The Influence of Profitability and Leverage on Corporate Social Responsibility Disclosure

This study aims to examine the influence of profitability and leverage on corporate social responsibility disclosure. The study was conducted in companies listed in Indonesia Stock Exchange. Profitability and leverage were treated as independent variables, while disclosure of corporate social responsibility is the dependent variable. The research method was used in this research is a verificative approach. The population in this study is the companies listed in Indonesia Stock Exchange. Sample of the study is the companies included as a member of LQ 45 index for period 2013-2015. Total listed companies were involved in this study is 67 companies. The sampling technique used in this study is nonprobability sampling with the purposive sampling method. The data analysis used in this study is multiple linear regression analysis at a significance level of 5%. The statistical program was used in analyzing data is Eviews version 8. The results showed that profitability influences corporate social responsibility disclosure. However, leverage does not influence corporate social responsibility disclosure. Simultaneously, profitability and leverage influence corporate social responsibility disclosure


Introduction
The management of the company seeks to implement good governance by accommodating the interests of all parties. The increasing trend of good governance practice has improved the company's response toward social responsibilities. Furthermore, it raises public awareness so that the company is subject to pressure and demands from society. Initially, the management only has a responsibility to manage the organization only. However, nowadays, with stakeholders being strategic issues for the existence of a business organization, the management has to include social responsibility as an important aspect should be managed. Since then, the concept of social responsibility arises and being popular (Masnila, 2010). The business activities, either directly or indirectly, can affect environmental quality through waste and pollution. The implementation of corporate social responsibility is compensation of harmfull effect of business activities to the environment and community. John Elkington introduced the concept of the Triple Bottom Line (TBL) and it refers to profit, people, and the planet. Corporate Social Responsibility (CSR) implies that the business organization is not only pursuing profits only but also responsible for the social (People), and its environment (Planet). CSR is indispensable in the business world and is a pillar in measuring the success of a company (Hadi, 2011:56).
Eipsten and Freedman in Cheng and Christiawan (2011) explained that there were many benefits of CSR disclosure for the business organization. Improving competitive advantage, increasing the trust of shareholder and stakeholders are some of the example the benefits of CSR. Even though the popularity of CSR is increasing lately, however, the practice of CSR program in the business organization still poor (Haramain, 2016). Furthermore, the accountability of the CSR program was found not transparent (Daniri, 2005). There are several rationalizations that business organizations should implement CSR activities. The company is part of the community. It is reasonable when the company pays attention to the public interest. Business organization and society have symbiotic properties of mutualism. A business organization can not survive without the existence of society. Therefore, the companies should give back the benefits such as profits obtained through the CSR program. Furthermore, CSR activities can avoid social conflicts due to the negative impact of business organization operation ( pollution and waste) The company has goals and targets to achieve. As part of the community, the company interacts with other community members in every activity. It is because the company is a subsystem of community life, so it requires the regularity of interaction patterns with sub-Other systems. The existence of the company cannot be separated with the interests of the wider community (stakeholders). The company is a party that utilizes resources, which is potentially cause Social and environmental problems. The company has benefited from the utilization of such resources, while the community that bears the negative consequences. It has become the responsibility of the company to distribute some of the profits gained for the welfare of the community, repair the damage caused, and give reciprocal value to the stakeholders. This reason causes social responsibility to be an integral part of the company's operations (Hadi, 2011:99).
Some of the issues that arise related to the company existence are less concerned about the environmental and social conditions surrounding it. There are only about 25 companies that conduct the disclosure of corporate social responsibility of 438 companies listed on the Indonesia Stock Exchange ( Darwin, 2011). It is relatively low the participation of the listed companies in disclosing CSR reporting. Therefore, there is a need to understand the factors that influence CSR disclosure. Purpose of the study is to examine the influence of financial aspects, namely profitability and leverage on CSR disclosure.

Literature Review
Corporate social responsibility is the commitment of the company to contribute to the development of sustainable economies concerning corporate social responsibility and focused on the balance of the economic, social, and environmental aspects (fortunately, 2008:42). Corporate social responsibility is a business commitment to act ethically, operate legally and contribute to the improvement of the improving the quality of life of employees and their families, local communities and the wider community (Budimanta, Prasetijo, & Rudito (2004:38). As part of transparency and accountability to the stakeholders, the management of the http://jurnal.unpad.ac.id/jaab -ISSN: 2614-3844 company is expected to conduct CSR disclosure. CSR disclosure is the delivery of information on the social and environmental impacts of the company's economic activities aimed at stakeholders and society as a whole as a form of CSR (Adebayo, 2000).
In Indonesia context, CSR reporting is governed by law No. 40 the year 2007. In that law, the limited liability companies related to the natural resources must disclose corporate social responsibility information. The law requires all the company to report the implementation of social responsibility and the environment in the annual report. The reporting is a reflection of the need for corporate accountability for the implementation of social and environmental responsibility so that stakeholders can assess the implementation of the activities. The Law of Limited Liability article 74 paragraph (1) mentions that the company carrying out business activities related to natural resources must carry out social and environmental responsibility. Limited liability Law Article 66 paragraph (2) which requires the company to report social responsibility activities in its annual report. The law No. 32 of 2009 on environmental protection and management also governs that any person who does business activity is obliged to provide information relating to the protection and management of the environment.
In the international context, the guidelines for the joint reference of social responsibility reports have been developed by the Global Reporting Initiatives (Elka, 2014). Global Reporting Initiatives (GRI) is an international standard for preparing social responsibility reports. Lindblom in Deegan et al. (2002) states one of the CSR disclosure media is through an annual report, which is an essential tool for obtaining information about financial conditions and non-financial information that have been achieved Company. Main factors for gaining attention from the investors is profitability and leverage. It provides information to analyze and assess financial conditions as well as the potential of the company (Munawir (2004:31) According to Heinze (1976) in Anggraini (2006), profitability is a fundamental factor that makes management have the flexibility to spend financial resources for conducting social responsibility activities. According to Yuliana et al. (2008), the high level of profitability encourages managers to provide more detailed information about their social programs. Belkaoui and Karpik in Maiyarni et al. (2014) explained that the higher the leverage, the more likely the company will be experiencing a breach of debt contracts, then the manager will strive to report the profit is now higher than the future profit. The reported profit must be high, then the manager reduces costs, including fees for disclosing social information as a form of social responsibility. The management of the company with high leverage will reduce the disclosure of social responsibility he made in order not to be the highlight of the Debtholders (Wardani, 2013). The results of the research conducted by Daryono and Zulhelmy (2012) showed a significant influence between leverage and corporate social responsibility.

Research methods
The object of this research is the profitability, Leverage, and Disclosure of Corporate Social Responsibility. Meanwhile, the company listed on the Indonesia Stock Exchange is subject of the study. The population in this study is the annual report of the listed company in Indonesia Stock Exchange company based on the LQ 45 index throughout 3 (three) years, from 2013 to 2015. The following presented in Table 1 is a list of companies included in the index LQ 45 the year 2013 -2015.  The secondary data was used is the annual report of the company. The data was obtained from the Indonesian stock exchange through the official website of www.idx.co.id. The data collection method used in this study is literature research. Literature research is conducted by collecting data and information from a variety of sources that support research, study books, journals, theses, articles, and other data relevant to the variables studied. The profitability and financial leverage were obtained from financial information stated in the annual report. Meanwhile, non-financial information to identify the data of CSR disclosure, content analysis procedure was conducted. In this study, the framework was used to measure CSR disclosure is using Global Reporting Initiative (GRI). http://jurnal.unpad.ac.id/jaab -ISSN: 2614-3844

Normality and Autocorrelation Test
Before conducting a regression analysis, the normality test is required. Normality test was addressed to examine whether the data is normally distributed or in other words representing the population. Based on information depicted in image 1, the test result of normality data shows that Jarque -Bera of 0.347724 is smaller than 2 (two) and the Probability value of 0.840413 is higher than the error rate of 5% or 0.05. It was concluded that the data was normal distributed so that the data is qualified for regression testing.
The data was used in this study is times series data. In the regression analysis, the autocorrelation test is required to identify whether the data free form autocorrelation.
Autocorrelation is a characteristic of data which shows the degree of similarity between the values of the same variables over successive time intervals. It violates the assumption of instance independence, which underlies most of the conventional models. It generally exists in those types of data-sets in which the data, instead of being randomly selected, are from the same source. The results of autocorrelation is presented in table 4.  Table   4, the conclusion is that there is no autocorrelation. Therefore, the data fulfills the requirement for regression analysis.

Multiple Linear Regression Analyses
Multiple linear regression analyses were performed to predict the relationship between independent variables and dependent variables. The dependent variables in this study are Corporate Social Responsibility (CSR) as measured by the CSR INDEX (CSRI) and independent variables in this study is the level of profitability and leverage. Level of profitability was measured using Return On Investment. Meanwhile, Debt to Equity Ratio is proxy to measure leverage. The results of multiple regression is presented in Table 5. Based on information stated in Table 5, it indicates that the profitability of companies positively influences the CSR disclosure ( p<0.05). It means that companies with higher profitability tend to disclose CSR information better than the companies with lower profitability. The results consistent with the previous researches that predict the profitability of the firm positively significantly influenced CSR disclosure. However, leverage is failed to prove as a factor to influence CSR disclosure. The result that indicates that leverage is not significant to explain the variance of CSR disclosure is not as expected.

Coefficient of Determination analysis
Coefficient of determination analysis aims to measure to the extent to which the ability of the model in describing the variation of dependent variables. The value of coefficient of determination is between 0 (zero) to 1 (one) which is 0 < R 2 < 1. A value approaching 1 (one) means that independent variables provide almost all the information needed to predict the variation of the dependent variable. The results of coefficient determination calculation are presented in Table 6.

Discussion
The statistical T-Test (partial testing) indicates a profitability variable that is proxied using a Return On Investment (ROI) ratio affects the Corporate Social Responsibility Disclosure (CSR). The result is consistent with the previous findings by Sari and Hanifa (2017), Gusti and Ida (2015), Rina and Suyanto (2015), and Heni (2013)