The Effect of CSR and Leverage on Financial Performance in Manufacturing Companies of Indonesia

Abstract

The primary goal of this research is to ascertain the effects of corporate social responsibility and financial leverage on the financial performance of 38 Indonesia Stock Exchange-listed manufacturing companies for three years (2019-2021). This study utilizes two independent variables, which are corporate social responsibility and financial leverage as assessed by the debt equity ratio (DER) in analyzing their impact on financial performance metrics like return on equity (ROE), return on assets (ROA), and earnings per share (EPS). Secondary data was gathered from the financial reports (comprehensive income statements and financial position statements) of chosen companies listed from the Indonesian Stock Exchange (IDX). Descriptive statistical tests, multiple linear regression tests and hypothesis testing were utilized to examine the research data. The analysis results reveal that Corporate social responsibility and leverage have a significant and favorable effect, as assessed by the debt-to-equity ratio on the financial performance of 38 companies.