The Influence of Corporate Social Responsibility, Leverage and Firm Size on Firm Value: A Case Study of Food and Beverage Sectors

Abstract

This research holds significant importance in the context of finance and corporate management by using independent variables including corporate social responsibility (CSR) evaluated through Corporate Social Disclosure Index, leverage evaluated through Debt to Equity Ratio, and firm size evaluated through Size, alongside the dependent variable of firm value evaluated through Tobin’s Q. The research goal is to investigate how CSR, leverage and firm size affect the value of food and beverage companies that are listed on the Indonesia Stock Exchange between 2019 and 2022. The study’s population consisted of 75 companies using purposive sampling guided by predetermined criteria, resulting in 27 companies with 108 data. This study employed a causal research design to determine cause-and-effect relationships, with secondary data acquired from financial and annual reports as well as data analysis methods such as the Classical Assumption Test, Hypothesis Test, Multiple Linear Regression Test, and Coefficient of Determination Test calculated through statistical tools. The findings indicate that CSR negatively affects firm value, implying that companies need to evaluate their CSR strategies to avoid adverse effects on the firm’s value. Leverage negatively affects firm value, suggesting that companies should consider their capital structure to prevent incurring costs on the firm’s value. On the other hand, firm size positively affects firm value, suggesting that it could be an encouragement for companies to maintain and expand their operations to enhance the firm’s value. This research provides basic considerations for prospective investors to be more cautious when evaluating how companies represent both financial and non-financial information. Companies should also maintain good management performance, leading to an enhancement in their firm value over time.