The Influence of Corporate Social Responsibility (CSR) on Firm Value in the Indonesian Banking Industry

Abstract

This study aims to analyze the impact of Corporate Social Responsibility (CSR) activities on firm value within the context of the Indonesian banking industry. Using data from banks listed on the Indonesia Stock Exchange (IDX) during the period of 2014-2023, this research applies a multiple linear regression method to assess the relationship between various dimensions of CSR and firm value. The measured CSR dimensions include CSR expenditures and CSR index metrics, while firm value is measured through Price-to-Book Value (PBV) and Tobin's Q. The results of the study indicate that CSR activities focused on social and environmental development have a significant positive impact on firm value. Specifically, investments in social and environmental activities have been proven to enhance the company's reputation and customer trust, which indirectly increases the company's market value. This finding confirms that CSR is not only a moral responsibility but also a profitable business strategy. However, the study also reveals that not all CSR initiatives have the same impact. CSR activities that are not well integrated into the company's core business strategy tend to have no significant effect on firm value. Therefore, this study suggests that banks in Indonesia should be more strategic in designing and implementing CSR programs, taking into consideration. business objectives and stakeholder needs.