Muhammad Madyan and Harlina Meidiaswati and I Made Sudana and Nugroho Sasikirono (2018) The PROPER Award, CSR Performance, and Market Performance In The Indonesia Stock Market: Does Environmental Award Create Value? In: Airlangga International Conference on Economics and Business 2018. Faculty of Economics and Business Universitas Airlangga, Surabaya, pp. 59-70.

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Abstract

This study aims to examine the effect of environmental performance measured by rating of the PROPER award (the Corporate Performance Rating Assessment Program in Environmental Management of the Ministry of Environment and Forestry of the Republic of Indonesia) and the performance of the implementation of Corporate Social Responsibility (CSR) on the market performance of company in the Indonesia Stock Exchange. Market performance is measured using the Tobin’s Q ratio, and information about CSR performance is obtained from the issuer's Annual Report. CSR disclosure criteria developed by Hackston and Milne (1996) are used as CSR performance assessment criteria. The sample used was 184 companies listed on the Indonesia Stock Exchange (IDX) for the period 2011-2014 and revealed the implementation of CSR in its annual report.. Test results using ordinary least square indicates that the PROPER award which is a measure of environmental performance is related to market performance. Companies that receive prestigious PROPER awards (blue, green or gold) exhibit higher market performance. CSR performance has a positive effect on market performance. Furthermore, CSR performance is fully mediating the influence of the PROPER award on market performance. However, the assignment of control variables makes partial mediation by CSR occur. Robustness checks using quantile regression show that CSR is fully mediating the influence of the PROPER award on companies with small and medium market performance (Q25 and Q50). While for companies with large market performance (Q75 and Q90) CSR is only partially mediating these influences.

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