The effect of social responsibility and managerial ability on firm value-mediated profitability

Abstract

The mining industry in Indonesia has a high enough capitalization value to attract investment. The more investors that invest, the higher the stock price and the value of the firm, yet the mining sector's share price has changed throughout time. The mining industry in Indonesia must likewise be mindful and worried about the environment. Previous research has not explored the correlation between profitability and firm value, which contributes as a mediator. This resulted in a clear gap in the literature. This study contributes to filling a gap in the literature. The mining sector businesses listed on the Indonesia Stock Exchange (IDX) from 2018 to 2020 were chosen as the population, with a total sample of 11 companies selected using the purposive selection approach. The data analysis process has been carried out using SPSS version 28 software. The study's findings revealed that corporate social responsibility and corporate management skills had little influence on business value. Furthermore, the findings of this research show that profitability, as a moderating variable in this study, is a complete mediator of social responsibility and managerial ability to firm value. The presence of profitability mediation in this research yields substantial findings, serving as a warning to investors.

Determination of Earnings Quality and Firm Value: New Evidence from Indonesian Non-financial Companies

“…The results of this test proved that corporate social responsibility award had a positive and insignificant effect on firm value, so H6e is rejected. The findings of this study support the results of the study (Kristi & Yanto, 2020;Marc et al, 2022;Larasati & Arrozi, 2022;Wiranudirja et al, 2022;and Sentya & Mardianto, 2022). However, the results of this study break the research of Benjamin and Biswas (2022), which states that corporate social responsibility award has a significant positive effect on firm value.…”

“…Any signal or information disclosed to the market by management must first be interpreted whether the information is a positive or negative market signal. When the market catches and perceives the signal well, it will place the highest confidence in companies of good quality rather than those not and achieve a positive market reaction to the value of the company (Wiranudirja et al, 2022). H7: Managerial capability significantly affects firm value.…”

“…The increase and decrease in firm value can also be influenced by the presence of several factors that act as the basis for investment considerations for stakeholders. For example, firm size (Tiara & Jayanti, 2022;Susanti & Restiana, 2018;Dewi & Sembiring, 2022), firm growth (Faizra et al, 2022;, working capital ratio (Nirawati et al, 2022;Devina & Purnama, 2022;Afanny et al, 2022), cash to current assets (Saleh et al, 2020), current debt to total assets (Sari, 2022;Purba & Mahendra, 2022;Larasati & Arrozi, 2022), earnings per share (Putri & Anwar, 2022;Dewi & Susanto, 2022), firm age Muzayin & Trisnawati, 2022), listing age (Tiara & Jayanti, 2022;Annisa & Praptoyo, 2022), price earnings ratio (Ratnasari, 2022;Hulasoh & Mulyati, 2022), market capitalization (Lathifatussulalah & Dalimunthe, 2022;Rahmanissa & Isynuwardhana, 2022), corporate social responsibility award (Benjamin & Biswas, 2022;Sentya & Mardianto, 2022), managerial capability (Doukas & Zhang, 2020;Wiranudirja et al, 2022), and earnings management (Prabowo, 2022;Rajab et al, 2022;Putry & Murni, 2022).…”

Corporate social responsibility, reputation and performance in the Zimbabwe’s mining sector

“…The present-day CSR is a concept whereby business corporations consider the interest of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders as well as their environment (Wiranudirja, Salim & Indrawati 2022). Corporate social responsibility is applied to strategies that corporations adopt of how to conduct business in a way that is ethical and society-friendly (Burguete et al 2023).…”

Factors influencing the carbon emissions disclosure in basic and chemical industrial companies listed on the IDX in 2016-2019

“…The more managerial ownership, the less agency conflict, where managers will participate in making decisions and tend to act like a company owner. It means that managers will make more decisions and consider things that are good for the continuity of the company which will cause the company better in the eyes of stakeholders, attract the attention of investors, and to gain community legitimacy (Wiranudirja et al, 2022). It can be carried out by making voluntary disclosures by disclosing carbon emissions (Chen et al, 2021).…”