To read this content please select one of the options below:

Toward a better understanding of social impact, CSR reporting and firm performance: a look at the ASEAN banking industry

Eduardus Tandelilin (Faculty of Economics and Business, Universitas Gadjah Mada, Yogyakarta, Indonesia)
Berto Usman (Faculty of Economics and Business, University of Bengkulu, Bengkulu, Indonesia)

Social Responsibility Journal

ISSN: 1747-1117

Article publication date: 5 April 2022

Issue publication date: 28 February 2023

1310

Abstract

Purpose

This study aims to investigate the relationship between social impact, corporate social responsibility (CSR) reporting and firm performance in the context of the Association of Southeast Asian Nations (ASEAN) banking industry, providing insight into CSR-performance nexus debate, especially for non-environmentally sensitive industry (NESI).

Design/methodology/approach

We use a sample of 27 publicly listed banks in five ASEAN member countries (i.e. Indonesia, Malaysia, Singapore, Philippines and Thailand), with the period of observations ranged from 2011 to 2019 year. This study also carefully accounts for endogeneity issues and the dynamics of social impact – CSR reporting – bank financial performance relationship.

Findings

The results show that social impact (performance) and CSR reporting negatively associate with bank performance, either measured by accounting performance or market performance. The negative association between social performance and bank financial performance also persists in a longer-term relationship. This result implies that social performance and CSR might not have the expected result for banks in ASEAN developing countries and the expected effect also does not manifest in the following periods.

Practical implications

The negative association between social performance and financial performance implies that banks’ CSR in ASEAN might be misstargeted or that it takes more time to manifest the expected outcome. Therefore, banks should be able to foresee if social investment will finally offset the opportunity cost from diverting financial resources away from their core activities. On the other hand, policymakers must standardize the reporting related to social activities for banks and should bring the environmental and social issues to the depositors’ attention to show that these issues are also relevant in the banking industry.

Originality/value

To the best of the authors’ knowledge, this study is among the first to provide empirical evidence on the direct relationship between social impact, CSR reporting and firm performance in the context of ASEAN’s NESI. The results should be of potential interest value to ASEAN’s banks, regulators and shareholders.

Keywords

Acknowledgements

The authors are grateful for the support of research grants provided by Hibah FEB Universitas Gadjah Mada. The authors also thank everyone who has contributed to the completion of this study; research assistants, input from the participants of the 6th Indonesian Finance Association Conference, Dr. Leo Indra Wardhana, Dr. Muizzuddin, journal editors, and anonymous reviewer(s).

Citation

Tandelilin, E. and Usman, B. (2023), "Toward a better understanding of social impact, CSR reporting and firm performance: a look at the ASEAN banking industry", Social Responsibility Journal, Vol. 19 No. 3, pp. 579-600. https://doi.org/10.1108/SRJ-04-2021-0167

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

Related articles