Debt, Profitability, and Corporate Social Responsibility – A Political Economic Theory Analysis

Abstract

Abstract This study aims to provide empirical evidence of the effect of short-term debt (STD), long-term debt (LTD), and return on assets (ROA) on corporate social responsibility disclosure (CSRD) and how the impact the Covid-19 pandemic (covid) has on the effect of STD, LTD, and ROA on CSRD. The research sample is a manufacturing company listed on the Indonesian stock exchange and observed from 2015 to 2021. Our study shows that STD does not affect CSRD, but LTD has a negative effect on CSRD. Based on CSRD indicators (social, environmental, economic disclosure), the results show that LTD has a negative effect on social and environmental disclosure. However, LTD has a positive effect on economic disclosure. The covid has caused LTD to have a positive effect on CSRD. These results show that during the covid, which caused a decline in financial performance, companies used CSRD as a tool to gain legitimacy and build investor confidence in the company’s financial performance. This study also shows that ROA has a positive effect on CSRD, and the covid has no effect on the effect that ROA has on CSRD.