Mandatory Disclosures Compliance, CSR and Financial Performance: A Study of the Indonesian Listed Banks
The aim and significance of the study is a contribution to provide evidences on the relationship between mandatory requirement compliance, voluntary disclosure on corporate social responsibility and financial performance in the highly and regulated banking industry. The contribution of this study is to analyze mandatory and voluntary disclosures in a joint approach and, therefore, the value of the study derives from the joint manner to the analysis of the disclosures as little has been done particularly using the most recent data involving Indonesian listed banking companies. Secondary data from Indonesian listed banks during the period between 2005 and 2006 was gathered, two different forms of analyses are conducted. Linear multivariate regression analysis is discussed first to determine the factors that influence bank financial performance. Then a logistic regression analysis is undertaken to specifically examine factors influencing company’s probability success or failure in terms of financial performance; where a binary indicator of bank’s success or failure is used as the dependent variable. The empirical evidence supports the hypothesis that the link between voluntary disclosure on CSR and financial performance is significantly positive while compliance on mandatory requirement has negative impact to financial performance. This study addresses issues relevant to mandatory and voluntarily disclosures which could provide policy implication in association with corporate disclosures, add on the existing debates, and could open for further research in similar fields. The findings suggest that better practices will enable Indonesian banks to retain their social sustainability as they gain competitive advantage.
Keywords: Compliance, Mandatory Requirements, Voluntary Disclosures, Corporate Social Responsibility, Financial Performance, Social Sustainability, Competitive Advantage
Dr. Elvia Shauki
Lecturer in Financial Accounting, School of Commerce, Division of Business, University of South Australia
Recent Graduate, Department of Accounting, Faculty of Economics University of Indonesia, Jakarta, Indonesia