ANALYSIS THE INFLUENCE OF CORPORATE SOCIAL RESPONSIBILITY ON RETURN ON EQUITY (ROE)

Abstract

Introduction: Firm is definite as a legal entity that operates due to economic policy. It is not only oriented to achieve maximum profit, but in addition it also needs to build a good reputation through corporate social responsibility to maintain the existence of the firm through the competition. Therefore, ISO 26000 can be chose by the firm as an indicator in implementing good corporate social responsibility activities. The seven factors that consist in ISO 26000 are corporate governance, human rights, labour practices, the environment, fair operating practices, consumer issues, and community involvement and development. Going forward from the process, the firm can measure the success of operational activities and corporate social responsibility activities through financial performance indicator, such as: Return on Equity (ROE). Methods: This study is using causal comparative research method which represents the relationship between one variable to another variable, by using the facts that have been occurred (ex post facto). The sample that used in this study are the manufacturing firms that listed on Bursa Efek Indonesia (BEI) since 2009 till 2015. Results: The results of this study indicate the different effects of significance on corporate social responsibility to financial performance of the firm, in which corporate social responsibility has positive significant effect to Return on Equity (ROE) in the manufacturing firms that listed on Bursa Efek Indonesia (BEI). Conclusion and suggestion: The managerial implication that can be carried out by company management is to maintain a balance of social responsibility disclosure between the interests of stakeholders and company management. Until in the end, the company's activities can run well, namely achieving profits from the company's operational activities, as well as benefits from corporate social responsibility activities. Various activities that can be carried out by companies, namely increasing disclosure of social responsibility which is still included in a low proportion, especially fair operating practices, such as: anti-corruption, responsible involvement in political affairs, fair competition, promotion of social responsibility, and respect for rights. create.