THE RELATIONSHIP BETWEEN CORPORATE SOCIAL RESPONSIBILITY AND FINANCIAL PERFORMANCE ON THE MINING INDUSTRY LISTED IN INDONESIA STOCK EXCHANGE FROM 2010 – 2012

Abstract

The continuation usage of the environment has led us to many environmental damages day by day. Mining industry as the large user of environment are obligated to do Corporate Social Responsibility activities; but being socially responsible involves costs and eventhough there are many benefits can be generated from CSR, investors and shareholder are still reluctant in implementing appropriate CSR activities according to the GRI standard. This research is done to examine and prove the true correlation between CSR and the Financial Performance in the mining industry for the year 2010-2012 in order to encourage the mining companies to do more CSR activities. This research examine 3 variables that are independent variable of CSR with the control variable of leverage to the dependent variable of Financial Performance represented in Return on Asset. From the analysis, it is found that the implementation of Corporate Social Responsibility disclosure in the mining industry listed in Indonesia Stock Exchange for the year of 2010 to 2012 is quite satisfying since there are around 60% companies that have disclosed more than 50% of their CSR activities. The test result are divided into 3,which are: First, partial t test that shown either CSR or leverage have significant influence to the financial performance (ROA). The constanta value of CSR is positive at the value of 0.124 that means every 1% increase of Corporate Social Responsibility will increase the Financial Performance for the amount of 0.124 and vice versa. The constanta value of leverage is negative at the value of -0.019 that every 1% increase of Leverage will decrease the Financial Performance for the amount of 0.019 and vice versa. Second, simultaneous F test also found both CSR and leverage shown significant influence to the financial performance (ROA) wherein F table (4.007) < F calculation (6.162) and a significance level at 0.004 < 0.05. The third as the last, the coefficient of determination (R2) resulting that independent variable CSR with control variable leverage can explain 17.80% variation of dependent variable Financial Performance, and the rest is 82.20% can be explained by other variables which are not used in this research.