The Effect of Profitability and Firm Size on Corporate Social Responsibility Spending: Study of Mining and Agriculture Firms in Indonesia Period 2005-2010

Best known for its riches in natural resources, Indonesia is basically a great place for mining and agricultural firms to be established and settled. However, the two-side impacts of mining and agricultural firms towards the economy and society in Indonesia have long become a discussion. The question raised would be how these mining and agricultural firms would attempt to behave responsibly given the fact that the managers are faced with several different expectations by their stakeholders. This thesis tries to examine how the firms� profitability and size affect the firms� spending on Corporate Social Responsibility given the different ownership model during the period before and after the government�s regulations on Corporate Social Responsibility took place using Multiple Regression Analysis. The conclusion shows that although profitability and size of the firms significantly affect the firms� CSR spending, there are some differences imposed in different periods and different ownership models as imposed with the difference significance levels. Ownership models affect the firms� CSR spending to the extent where government-owned firms tend to spend more compared to the private owned firms. The state regulations however, seem to leave the private owned firms unaffected while at the same time has the full effect on the government-owned firms