfilled their social responsibilities. The increasingly widespread discussion of social responsibility is a logical consequence of the introduction of good corporate governance (GCG), whose principles include the need for companies to consider the interests of their stakeholders and actively cooperate with them in accordance with current regulations. . . long-term survival of the company (OECD, 2004). 

According to Jalal (2007), the development of CSR issues in Indonesian universities has also shown growth, although it is still in its early stages. A relatively large number of students from various classes wrote their theses - research, theses or theses - on social responsibility. Based on the information collected by www.csrindonesia.com, most of them are from social and economic faculties of various universities. Most of them are interested in the relationship between a company's financial performance and corporate social responsibility. The ratio is often considered the holy grail in CSR academia. 

Regarding the board's policy, the board's attention to CSR is contained in the Limited Liability Companies Act (PT Act) No. 40, 2007 Chapter V § 74. Section 74 of the Companies Act states that environmental responsibility (TJSL) ) must be borne by every company whose business activities are with or related to natural resources. In addition, it was announced that TJSL is budgeted and accounted for by the company's expenses, and violations of these obligations will result in sanctions. Unlike the obligations of social and environmental responsibility, which require the implementation of PP, reporting takes place immediately after the law comes into force. Thus, there will be many CSR reports at the end of 2008 (Jalal, 2007). 

CSR itself is an approach that integrates social welfare into a company's business operations and interactions with stakeholders, based on the principles of volunteerism and partnership (Nuryana, 2005). Several other names that are similar or even commonly identified with CSR include corporate giving/charity, corporate philanthropy, corporate community relations and community development. ). These four names can also be considered dimensions or CSR approaches in the context of corporate social investment (Investment), which are guided by motives that vary from philanthropic motives to empowerment (Brilliant and Rice, 1988, Tanudjaja, 2009) 

According to Tanudjaja ( 2009 ), corporate social responsibility differences in interpretation also lead to differences in the implementation of CSR, depending on how the company interprets CSR. Herein lies the importance of CSR regulation in Indonesia, so it has a regulatory, binding and driving force. CSR, which was initially voluntary, needs to be updated to become a more mandatory CSR. Thus, it can be assumed that the contribution of the business world can be measurable and systematic in its participation in increasing the well-being of society. On the other hand, the community cannot make demands on companies if their expectations are outside the limits of the current regulations. 

Regulation of social responsibility reporting can play an important role in encouraging companies to prepare CSR reports. However, until now, even in developed countries, there has been a debate about whether companies should be forced to publish CSR reports or leave the publication of these reports to the awareness of companies (Tschopp, 2005). 

In theory, without the obligation, the company automatically reports to stakeholders, as the company is subject to stakeholder sanctions if it does not report on CSR. For example, if a company does not publish a CSR report, investors who do not want to own shares in the company impose sanctions. That reluctance causes the company's stock price to fall, which ultimately hurts the company itself. Consumers may boycott the company's products and suppliers do not share raw materials with the company, which causes operational difficulties for the company. Sanctions that directly affect the company's performance force companies to encourage CSR reports. 

Voluntary CSR reporting may not occur because it is not certain that stakeholders are motivated by sanctions, and even if a sanction is imposed, the impact is indirect and does not significantly affect the company's bottom line. This condition justifies the obligation of companies to prepare CSR reports. Another reason for the need for mandatory CSR reporting is that, unlike capital owners, who can contractually oblige companies to prepare financial reports, other stakeholders (for example, consumers, employees, the public) do not have the right to demand corporate responsibility reports (pää). , 2007). 

At the same time, the dissenting group argued that corporations are profit-making organizations, not individuals or groups of people as in social organizations. Businesses paid taxes to the state and therefore the responsibility for improving the general welfare was transferred to the state (Wiwoho, 2009). The application of the TJSL requirements of the Companies Law (as well as the penalties for violation of the provisions) can be a pressure tool for investors who have not properly conducted their business activities. But on the other hand, the entrepreneurs who are disciplined in implementing CSR feel that they have lost the value of volunteering in all their CSR activities. Also Robins (2005) emphasizes that profit is still the main goal of the company because without profit there are no resources for CSR activities. Robins and also Hess (2001) Utamas (2007) further argued that it is better to encourage CSR through moral persuasion and market pressure than through enforcing rules: 

Raise business-related environmental standards through law. . it is one thing and that is acceptable, but any attempt to impose regulatory burdens that are not essential to the business is very risky indeed. Such an action would be much more than controversial; this would lead to completely negative social consequences, including corruption and economic inefficiency (Robins, 2005, pp. 112). 

CSR disclosure is influenced by many factors. A study conducted in Malaysia by Amrani and Devi (2008) shows six factors that influence CSR disclosure. These factors include foreign shareholders, government ownership, dependence on government, dependence on foreign partners, industry, size and profitability.

This study continues the study of Amran and Devi (2008) by introducing several factors and adding new factors. Acceptable factors are state ownership, foreign ownership, type of industry, company size and profitability, while new factors are government regulations (government regulation). 

In Indonesia, Bapepam LK recently published decision No. 134/BL/2006 on the obligation to present annual reports of issuers and joint stock companies. Compared to the old rules (SK Bapepam No. 38/PM/1996), the amount of publicized information, especially in relation to corporate management practices, is much greater. In 2007, the DPR also adopted Law No. In Section 40, Clause 7 of the 2007 Companies Act, companies are required to describe costs related to activities and costs related to social responsibility and the environment. This affects the increasing amount of information about the company's activities disclosed in the company's annual report, including the disclosure of corporate social responsibility. Therefore, researchers include state regulatory factors as research variables. 

Based on the above background, the purpose of this study is to analyze the impact of corporate characteristics and government regulations on corporate social responsibility (CSR) disclosure in Indonesian corporate annual reports. The relationship between the variables is explained using political economy theory (PET). According to Gray, Kouhy and Lavers (1995), PET looks at the political, social and institutional framework in which this economic activity is carried out. Several studies show that the extent of environmental social disclosure (PSL) in corporate annual reports increases when social and environmental issues are perceived as both politically and socially important (Guthrie and Parker, 1989). Thus, PET seems more relevant to explain why firms generally respond to government and public pressure to disclose information about the social impact of firms' business practices (Guthrie and Parker, 1990).