Corporate Sosial Responsibility and Financial Performance: Stakeholder Theory vs Good Management Theory

Abstract

Previous research related to social responsibility (CSR) and corporate financial performance (CFP) refers to different theoretical underpinnings. This study uses two different perspectives, namely stakeholder theory and resource based theory. This study focuses on the banking industry listed on the Indonesia`s stock exchange period 2008-2015. Bank Indonesia as a major central bank, which has big authority, has set a bank soundness rating since 2011. This provision encourages banks to improve their management and meet these requirement thus CSR and CFP are important indicators. The findings of this study indicate that CSR has a significant influence on CFP, and CFP also has a significant effect on CSR. The size of the influence of both is still determined by the size of the company, the composition of corporate funding sources and government intervention