When Disclosure Is Not Enough: The Divergent Effects of CSR Disclosure and CSR Investment on Corporate Performance in Emerging Market Manufacturing Firms

Fita Helmaliya Putri; Jon Kenedi

doi:10.30598/baileofisipvol4iss1pp129-152

Fita Helmaliya Putri Universitas Islam Negeri Sjech M. Djamil Djambek Bukittinggi, Indonesia
Jon Kenedi Universitas Islam Negeri Sjech M. Djamil Djambek Bukittinggi, Indonesia

DOI: https://doi.org/10.30598/baileofisipvol4iss1pp129-152

Keywords: Corporate Performance, CSR Disclosure, CSR Investment, CSR Performance Divergence, Emerging Markets, Legitimacy Theory

Abstract

This study examines the divergent effects of Corporate Social Responsibility (CSR) disclosure and CSR investment on corporate performance among basic materials and chemical manufacturing firms listed on the Indonesia Stock Exchange during 2021–2024. The study addresses the persistent inconsistency in the CSR–performance literature, which has largely treated CSR as a single construct while overlooking the distinction between symbolic disclosure and substantive investment. Using an explanatory quantitative design, secondary data were collected from annual reports, sustainability reports, and financial statements. Firm performance was measured by Return on Assets (ROA), Return on Equity (ROE), and Return on Sales (ROS). Panel regression analysis was employed to estimate the simultaneous and individual effects of CSR disclosure and CSR investment. The results reveal that CSR disclosure has a significant negative association with all three performance indicators, whereas CSR investment exerts a significant positive effect. These findings suggest that symbolic CSR disclosure primarily serves legitimacy purposes without directly generating economic value, while substantive CSR investment strengthens stakeholder relationships, enhances corporate reputation, and improves financial performance. This study contributes to the literature by conceptualizing CSR as two distinct dimensions—symbolic and substantive—and introducing the concept of CSR Performance Divergence, thereby extending stakeholder and legitimacy theories in explaining how different CSR mechanisms create corporate value.

Downloads

Download data is not yet available.

References

Al-Fakir Al Rabab’a, E., Rashid, A., & Shams, S. (2023). Corporate carbon performance and cost of debt: Evidence from Asia-Pacific countries. International Review of Financial Analysis, 88, 102641. https://doi.org/10.1016/j.irfa.2023.102641

Amiraslani, H., Deller, C., Ittner, C. D., & Keusch, T. (2025). Board risk oversight and environmental and social performance. Journal of Accounting and Economics, 79(2–3), 101754. https://doi.org/10.1016/j.jacceco.2024.101754

Anand, A., Rottig, D., Stocker, M., & Bodolica, V. (2026). A multilevel framework for analysing organisational misconduct in emerging economies. International Business Review, 35(2), 102563. https://doi.org/10.1016/j.ibusrev.2026.102563

Banerjee, S., & David, R. (2025). Does ESG really matter? Accessing the relevance of ESG in Indian investors’ decision-making dynamics. Qualitative Research in Financial Markets, 17(4), 805–829. https://doi.org/10.1108/QRFM-10-2023-0241

Chen, Y., Fan, Q., Yang, X., & Zolotoy, L. (2021). CEO early-life disaster experience and stock price crash risk. Journal of Corporate Finance, 68, 101928. https://doi.org/10.1016/j.jcorpfin.2021.101928

Fayezi, S., & Zomorrodi, M. (2025). Navigating the multiplicity of sustainability policies in agribusiness supply networks: The role of policy brokers and advocates. Food Policy, 136, 102973. https://doi.org/10.1016/j.foodpol.2025.102973

Fedorova, E., Ledyaeva, S., Meshkova, E., Loktionova, O., & Stepanov, V. (2026). Cross-continental analysis: Culture, ESG disclosure, and bank performance nexus. Research in International Business and Finance, 88, 103426. https://doi.org/10.1016/j.ribaf.2026.103426

Gucciardi, G., Ossola, E., Parisio, L., & Pelagatti, M. (2025). Common factors behind companies’ Environmental ratings. International Review of Financial Analysis, 100, 103961. https://doi.org/10.1016/j.irfa.2025.103961

Guo, J., Islam, M. A., Jain, A., & van Staden, C. J. (2022). Civil liberties and social and environmental information transparency: A global investigation of financial institutions. The British Accounting Review, 54(1), 101018. https://doi.org/10.1016/j.bar.2021.101018

Handoyo, S. (2026). Assessing the static and dynamic effects of ESG performance on corporate financial and market outcomes: Global evidence from instrumental variable and GMM analyses. International Review of Economics & Finance, 108, 105251. https://doi.org/10.1016/j.iref.2026.105251

Ho, C. Y. (Chloe), Wu, E., & Yu, J. (2024). The price of corporate social irresponsibility in seasoned equity offerings: International evidence. The British Accounting Review, 56(4), 101369. https://doi.org/10.1016/j.bar.2024.101369

Hsin, C.-W., & Peng, S.-C. (2023). The role of social capital in price efficiency: International evidence. International Review of Financial Analysis, 89, 102740. https://doi.org/10.1016/j.irfa.2023.102740

Huang, W., Hu, Y., & Chen, S. (2026). Overcoming liability of origin: the effects of EM-MNEs’ ESG reporting on establishment mode choice. Journal of Business Research, 210, 116133. https://doi.org/10.1016/j.jbusres.2026.116133

Jain, P., & Malhotra, P. (2026). Does National Economic Development (NED) influence ESG on corporate performance? Evidence from the global cement industry. International Journal of Productivity and Performance Management, 75(1), 228–263. https://doi.org/10.1108/IJPPM-01-2025-0074

Kabir, M. N., Rahman, S., Rahman, M. A., & Anwar, M. (2021). Carbon emissions and default risk: International evidence from firm-level data. Economic Modelling, 103, 105617. https://doi.org/10.1016/j.econmod.2021.105617

Karajeh, A. I. (2023). The moderating role of board diversity in the nexus between the quality of financial disclosure and dividends in Jordanian-listed banks. Asia-Pacific Journal of Business Administration, 15(4), 553–571. https://doi.org/10.1108/APJBA-06-2021-0260

Kazemi, M. Z., Elamer, A. A., Theodosopoulos, G., & Khatib, S. F. A. (2023). Reinvigorating research on sustainability reporting in the construction industry: A systematic review and future research agenda. Journal of Business Research, 167, 114145. https://doi.org/10.1016/j.jbusres.2023.114145

Kok, S. K., Akwei, C., Giorgioni, G., & Farquhar, S. (2022). On the regulation of the intersection between religion and the provision of financial services: Conversations with market actors within the global Islamic financial services sector. Research in International Business and Finance, 59, 101552. https://doi.org/10.1016/j.ribaf.2021.101552

Kwong, R., Wong, H. S. M., & Kwok, M. L. J. (2026). ESG as a turnaround strategy: Evidence from global firms facing performance shortfalls. Research in International Business and Finance, 83, 103308. https://doi.org/10.1016/j.ribaf.2026.103308

Malik, N., & Kashiramka, S. (2025). “ESG disclosure and its impact on firm leverage: Moderating role of quality of financial reporting and financial constraints.” Global Finance Journal, 65, 101099. https://doi.org/10.1016/j.gfj.2025.101099

Mpinganjira, M. (2026). Mapping customer-to-customer helping behaviour in financial services and digital platforms: a bibliometric and content analysis. International Journal of Bank Marketing, 44(1), 56–76. https://doi.org/10.1108/IJBM-04-2025-0295

Nguyen, Q., Diaz-Rainey, I., & Kuruppuarachchi, D. (2023). In search of climate distress risk. International Review of Financial Analysis, 85, 102444. https://doi.org/10.1016/j.irfa.2022.102444

Noval, M., & Ardianto, A. (2026). CSR expenditure and Islamic bank performance: the moderating role of Sharia supervisory board characteristics. International Journal of Islamic and Middle Eastern Finance and Management, 19(3), 864–884. https://doi.org/10.1108/IMEFM-03-2025-0199

Ogundipe, A. A., Daugaard, D., Khan, F., & Jia, J. (2026). Managerial overconfidence and corporate environmental, social, and governance performance: International evidence. Global Finance Journal, 69, 101242. https://doi.org/10.1016/j.gfj.2026.101242

Prasojo, P., Muhfiatun, M., Syarifah, L., & Rosman, R. (2025). Conformity of Indonesian Islamic bank CSR practices with maqashid shariah rules. Journal of Islamic Marketing, 16(9), 2596–2616. https://doi.org/10.1108/JIMA-01-2024-0047

Prati, A. H., Ashfaq, M., Ullah, S., & Hasan, R. (2025). Performance of shariah-compliant and non-shariah-compliant ETFs: a comparative study. International Journal of Islamic and Middle Eastern Finance and Management, 18(1), 121–141. https://doi.org/10.1108/IMEFM-04-2024-0181

Saha, A., Bose, S., & Lobo, G. J. (2025). Does commitment to operational sustainability pay off? International evidence. The British Accounting Review, 101782. https://doi.org/10.1016/j.bar.2025.101782

Seng, J., & Zhang, L. (2025). ESG ratings and corporate clean production from the perspective of evolutionary game theory: Evidence from A-share listed companies. Energy Economics, 152, 108989. https://doi.org/10.1016/j.eneco.2025.108989

Seth, R., & Mahenthiran, S. (2022). Impact of dividend payouts and corporate social responsibility on firm value – Evidence from India. Journal of Business Research, 146, 571–581. https://doi.org/10.1016/j.jbusres.2022.03.053

Suhardjo, I., Akroyd, C., Rudyanto, A., & Suparman, M. (2026). Double materiality and sustainability reporting: a qualitative study in a developing country. Meditari Accountancy Research, 34(1), 90–114. https://doi.org/10.1108/MEDAR-11-2024-2738

von der Assen, L., & Braun, A. (2026). Do investors care about ESG scores in the fashion industry? The influence of ESG rating on market value. Research Journal of Textile and Apparel, 30(2), 368–386. https://doi.org/10.1108/RJTA-07-2024-0112

Wan, G., Dawod, A. Y., Chanaim, S., & Ramasamy, S. S. (2023). Hotspots and trends of environmental, social and governance (ESG) research: a bibliometric analysis. Data Science and Management, 6(2), 65–75. https://doi.org/10.1016/j.dsm.2023.03.001

Wang, Y., Ma, J., Chang, X., & Wang, T. (2025). The multifaceted government influence on CSR activities: CSR decoupling in an emerging market. Long Range Planning, 58(1), 102497. https://doi.org/10.1016/j.lrp.2024.102497

Wu, T., Delios, A., Chen, Z., & Wang, X. (2023). Rethinking corruption in international business: An empirical review. Journal of World Business, 58(2), 101410. https://doi.org/10.1016/j.jwb.2022.101410

Yan, M., Li, Y., Pantelous, A. A., Vigne, S. A., & Zhang, D. (2024). A comparative and conceptual intellectual study of environmental topic in economic and finance. International Review of Financial Analysis, 91, 103023. https://doi.org/10.1016/j.irfa.2023.103023

Zafar, M. B. (2026). Talk or action? Unveiling the nature and depth of climate disclosures in Islamic banks using machine learning. Borsa Istanbul Review, 26(2), 100789. https://doi.org/10.1016/j.bir.2026.100789

Zhou, P., Ding, W., Mazouz, K., & Jin, S. (2026). Green bonds and the energy transition: From instrumental use to intrinsic value. Energy Economics, 161, 109503. https://doi.org/10.1016/j.eneco.2026.109503

Zhu, C., & Wang, T. (2025). New Firm entry and ESG performance: An inverted-U curve from spillovers to involution. International Review of Economics & Finance, 104, 104709. https://doi.org/10.1016/j.iref.2025.104709