The Influence of Corporate Social Responsibility, Debt to Equity Ratio, and Total Assets Turnover on Financial Performance of Manufacturing Companies in Indonesia

Lidya Martha; Masyhuri  Hamidi; Yurniwati Yurniwati; M Fany  Alfarisi

doi:10.33395/owner.v10i3.3540

Authors

Lidya Martha
✉ Corresponding author: lidyam83@gmail.com Universitas Andalas
Masyhuri Hamidi Universitas Andalas
Yurniwati Universitas Andalas
M Fany Alfarisi Universitas Andalas

DOI:

https://doi.org/10.33395/owner.v10i3.3540

Keywords:

: Corporate Social Responsibility, Debt to Equity Ratio, Financial Performance, Manufacturing Companies, Return on Assets, Total Assets Turnover

Abstract

This study aims to analyze the influence of Corporate Social Responsibility (CSR), Debt to Equity Ratio (DER), and Total Assets Turnover (TATO) on the financial performance of manufacturing companies listed on the Indonesia Stock Exchange for the 2017-2023 period. Financial performance is proxied by Return on Assets (ROA). The population of this study is all manufacturing companies listed on the Indonesia Stock Exchange, totaling 218 companies. The sampling technique used purposive sampling with criteria including manufacturing companies that published annual reports and sustainability reports consistently during 2017-2023 and had complete data for the variables studied. Based on these criteria, 36 manufacturing companies were obtained as the initial sample. After outlier treatment, 18 companies remained with a total of 123 observations (unbalanced panel). The research method used is quantitative with panel data regression analysis using EViews 12 software. The selection of the best model was carried out through the Chow test, Hausman test, and Lagrange Multiplier test which showed that the Random Effect Model (REM) was the most appropriate. The key findings indicate that CSR has no significant effect on ROA with a probability value of 0.0865 > 0.05, contradicting Stakeholder Theory but aligning with several previous studies in Indonesia. Similarly, DER also has no significant effect on ROA with a probability value of 0.2938 > 0.05, suggesting that sample companies have not been able to utilize debt productively to increase profits. In contrast, TATO has a positive and significant effect on ROA with a probability value of 0.0002 < 0.05, confirming that asset utilization efficiency is a fundamental factor in determining profitability of manufacturing companies. The conclusion of this study is that TATO is the most consistent determinant of financial performance, while CSR and DER do not show a direct influence on profitability in the context of Indonesian manufacturing companies during the observation period.

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