CSR and financial institution ownership in managing the cost of capital

Abstract

This study aims to examine the influence of corporate social responsibility (CSR) performance and financial institution ownership on the cost of capital for companies in the tourism and hospitality industry at ASEAN-5. A balanced panel data of 594 firm-year observations from 2014-2019 in ASEAN-5. CSR performance data results from content analysis in the annual reports of ninety-nine companies. The WACC is the proxy for the cost of capital. The research framework applies the weighted least square of panel effect regression. The statistical results indicate that CSR performance raises the cost of capital while financial institution ownership diminishes. Also, environment and human rights disclosures are components of CSR disclosures that reduce the cost of capital. The results are limited to the tourism and hospitality industry of ASEAN-5. Future studies may consider using other than KLD to measure CSR. Besides, this study only focuses on financial institution ownership. Future studies can examine other types of ownership, such as managerial and government ownership. This research is the first to examine CSR and Financial Institution Ownership's role in the cost of capital in the tourism and hospitality industry within the 5 ASEAN countries.