THE EFFECT OF CSR ON FIRM RISK DURING THE COVID-19 PANDEMIC: EVIDENCE FROM INDONESIAN LISTED NON- FINANCIAL FIRMS

• Main Author: Fathurrohim Erawan, Mathys
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/67992
• Institution: Institut Teknologi Bandung

A corporation’s Corporate Social Responsibility provides insight into how it is being managed. Corporations with high CSR performance have shown that CSR can be used as a tool to enhance a corporation’s image and reduce its firm risk. The Covid-19 pandemic provides a valuable exercise to help examine the relation between CSR and firm risk during a financial recession. This study aims to give a deeper insight towards how CSR and its dimensions affect firm risk. This paper examines a sample of 37 firms listed on the Indonesian Stock Exchange (IDX) from 2018 to 2021. Utilizing panel regression with random effects model this study found that corporate social responsibility negatively affects systematic risk. This study also found that the Covid-19 pandemic positively affects firm risk. From this study the author recommends that for managers they can look to community and employee CSR performance to reduce systematic risk by reducing operational leverage. For investors who are diversifying their portfolio and would like to reduce the systematic risk of their portfolio it is recommended to take into account the community and employ.