POLITICAL CONNECTION AND CORPORATE SOCIAL RESPONSIBILITY: EVIDENCE FROM INDONESIA
This paper aims to investigate the influence of political connection on CSR expense in Indonesia. We use quantitative approach consisting a sample of 682 firm-year observations between 2010 and 2015. The models are estimated using Generalized Least Square regression with robust standard error. Using...
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| Format: | Theses |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/41868 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | This paper aims to investigate the influence of political connection on CSR expense in Indonesia. We use quantitative approach consisting a sample of 682 firm-year observations between 2010 and 2015. The models are estimated using Generalized Least Square regression with robust standard error. Using the individual-level of political connections, we find that the political connection is an important determinant of CSR expense. The political connection effect is analyzed based on the different charactristics of ownership structure, the affiliations, and board structure. We find that state-owned enterprises and privately-owned enterprises that politically connected are positively associated with CSR expenses. Interestingly, the evidence shows that politically connected board of commissioners are more willing to spend in CSR activities, while we find no evidence for the association between politically connected board of directors and CSR. Furthermore, politically connected firms that contribute to CSR are from government-leaning firms, while opposition-leaning firms are more concern to profitable projects. The findings are robust using different measures of political connection and controls. This study contributes to the existing literature by investigating this link in a country where political connection plays a critical role |
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