How does family business affect the association between corporate social responsibility disclosure and cost of debt in Indonesia?

Sari, Meilinda and Joni, Joni and Ginting, Enda Karina Salsalina Br. (2024) How does family business affect the association between corporate social responsibility disclosure and cost of debt in Indonesia? Business Strategy and Development, 7 (3). ISSN 2572-3170

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Abstract

This study examines how corporate social responsibility (CSR) disclosure and family firms affect the cost of debt (COD) using a sample of companies listed on the Indonesia Stock Exchange between 2017 and 2020. Ordinary least square regres�sion was applied to investigate this association. This study also addresses the endo�geneity problem using the generalized method of moments (GMM). This study finds that CSR lowers a company's COD. Firms with more CSR reporting minimize infor�mation asymmetry and improve their reputation. Next, we investigate whether fam�ily ownership can moderate the relationship between CSR and the COD. These findings support the hypothesis that family ownership moderates the relationship between CSR and COD. It is possible that family businesses use CSR to maintain a good reputation among their stakeholders, thus producing more CSR reports. The findings contribute to the literature by providing empirical evidence on how CSR and family firms experience a lower COD capital in the emerging economy context of Indonesia. Furthermore, this study provides academic implications by investigat�ing whether family ownership can be a moderator variable in the association between CSR and COD. The study also has practical implications for practitioners and regulators in creating policies that promote better CSR initiatives and corporate governance systems.

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