Research on World Agricultural Economy

The Role of Corporate Social Responsibility and Firm Characteristics in Building a Sustainable Capital Structure in Indonesia’s Agricultural Sector

Bahtiar Effendi

Accounting Department, Satu University, Bandung 40253, Indonesia

Heru Wahyudi

Development Economics Departement, Faculty of Economics and Business, University of Lampung, Bandar Lampung 35145, Indonesia

DOI: https://doi.org/10.36956/rwae.v6i3.2152

Received: 14 May 2025 | Revised: 10 June 2025 | Accepted: 17 June 2025 | Published Online: 25 July 2025

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Abstract

This study aims to explore the relationship between Corporate Social Responsibility (CSR), sales growth, and firm size on sustainable capital structure, with profitability as an intervening variable, in agricultural companies in Indonesia. The research employs a quantitative approach using secondary data collected from 88 agricultural companies listed on the Indonesia Stock Exchange (IDX) over the 2021–2024 period. To examine the direct and indirect relationships among the variables, path analysis is applied as the main statistical technique, supported by multiple linear regression. CSR is measured using the Corporate Social Responsibility Disclosure Index (CSRDI). Sales growth is calculated as the year-over-year percentage change in sales. Firm size is represented by the natural logarithm of total assets, and profitability is proxied by Return on Assets (ROA). The sustainable capital structure is measured using the Debt to Equity Ratio (DER). The results show that sales growth and firm size have a significant positive effect on sustainable capital structure, both directly and indirectly through profitability. In contrast, CSR does not exhibit a significant direct impact, suggesting it is not yet integrated into strategic financing decisions. Profitability is confirmed as an important mediating variable, supporting the signaling theory, which posits that profitable firms send positive signals to investors and creditors, thereby improving their access to external funding. These findings highlight the critical role of internal firm characteristics and operational performance in shaping sustainable capital structure decisions within Indonesia’s agricultural sector. While CSR remains important for compliance and reputation, its financial impact requires further strategic integration. This study underscores the value of utilizing advanced quantitative methods such as path analysis to uncover complex causal relationships and encourages future research to develop more detailed CSR metrics to better assess its role in financial decision-making.

Keywords: Corporate Social Responsibility; Sales Growth; Firm Size; Capital Structure; Profitability

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