Title: CSR disclosure, politically connected supervisory board and cost of debt financing: evidence from Indonesia

Authors: Joni Joni; Aurora Angela; Enny Prayogo; Maria Natalia; Oktavianti Oktavianti; Sinta Setiana; Tan Ming Kuang; Yunita Christy

Addresses: Department of Accounting, Maranatha Christian University, Indonesia ' Department of Accounting, Maranatha Christian University, Indonesia ' Department of Accounting, Maranatha Christian University, Indonesia ' Department of Accounting, Maranatha Christian University, Indonesia ' Department of Accounting, Maranatha Christian University, Indonesia ' Department of Accounting, Maranatha Christian University, Indonesia ' Department of Accounting, Maranatha Christian University, Indonesia ' Department of Accounting, Maranatha Christian University, Indonesia

Abstract: We examine the effect of corporate social responsibility (CSR) disclosure on the cost of debt financing (COD) in an emerging market, Indonesia. Next, the moderating effect of political relations through a connected supervisory board (PC-SVB) is investigated in this association. The paper uses all Indonesian listed companies as our population, and the final sample is 1,886 observations. Moderated regression analysis is applied to investigate the moderating effect of political relations on the association between CSR and cost of debt. Also, we address the endogeneity problem by using the generalised method of moments (GMM). We find that firms with more CSR disclosure have lower costs of debt financing in Indonesia. It means that CSR is valuable from the perspective of creditors or lenders. Additionally, the relationship is stronger in the presence of politically connected supervisory boards.

Keywords: corporate social responsibility; CSR; cost of debt; COD; politically connected supervisory boards; PC-SVB; emerging market; Indonesia.

DOI: 10.1504/IJBEM.2025.147152

International Journal of Business and Emerging Markets, 2025 Vol.17 No.3, pp.326 - 338

Received: 16 Jan 2023
Accepted: 25 May 2023
Published online: 11 Jul 2025 *

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