Is Company Intellectual Capital Linked to Corporate Social Responsibility Disclosure? Findings from Indonesia

Abstract

Many researchers have found relationships between a company’s financial performance and either corporate social responsibility (CSR) or intellectual capital. But this exploratory study investigates whether there is a relationship between intellectual capital and its components and corporate social responsibility disclosure. The method uses hypothesis testing of listed companies on the Indonesian Stock Exchange. The corporate social responsibility disclosure index is based on content analysis of a company’s annual report, whereas the Value Added Intellectual Coefficient (VAIC) for the fiscal year of 2007 is derived from financial information. The result shows that intellectual capital, in its aggregate value of the VAIC, does not have a significant relationship with corporate social responsibility disclosure. However, one of its components, capital employed efficiency, has a significant impact on CSR disclosure, while the other two, human capital efficiency and structural capital efficiency, have no significant impact. The results of the research could also infer that the perception of corporate social responsibility is still at a stage where companies conduct CSR on an ad-hoc basis rather than incorporating it into corporate strategy.