Corporate social responsibility and profitability as sustainability strategies to maximize firm value

Abstract

This study addresses a research gap by examining the relationship between stock price movements, Corporate Social Responsibility (CSR) implementation, and profitability in the consumer goods subsector after the COVID-19 pandemic. The findings contribute to the ongoing debate on whether companies should invest in CSR during financial difficulties to gain stakeholder support. While CSR spending may appear burdensome in times of crisis, it serves as a strategic investment that signals the sustainability of a company's operations. Support from the capital market is also essential for business survival. The study analyzes stock and financial data from consumer goods companies listed on the Indonesia Stock Exchange between 2021 and 2023. Using Moderated Regression Analysis, the results indicate that CSR strengthens the relationship between profitability and firm value. Additionally, CSR directly enhances firm value, whereas profitability alone does not. These findings suggest that investors place greater importance on social and environmental initiatives post-pandemic than on profitability. As a result, companies in the consumer goods subsector are encouraged to increase their CSR engagement, as it promotes corporate sustainability and strengthens protections for employees, customers, creditors, and shareholders.