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The effect of corporate social responsibility (CSR), firm size, and leverage on firm value during COVID-19 period: evidence from basic industry and chemicals listed in IDX

This study aims to study the relationship between corporate social responsibility, firm
size, leverage, and firm value in the basic industry and chemicals sector of the Indonesia Stock
Exchange or IDX.
The author would like to utilize corporate social responsibility (CSR), firm size and
leverage as the independent variables, as well as firm value as the dependent variable in this
study. The research will employ the KLD (Kinder, Lydenberg, Domini & Co.) or MSCI ESG index to
measure the CSR variable. To test the sample of 53 listed companies in the basic industry and
chemicals sector of IDX over the period of 2017-2020, panel data analysis is performed using the
GRETL statistical software. Additionally, a paired sample t-test is done to check whether CSR and
firm value had any significant differences between the period before COVID-19 pandemic (year
2016-2019) with the period during the COVID-19 pandemic (year 2020).
From the research result it can be concluded that the CSR has a significant positive
impact towards firm value, the leverage has a significant negative impact towards firm value,
while the firm size has no significant impact on firm value. The difference between the CSR and
firm value in a period before and during COVID-19 is also shown to be insignificant. Although
this research is limited by the one-year occurrence period of COVID-19, the findings of this
research suggest that the positive significance of CSR performance could help companies in
safeguarding the firm’s value throughout the beginning of a financial crisis period even if there
will be no significant improvement. This research adds to previous studies of social responsibility
research by giving more clarity on the inconsistent existing findings regarding the impact of CSR
to firm value during a crisis period. CSR has proven to retain its positive impact towards firm
value throughout the period before COVID-19 pandemic to the first year of the pandemic period.
Nonetheless, future research will be needed to determine whether CSR has different impacts on
the second year of COVID-19 period compared to the pre-crisis period and the first year of the
COVID-19 period.