IMPACTS OF CORPORATE SOCIAL AND ENVIRONMENTAL RESPONSIBILITY (CSER) PERFORMANCE ON COST OF CAPITAL.
€
ECONOMIC F'ACULTY
ANDALAS UNIVERSITY
Thesis
IMPACTS OF CORPORATD SOCL{L AND EN!'IRONMENTAI,
RESIONSIBILITY (CSER) PERIORMANCE ON COST OF CAIITAL
DEDI ADRIAN
04153 05t
Studcnl of Undergmduate Degree in A.counting Dcplrtmcot
PADANG
nrs srd) fiF a Cap i,
rhe emprricol
eNircmertal rcsporuibility by exminirg irs
d€bl and cosl
odsty
of equit)
i!
nining
s
lirl
hign pronle indut y, yhich
oF
ir
a
ir
in equity finecins
dd
10
inGidst 6te
dd
ed
banrins
a
low pmfile induFy,
CSER issu€s. This Bearch
borh induslries. Usine
hajor frctor atrecting cost ofcapita.l.
indul,-y
of
mrc operarion, is higbly rclaied to
opdation is nol significmlly r€Lr€d
will compde iiat relatiotrhip
md
Minils ad minjog senice indusbr h
CSER issues. In lhe ot!€r had, banling is cldsified
trfiich ns
s.id'
lo the 6st of opft.t (cost
ed ninine snice
listed at takafia Srock Exchmge.
clsified
li.eaD'e on co-pomr.
e
asMprlon
veiables ofBeta
s a nesw
rhat dsk is
6 a m€sw ofnsk
of iisk in debt tumcing, rhis
study conclude thal in general rherc G no ElatioBhip
betren
CSER
perfomde
md cosl of capiid in both industy. 4n qception jusr @cws !o lhe Elationship
betw€en CSER
ildutr. lbis
CSER
perfomee dd @st of debt in midng ed nining
Esuh nees ihal investoG
lerfomee
of
a
dd cEdito$
have not
s€aice
co.M€d
yei to
compoy befoF invesline tbeir tund.
Kztwor&: Coryorale So.ial and Envirc nental RespoBibilitr, C6t afcapital,
cast af Debt, cosr
afEq"it
CITAPTERI
INLRODIICTION
Corpomrc Social and trnvtonmenral Respo ibilny l]3s beconc tne inLLrcslins
&oud
issuc
dt
ihe world in rho ldsl decdes.
ctudty. this issue tras
industial rc!.lution in western c.ulries ar 1990
ol 1,d6rial
deltlopmenrs
tsch.oloCjr werc
(Hilna!
r!.
go*ins rapidly Th.
Fositive md neeative etrdcrs into tlic *ortd. onc orlhe
Tn. indGriai
derclopnenrs
did not jusr
ar
hun
ihjs
ne. rte
stopped
ol thar lmc
Now.
been estabtished
jnpa* ofn
dc boi ju$ nappen in weslcd countriesbymoF,
also b€comes Eloballr The efecls
tud
que broushr
suntn.s
in narrr comries sincc lhc r€rolurion. In line wilh lhh condition. de
'suc
comreiry dd envtonnent. lor exdple,
elabal wamriDe
rieht hsue thdl sprad domd rbe wond.
The Blobaliztions
ol industry ec iollowed by
onmuny ro*dd ewirorncn! ad $ci!t
phce pnerc they
lile ad $c lila
ilslt
Lhe incrcasing aRare.css
issucs. p€ople
m
nore concch .iour
One locus of then conccms
h
+pEciate $e companies $ar
m
tu
wo
b foft
oltendency Io
ol
rhe
towdd
QrpoBte aclions esddirs to cohmunity md environnenr hsucs. They rend
be
ol
regdi,c inpocls of
indusiriallztion n spreadine round the rvortd. Many iddlslries havc
but aho lo rhe Blobal
le.hniquc
ftch
dis developnem is lo$€rds drc cnvr.n.Enr d socid. Howcver,
cttbcls of dns revoluljon *erc slill happened in drc {esrern
ruised since
2l)l)?). tn this cra rhe
masive poducrion was inboduced at tlis tim€. This pioducrion
both
b*r
10
also conccm wirh lhese issues. Thh afpEciarion
in
$!t contdy,
buy
thd
produds. or invest in
MILIK
LJPT PERPUS-lAKAAN
IJNI!ERSIi'AS ANDA LAS
tsesidesrha{. de inbnnationrcchnoloqicsllso impove
evcn( in
o....dnrq
can bc
doud
the
tnowo by thc F.nre iD orhercoundcs in
*rrtd.
rhe
sc()nd The
a
cvenls berc inulude rhc co4{rare sociar rcsponsibiliiy iss@s conduclcd by
co4roralions. So that. inlbmarion abour CSLR
&cesses
bt
everyom in
depend on lhe CSER
All
fie world lh€
peopte
ttrfondrc
of a contary cm
be
*1lt reacl p.sirilely or lcgarively
peifoftdce of llc c.opary ilsett
phenonenoB above lead CSER hecome hot ropjc in rhe wortd. r'oday.
pcople aE nore concern lo rlis nsue. 1r cm be prcvcn by ihe
CSER Mses ftced by thc
conpaies hale
b€en sueessaulty
in.@i4 nrnbcs ot
di$lo*d.
thc
ces
ir.tf
ae hoth in positive md nesarive te@s. This facr made rhe compeies have ro reviJe
rheir
noi jusr achierins lhe
eds $al
dgele! findci.l profit, bu aho achjeling
subinabiliqr derelopment of $eir busincss Tn€ susbinability development
consisls olachicving Esered
soorl relatiod wilh
cu!one*, enployecs, &d supplieF
wil
brins negative consequenccs ro the
conF&y. Thc cxdple olthh cae is Nike underp.id workers
i.
o,ereeas facl.nes
enployed chitd in the rus indusrty in Fleral develop'n8 countri$
Bdon (2001). Ii
bolcons
oftm
here
fin&cid prcjtt; developing colmmir!; od natrjna,
Fail ro a.@mplnh &ese goah
od
the
ws
a so@e of onlroveny
aliesed ro be paying
autries. Nike sa
one
od disord.
6
shred in
wnn anempts lo organjze
uwsonably low w,gcs lo €mployees in pmr
ofthc fi^l tujor otpoEtiotrs to titce such a boycon. Md n
urloubtedly ddaged its brmd image.
Ihe csc otNikeaho occMed
oi Swilarlod (!cal.
\ile
2l]O4). Bur.
did. Levj noved b€foie n
ondnions
ad
ar
Lcvi StEu$ ot.rhe US
dd
Chdles veilton
d.se ampdics handled n norc proacrivety lhd
bedre llc
wases wee rc6onab1c
iaJgel of cnrichm to cosur€ that Rortjng
all lbrouen ils supply chain,
ed
vejuon
CHATTERV
Based on thc hypothesis tcsting
mnclBion
I
.l $is r€srth
There
k no
in the chapter 4. the reseNhcr cm draw
The conclusidns
reLriionrhin
Esponsibilily pdfomdcc
olthis Esear.h in,
betw€en corporate
dd
the
scial dd
co$ oI equny in Midne
ed
envnomeni.l
Mining
lndusrr_v
Tlis coftlition exisls becaue the invenos oi borh indEr.ies stiU focus
lheir ancndons lo nnmcial pe.fomces of the
onpuics
bcforc investing
then tunds. It
c
be proven by all of r values
LevcraCe. DFL
dd
Le\erage ae onesorfinucialrisks indicdror.
Thca is no
relarionship
responsibility performce
de above .96 for DFL md
1
b:rRen coryomtc ecial and
dd on ofdcbt
in
envnomental
Bdkins Indusr4
lhe resor for this condilion is sde with the prcvious
creditoE in this induFy still
fcu
se. rtun the rdult of nultivdiale
on lhe nnmcial !€domaces.
Eslession that says
rclatiohship bctwccn Capital Sl,acnft (Findcjal related
3. There
one. The
It can
b€
$qe is sisdficmt
nsk) d lntftst
Ratc
is nesalive Etalionship b€te€en corForale $cial lnd erviromcnial
rcsponsibihy peifommce md cost of debl in Mini.g
dd Mining IndsLy.
This relalionshjp exisls nay be beMse the ciedito6 in thh induslry
h6
Eoie risl$ drd the oeditos in Bar*ins Industry. Tnh prcnim rislc @
elated 1o lhe coE operalions
ol Minin8 d Mining Fims, ehich &
Bqon.David P., 2001, 'Busin6s and lts En!ir.nnent,4tn !dition". Prdnricellall.
B.nh, Mary
E.,
d Any P. Hunon, 200l. "Finacial analysls
dd
rhe pncing oa
accruals",Slanford Univesity Workinn Papcr.
Chspmln, Pctcr, 200l, Thc Elhics of CorpoEre Social Responsibitityi
MaMsement Trend of lhe Nerv Millcnnium?'. Sh@holder Assciariod ior
Reserrh od Educltion
Coch6n, P. and Wooi, R., 1934, Corp.rare Social Resp.nsibility
P€rromrce , Audeny ofMdagement Joumai. 27 ( l l: 42-56
ud
Financial
lith CSR? lte Top l0 Benefib ol
B€,gilg in Ctrp@r S&irl R.spesibihr. Tlrc BasiK tt*..
u\!':s r!r\.' !.!4. Rdi6€d d ,rm3-4{ lO
csdelwork
dd Yelds, Radley,2004, why
DNin, Ali,
bother
2007. 'Prospek Corpodts Sooisl Responsibiliry Menggenbi6kan,
Akunrrn Indonesi!: 3nahun lNovcmb(2007
Dehow, Palricia M., and Ilia D. Dichev. 1993, "The qualilt.faccnak lnd eminss:
The role of &crud slinration cm6', Unive^ity olMichigan working Fper
Dene{im,200T, lrinancialRaliosa.dcredirRiskiTheSelarionorFinanci:lRatio
Cddb in D& Cebets"- \! \r ! !t! qir l
Dwyer, DouElA W.,Guo.Gurog,dd Hood III, Frcdcnck, 2006, , rto.dii KMv Riskcatc
\'3'1 l@-. $rwdodvslmv c!ni,ll6;er€d o 2@a.l}5-27
Dsler, Dougl* N., K@agil. Abhd E, ftd Relngold, Alexrder,2004, -Moody\ KMV
R]lLri. v31 U5 BEI'-\rr\ moodr:kD\ .ofi. Xei6€d q z0t)84t27
F.i€nds
ol $e E$lh, 2005, "British Am€ricah TotEco Reporl Shows Trulh aehind
. Rtui.v.d m 2mR
Crnwsh.
03 07
God6ex P., 2fiJ5, $€ Relationship B.twen corpocre Philanthropy dd St@hotder
wearln: a Rk( Manlsenrent Pe6p.ai\e . Acadeny .1 Ma asehent Rzyiev,3a
(4):777- 798
ECONOMIC F'ACULTY
ANDALAS UNIVERSITY
Thesis
IMPACTS OF CORPORATD SOCL{L AND EN!'IRONMENTAI,
RESIONSIBILITY (CSER) PERIORMANCE ON COST OF CAIITAL
DEDI ADRIAN
04153 05t
Studcnl of Undergmduate Degree in A.counting Dcplrtmcot
PADANG
nrs srd) fiF a Cap i,
rhe emprricol
eNircmertal rcsporuibility by exminirg irs
d€bl and cosl
odsty
of equit)
i!
nining
s
lirl
hign pronle indut y, yhich
oF
ir
a
ir
in equity finecins
dd
10
inGidst 6te
dd
ed
banrins
a
low pmfile induFy,
CSER issu€s. This Bearch
borh induslries. Usine
hajor frctor atrecting cost ofcapita.l.
indul,-y
of
mrc operarion, is higbly rclaied to
opdation is nol significmlly r€Lr€d
will compde iiat relatiotrhip
md
Minils ad minjog senice indusbr h
CSER issues. In lhe ot!€r had, banling is cldsified
trfiich ns
s.id'
lo the 6st of opft.t (cost
ed ninine snice
listed at takafia Srock Exchmge.
clsified
li.eaD'e on co-pomr.
e
asMprlon
veiables ofBeta
s a nesw
rhat dsk is
6 a m€sw ofnsk
of iisk in debt tumcing, rhis
study conclude thal in general rherc G no ElatioBhip
betren
CSER
perfomde
md cosl of capiid in both industy. 4n qception jusr @cws !o lhe Elationship
betw€en CSER
ildutr. lbis
CSER
perfomee dd @st of debt in midng ed nining
Esuh nees ihal investoG
lerfomee
of
a
dd cEdito$
have not
s€aice
co.M€d
yei to
compoy befoF invesline tbeir tund.
Kztwor&: Coryorale So.ial and Envirc nental RespoBibilitr, C6t afcapital,
cast af Debt, cosr
afEq"it
CITAPTERI
INLRODIICTION
Corpomrc Social and trnvtonmenral Respo ibilny l]3s beconc tne inLLrcslins
&oud
issuc
dt
ihe world in rho ldsl decdes.
ctudty. this issue tras
industial rc!.lution in western c.ulries ar 1990
ol 1,d6rial
deltlopmenrs
tsch.oloCjr werc
(Hilna!
r!.
go*ins rapidly Th.
Fositive md neeative etrdcrs into tlic *ortd. onc orlhe
Tn. indGriai
derclopnenrs
did not jusr
ar
hun
ihjs
ne. rte
stopped
ol thar lmc
Now.
been estabtished
jnpa* ofn
dc boi ju$ nappen in weslcd countriesbymoF,
also b€comes Eloballr The efecls
tud
que broushr
suntn.s
in narrr comries sincc lhc r€rolurion. In line wilh lhh condition. de
'suc
comreiry dd envtonnent. lor exdple,
elabal wamriDe
rieht hsue thdl sprad domd rbe wond.
The Blobaliztions
ol industry ec iollowed by
onmuny ro*dd ewirorncn! ad $ci!t
phce pnerc they
lile ad $c lila
ilslt
Lhe incrcasing aRare.css
issucs. p€ople
m
nore concch .iour
One locus of then conccms
h
+pEciate $e companies $ar
m
tu
wo
b foft
oltendency Io
ol
rhe
towdd
QrpoBte aclions esddirs to cohmunity md environnenr hsucs. They rend
be
ol
regdi,c inpocls of
indusiriallztion n spreadine round the rvortd. Many iddlslries havc
but aho lo rhe Blobal
le.hniquc
ftch
dis developnem is lo$€rds drc cnvr.n.Enr d socid. Howcver,
cttbcls of dns revoluljon *erc slill happened in drc {esrern
ruised since
2l)l)?). tn this cra rhe
masive poducrion was inboduced at tlis tim€. This pioducrion
both
b*r
10
also conccm wirh lhese issues. Thh afpEciarion
in
$!t contdy,
buy
thd
produds. or invest in
MILIK
LJPT PERPUS-lAKAAN
IJNI!ERSIi'AS ANDA LAS
tsesidesrha{. de inbnnationrcchnoloqicsllso impove
evcn( in
o....dnrq
can bc
doud
the
tnowo by thc F.nre iD orhercoundcs in
*rrtd.
rhe
sc()nd The
a
cvenls berc inulude rhc co4{rare sociar rcsponsibiliiy iss@s conduclcd by
co4roralions. So that. inlbmarion abour CSLR
&cesses
bt
everyom in
depend on lhe CSER
All
fie world lh€
peopte
ttrfondrc
of a contary cm
be
*1lt reacl p.sirilely or lcgarively
peifoftdce of llc c.opary ilsett
phenonenoB above lead CSER hecome hot ropjc in rhe wortd. r'oday.
pcople aE nore concern lo rlis nsue. 1r cm be prcvcn by ihe
CSER Mses ftced by thc
conpaies hale
b€en sueessaulty
in.@i4 nrnbcs ot
di$lo*d.
thc
ces
ir.tf
ae hoth in positive md nesarive te@s. This facr made rhe compeies have ro reviJe
rheir
noi jusr achierins lhe
eds $al
dgele! findci.l profit, bu aho achjeling
subinabiliqr derelopment of $eir busincss Tn€ susbinability development
consisls olachicving Esered
soorl relatiod wilh
cu!one*, enployecs, &d supplieF
wil
brins negative consequenccs ro the
conF&y. Thc cxdple olthh cae is Nike underp.id workers
i.
o,ereeas facl.nes
enployed chitd in the rus indusrty in Fleral develop'n8 countri$
Bdon (2001). Ii
bolcons
oftm
here
fin&cid prcjtt; developing colmmir!; od natrjna,
Fail ro a.@mplnh &ese goah
od
the
ws
a so@e of onlroveny
aliesed ro be paying
autries. Nike sa
one
od disord.
6
shred in
wnn anempts lo organjze
uwsonably low w,gcs lo €mployees in pmr
ofthc fi^l tujor otpoEtiotrs to titce such a boycon. Md n
urloubtedly ddaged its brmd image.
Ihe csc otNikeaho occMed
oi Swilarlod (!cal.
\ile
2l]O4). Bur.
did. Levj noved b€foie n
ondnions
ad
ar
Lcvi StEu$ ot.rhe US
dd
Chdles veilton
d.se ampdics handled n norc proacrivety lhd
bedre llc
wases wee rc6onab1c
iaJgel of cnrichm to cosur€ that Rortjng
all lbrouen ils supply chain,
ed
vejuon
CHATTERV
Based on thc hypothesis tcsting
mnclBion
I
.l $is r€srth
There
k no
in the chapter 4. the reseNhcr cm draw
The conclusidns
reLriionrhin
Esponsibilily pdfomdcc
olthis Esear.h in,
betw€en corporate
dd
the
scial dd
co$ oI equny in Midne
ed
envnomeni.l
Mining
lndusrr_v
Tlis coftlition exisls becaue the invenos oi borh indEr.ies stiU focus
lheir ancndons lo nnmcial pe.fomces of the
onpuics
bcforc investing
then tunds. It
c
be proven by all of r values
LevcraCe. DFL
dd
Le\erage ae onesorfinucialrisks indicdror.
Thca is no
relarionship
responsibility performce
de above .96 for DFL md
1
b:rRen coryomtc ecial and
dd on ofdcbt
in
envnomental
Bdkins Indusr4
lhe resor for this condilion is sde with the prcvious
creditoE in this induFy still
fcu
se. rtun the rdult of nultivdiale
on lhe nnmcial !€domaces.
Eslession that says
rclatiohship bctwccn Capital Sl,acnft (Findcjal related
3. There
one. The
It can
b€
$qe is sisdficmt
nsk) d lntftst
Ratc
is nesalive Etalionship b€te€en corForale $cial lnd erviromcnial
rcsponsibihy peifommce md cost of debl in Mini.g
dd Mining IndsLy.
This relalionshjp exisls nay be beMse the ciedito6 in thh induslry
h6
Eoie risl$ drd the oeditos in Bar*ins Industry. Tnh prcnim rislc @
elated 1o lhe coE operalions
ol Minin8 d Mining Fims, ehich &
Bqon.David P., 2001, 'Busin6s and lts En!ir.nnent,4tn !dition". Prdnricellall.
B.nh, Mary
E.,
d Any P. Hunon, 200l. "Finacial analysls
dd
rhe pncing oa
accruals",Slanford Univesity Workinn Papcr.
Chspmln, Pctcr, 200l, Thc Elhics of CorpoEre Social Responsibitityi
MaMsement Trend of lhe Nerv Millcnnium?'. Sh@holder Assciariod ior
Reserrh od Educltion
Coch6n, P. and Wooi, R., 1934, Corp.rare Social Resp.nsibility
P€rromrce , Audeny ofMdagement Joumai. 27 ( l l: 42-56
ud
Financial
lith CSR? lte Top l0 Benefib ol
B€,gilg in Ctrp@r S&irl R.spesibihr. Tlrc BasiK tt*..
u\!':s r!r\.' !.!4. Rdi6€d d ,rm3-4{ lO
csdelwork
dd Yelds, Radley,2004, why
DNin, Ali,
bother
2007. 'Prospek Corpodts Sooisl Responsibiliry Menggenbi6kan,
Akunrrn Indonesi!: 3nahun lNovcmb(2007
Dehow, Palricia M., and Ilia D. Dichev. 1993, "The qualilt.faccnak lnd eminss:
The role of &crud slinration cm6', Unive^ity olMichigan working Fper
Dene{im,200T, lrinancialRaliosa.dcredirRiskiTheSelarionorFinanci:lRatio
Cddb in D& Cebets"- \! \r ! !t! qir l
Dwyer, DouElA W.,Guo.Gurog,dd Hood III, Frcdcnck, 2006, , rto.dii KMv Riskcatc
\'3'1 l@-. $rwdodvslmv c!ni,ll6;er€d o 2@a.l}5-27
Dsler, Dougl* N., K@agil. Abhd E, ftd Relngold, Alexrder,2004, -Moody\ KMV
R]lLri. v31 U5 BEI'-\rr\ moodr:kD\ .ofi. Xei6€d q z0t)84t27
F.i€nds
ol $e E$lh, 2005, "British Am€ricah TotEco Reporl Shows Trulh aehind
. Rtui.v.d m 2mR
Crnwsh.
03 07
God6ex P., 2fiJ5, $€ Relationship B.twen corpocre Philanthropy dd St@hotder
wearln: a Rk( Manlsenrent Pe6p.ai\e . Acadeny .1 Ma asehent Rzyiev,3a
(4):777- 798