IMPACTS OF CORPORATE SOCIAL AND ENVIRONMENTAL RESPONSIBILITY (CSER) PERFORMANCE ON COST OF CAPITAL

Adrian, Dedi (2008) IMPACTS OF CORPORATE SOCIAL AND ENVIRONMENTAL RESPONSIBILITY (CSER) PERFORMANCE ON COST OF CAPITAL. Other thesis, Fakultas Ekonomi.

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Abstract

This study fills a gap in the empirical literature on corporate social and environmental responsibility by examining its link to the cost of capital (cost of debt and cost of equity) in mining and mining service industry and banking industry listed at Jakarta Stock Exchange. Mining and mining service industry is classified as high profile industry, which its core operation, is highly related to CSER issues. In the other hand, banking is classified as low profile industry, which its core operation is not significantly related to CSER issues. This research will compare that relationship in both industries. Using an assumption that risk is a major factor affecting cost of capital, and variables of Beta as a measure of risk in equity financing and interest rate as a measure of risk in debt financing, this study conclude that in general there is no relationship between CSER performance and cost of capital in both industry. An exception just occurs to the relationship between CSER performance and cost of debt in mining and mining service industry. This result means that investors and creditors have not concerned yet to CSER performance of a company before investing their fund. Keywords: Corporate Social and Environmental Responsibility, Cost of Capital, Cost of Debt, Cost of Equity

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