International Journal of Social Science & Economic Research
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Nila Tristiarini

Volume - 2 Issue - 2, Pages - 2497-2504

This study examined the effect of the magnitude of CSR Cost to the possibility of the company's financial distress. CSR is a corporate activity that puts the fulfillment of stakeholder interests that could ultimately improve the long-term prosperity of the company. CSR activity would require funds to be issued by the company as an ongoing fee. The costs incurred are expected to increase the company's value in the future in the long term. However, costs incurred for CSR activities should certainly be able to be controlled by a company that is not a burden for the company that could affect the company's financial performance. With the company's inability to control the cost of CSR will increase the company's financial distress due to substantial costs for CSR activities can disrupt cash flow of the company, which in turn reduces the rate of profit. Originality of this research lies in a different perspective to look at the concept of CSR, namely at the cost of CSR and not at the disclosure of CSR as in previous studies. The study population was the whole company that includes in SRI-KEHATI index in 2009 until 2015. The sampling method in this study is using purposive sampling method. This study uses analysis tools Structural Equation Modeling (SEM) with WarpPLS program version 3.00 that is used to test the hypothesis. The results showed that the companies that issue high costs for CSR activities can positively enhance the company's financial distress.

Cite this Article:

[Tristiarini, Nila. "THE INFLUENCE OF CSR COST IN INCREASING FINANCIAL DISTRESS." International Journal of Social Science & Economic Research 2.2 (2017): 2497-504.]

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