'Universitas Islam Indonesia (Islamic University of Indonesia)'
Doi
Abstract
This research is aimed to test empirically the influence of three CSR (Corporate Social Responsibility) reporting practices recently implemented by many companies on the quality of CSR disclosure. Specifically, the research is conducted to determine whether the practices are substantive in nature, which is to improve the quality of disclosure as media of accountability to stakeholders; or simply symbolic to establish a positive image of the company. The three practices are the use of standalone CSR reports, GRI reporting frameworks, and external assurance services for CSR reports. The quality of CSR disclosure in this study is measured based on the content of information disclosed, the type of information used to describe CSR information, and the managerial orientation of CSR information. This study uses a sample of 50 non-financial companies that have market capitalization value above the average of all companies listed in Indonesia Stock Exchange in 2011-2013. Legitimacy theory is used as the underlying theory. The results show that the use of standalone CSR reports negatively affects the quality of CSR disclosure, which is interpreted as a reflection of the symbolic approach in its preparation. Meanwhile, the use of external assurance services has a positive influence on the quality of CSR disclosure, which implies the importance of infrastructure and regulation in the preparation of more substantive CSR reports. The adoption of GRI (Global Reporting Initiative) reporting framework was also found to have a positive effect; but after several sensitivity tests, the results were mixed, and overall showed that GRI adoption did not improve the quality of disclosure. Thus, the research findings indicate that the use of external assurance services increases the quality of disclosure but there are still a lot of symbolic information in CSR disclosure in Indonesia, even though the company has already followed the GRI reporting framework
