The Role of Corporate Social Responsibility in Enhancing Company Value: Evidence from Sustainable Companies

Abstract

The purpose of this study is to determine the ability of corporate social responsibility to strengthen the relationship between profitability and company value. This study was conducted on companies listed on the Sri-Kehati index, which represents companies that are both economically profitable and attentive to environmental sustainability. The sample population comprises financial reports issued by companies on the Sri-Kehati index from 2012 to 2023, as listed on the Indonesia Stock Exchange. Purposive sampling was used to select the sample, resulting in a total of 90 financial statements for analysis. This study is explanatory in nature, aiming to provide insights into the moderating role of corporate social responsibility in the relationship between profitability and company value. Data processing was performed using moderated regression analysis with the Statistical Package for the Social Sciences software. The findings of this study reveal that corporate social responsibility can indeed strengthen the relationship between profitability and company value. The study highlights the importance of corporate social responsibility practices for companies aiming to enhance their market value. By integrating corporate social responsibility into their business strategies, companies can not only improve their financial performance but also build a positive reputation and foster trust among stakeholders. This dual focus on profitability and social responsibility can lead to sustainable business growth and increased investor confidence. Furthermore, the study underscores the relevance of the Sri-Kehati index as a benchmark for evaluating companies that balance economic performance with environmental stewardship. Companies listed on this index demonstrate a commitment to sustainable practices, which can enhance their long-term viability and appeal to socially conscious investors. This study provides valuable evidence that corporate social responsibility activities can amplify the positive effects of profitability on company value. It suggests that companies should adopt robust corporate social responsibility initiatives as part of their strategic objectives to achieve a competitive advantage and drive sustainable growth. The findings also encourage policymakers and regulatory bodies to promote corporate social responsibility practices within the corporate sector, ensuring that businesses contribute to broader societal and environmental goals while achieving financial success.