GCG, ROE and Size on CSR Based on Sharia Enterprises Theory

Abstract

The purposes of this paper are to investigate the Corporate Social Responsibility (CSR) reporting information at Indonesia sharia banks based on Sharia Enterprise Theory and explores the potential effects of Corporate Governance (CG) elements, Return on Equity (ROE) on CSR based on sharia enterprises theory, with size as the moderating variable. Using the sample of 10 sharia banks which published annual reports, CG, and CSR reports above the year 2014 to 2016, the panel data are examined by regression. The statistic test reveals that size is not fit as a moderating variable in testing the effect of CG and ROE on CSR. Aggregately, GCG, Size and ROE influence CSR. Large and high-profit sharia banks which apply good corporate governance will implement CSR by considering horizontal and vertical accountability based on Sharia Enterprise theory. This study makes a significant contribution to the Corporate Social Responsibility (CSR) and enterprise theory by offering Sharia Enterprise theory as the foundation of the CSR implementation at sharia banks.

Application of Shariah Enterprise Theory on Disclosure of Corporate Social Responsibility in Sharia Banking

“…CSR activities not only affect the surrounding community but have a positive impact on the company's reputation. The findings of this study are not much different from the research conducted by Platonova et al (2018) which examines the relationship between corporate social responsibility (CSR) and financial performance for Islamic banks, Aryani & Zuchroh (2018) examines the effect of GCG, ROE on CSR, and Ridwan & Mayapada (2020) which examines the influence of governance sharia on the disclosure of corporate social responsibility in Islamic banks in Indonesia. The difference between these studies and this research is that this study does not directly link CSR with company performance, but rather explores the components of CSR disclosure according to SET.…”

“…This analysis' particular description is as follows: (1) Identifying the disclosure elements according to Sharia Enterprise Theory (SET). The SET disclosure elements were adapted from Aryani and Zuchroh (2018) and Meldona et al (2020), who designed them based on two levels of accountability: vertical and horizontal accountability. (2) Performing the scoring.…”

“…In SET, the important concept is Allah as the Creator and Sole Owner of all the resources in this world, then Allah as the main Trust Giver. Meanwhile, the resources owned by the stakeholders are, in principle, a mandate from God in which there is a responsibility to use them in the manner and purpose set by the Trustee (Aryani & Zuchroh, 2018;Meldona, Riska, Rochayatun, & Nurdin, 2020;Musthafa, Triyuwono, & Adib, 2020). In other words, Sharia Enterprise Theory has a broader vision, which appears in the breadth of the scope of the company's stakeholders.…”

Corporate Social Responsibility Disclosure in Indonesia: A Bibliographic Study

“…In the following year, the number of studies discussing this topic decreased significantly. There were only four studies about this topic in 2018, namely Aryani and Zuchroh (2018); Cahyaningtyas (2018); Dianawati (2018). In 2019, three studies related to this topic; they were Anggita, Putri, and Kurniawan (2019); Gaol and Harjanto (2019) and Pramukti and Buana (2019).…”

“…Only four studies were using this proxy in 2018, namely Aryani and Zuchroh (2018); Cahyaningtyas (2018);Dianawati (2018). In 2019, three studies used this proxy, and they were Anggita et al 2019; Gaol and Harjanto (2019) and Pramukti and Buana (2019).…”