Companies should focus on increasing their size

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The Effect of Structure of Share Ownership and Company Size on Disclosure of Social Responsibility in Manufacturing Companies Listed on the Indonesia Stock Exchange for the 2015-2017 Period

Introduction

The concept of social responsibility (CSR) has become a crucial aspect of business operations in recent years. As companies strive to maintain a positive reputation and attract investors, the disclosure of CSR has become a vital component of their business strategy. However, the extent to which companies disclose their CSR activities varies significantly, and several factors contribute to this disparity. This study aims to investigate the effect of the structure of share ownership and company size on the disclosure of social responsibility in manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2015-2017 period.

Background

The IDX is one of the largest stock exchanges in Southeast Asia, with a significant number of manufacturing companies listed on it. These companies play a crucial role in the country's economy, and their CSR activities have a direct impact on the lives of millions of people. However, the disclosure of CSR activities by these companies is often limited, and several factors contribute to this lack of transparency. This study aims to identify the factors that influence the disclosure of CSR by manufacturing companies listed on the IDX.

Methodology

This study used a purposive sampling technique to select 76 companies from all manufacturing companies registered on the IDX. The variables tested consisted of institutional ownership and managerial ownership as the structure of share ownership, as well as the size of the company as an independent variable. The disclosure of social responsibility served as the dependent variable. The hypothesis test was carried out using multiple regression methods through SPSS software.

Results

The results of this study showed that the company's size has a positive and significant influence on the disclosure of partial social responsibility. However, both institutional ownership and managerial ownership did not show a significant effect on individual CSR disclosures. Furthermore, simultaneous analysis revealed that the three variables - institutional ownership, managerial ownership, and company size - collectively have a positive influence on the disclosure of social responsibility in manufacturing companies listed on the IDX.

The Importance of Company Size

The results of this study show that the company size has a significant effect on the disclosure of social responsibility. This can be explained by several reasons. Firstly, larger companies have more resources to be invested in CSR activities. Secondly, large companies are usually considered more by the public and other stakeholders, so they have incentives to be more transparent in their CSR reports. With increasing social expectations, pressure from consumers, and government regulations, large companies tend to be more committed to expressing their social responsibility.

Ownership Structure and Its Influence

In terms of ownership structure, the results of this study show that institutional and managerial ownership has no significant effect on CSR disclosure. This can be linked to the characteristics of the owner itself. Institutional ownership may focus on short-term financial benefits, while managerial ownership may be affected by a set of personal interests and goals, which are not always in line with the emphasis of corporate social responsibility. Thus, without adequate encouragement from the owner, the disclosure of CSR can be ignored.

Relevance for Business Practice

Given that the disclosure of social responsibility can increase a company's reputation and attract investors, it is essential for companies to not only focus on size but also on the quality of their disclosure. Companies that are able to show a real commitment to CSR, both through large company size and through good policy in ownership, will have a competitive advantage in the market.

Conclusion

In conclusion, a combination of company size and good management strategies in the disclosure of social responsibility needs to be optimized so that it not only complies with regulations but also achieves public trust and wider stakeholders. This study highlights the importance of company size and ownership structure in influencing the disclosure of social responsibility. By understanding these factors, companies can develop effective strategies to improve their CSR disclosure and maintain a positive reputation in the market.

Recommendations

Based on the findings of this study, the following recommendations are made:

Companies should focus on increasing their size: Larger companies have more resources to be invested in CSR activities, and they are more likely to be transparent in their CSR reports.
Companies should develop good management strategies: Companies should develop policies that encourage the disclosure of CSR activities, and they should ensure that their management team is committed to CSR.
Companies should prioritize CSR disclosure: Companies should prioritize CSR disclosure as a key aspect of their business strategy, and they should ensure that their CSR reports are transparent and accurate.

By following these recommendations, companies can improve their CSR disclosure and maintain a positive reputation in the market.
Frequently Asked Questions (FAQs) on the Effect of Structure of Share Ownership and Company Size on Disclosure of Social Responsibility in Manufacturing Companies Listed on the Indonesia Stock Exchange for the 2015-2017 Period

Q: What is the main objective of this study?

A: The main objective of this study is to investigate the effect of the structure of share ownership and company size on the disclosure of social responsibility in manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2015-2017 period.

Q: What are the variables tested in this study?

A: The variables tested in this study consist of institutional ownership and managerial ownership as the structure of share ownership, as well as the size of the company as an independent variable. The disclosure of social responsibility serves as the dependent variable.

Q: What are the findings of this study?

A: The findings of this study show that the company's size has a positive and significant influence on the disclosure of partial social responsibility. However, both institutional ownership and managerial ownership did not show a significant effect on individual CSR disclosures. Furthermore, simultaneous analysis revealed that the three variables - institutional ownership, managerial ownership, and company size - collectively have a positive influence on the disclosure of social responsibility in manufacturing companies listed on the IDX.

Q: Why is company size an important factor in CSR disclosure?

A: Company size is an important factor in CSR disclosure because larger companies have more resources to be invested in CSR activities, and they are more likely to be transparent in their CSR reports. With increasing social expectations, pressure from consumers, and government regulations, large companies tend to be more committed to expressing their social responsibility.

Q: What is the implication of this study for business practice?

A: The implication of this study for business practice is that companies should not only focus on size but also on the quality of their disclosure. Companies that are able to show a real commitment to CSR, both through large company size and through good policy in ownership, will have a competitive advantage in the market.

Q: What are the recommendations of this study?

A: The recommendations of this study are:

Companies should focus on increasing their size: Larger companies have more resources to be invested in CSR activities, and they are more likely to be transparent in their CSR reports.
Companies should develop good management strategies: Companies should develop policies that encourage the disclosure of CSR activities, and they should ensure that their management team is committed to CSR.
Companies should prioritize CSR disclosure: Companies should prioritize CSR disclosure as a key aspect of their business strategy, and they should ensure that their CSR reports are transparent and accurate.

Q: What are the limitations of this study?

A: The limitations of this study are:

Sample size: The sample size of this study is limited to 76 companies listed on the IDX.
Time period: The time period of this study is limited to the 2015-2017 period.
Variables tested: The variables tested in this study are limited to institutional ownership, managerial ownership, and company size.

Q: What are the future research directions?

A: The future research directions are:

Investigating the effect of other variables on CSR disclosure: Future research should investigate the effect of other variables, such as industry type, company age, and board composition, on CSR disclosure.
Examining the impact of CSR disclosure on company performance: Future research should examine the impact of CSR disclosure on company performance, such as stock price and financial performance.
Developing a framework for CSR disclosure: Future research should develop a framework for CSR disclosure that takes into account the complexities of CSR reporting and the needs of various stakeholders.