Can Corporate Social Responsibility and Good Corporate Governance Drive Firm Value? Evidence from Indonesian Mining Companies

Abstract

Corporate social responsibility (CSR) and corporate governance have become increasingly important determinants of firm value, particularly in environmentally sensitive industries such as mining. However, empirical evidence on their effectiveness in enhancing firm value remains inconclusive, especially in emerging markets. This study investigates the impact of corporate social responsibility disclosure and good corporate governance on firm value among mining companies listed on the Indonesia Stock Exchange during the 2020–2023 period. CSR is measured using the Corporate Social Responsibility Disclosure Index (CSRDI), while good corporate governance is proxied by institutional ownership and the proportion of independent commissioners. Firm value is measured using Tobin’s Q. This study employs a quantitative explanatory approach using panel data regression analysis. The sample consists of 14 mining companies selected through purposive sampling from a population of 71 listed mining firms. The findings reveal that corporate social responsibility (CSR) disclosure has a significant negative effect on firm value. This finding suggests that the market has not fully appreciated CSR disclosure in the Indonesian mining sector, while investors tend to place greater emphasis on financial performance and operational efficiency when assessing firm value. In contrast, institutional ownership and the proportion of independent commissioners have no significant effect on firm value. These results indicate that the corporate governance mechanisms measured by institutional ownership and independent commissioners have yet to play a significant role in shaping firm value among mining companies in Indonesia. This study extends the literature on corporate sustainability and governance by providing empirical evidence from an emerging market and demonstrating that CSR disclosure is significantly and negatively associated with firm value. This finding highlights the importance of considering how the market perceives the costs and benefits of sustainability disclosure. The study also provides practical implications for managers, investors, and policymakers in evaluating the effectiveness of CSR disclosure and corporate governance mechanisms in enhancing long-term corporate value.