The Effect of Partnership and Community Development Program on Financial Performance and Firm Risk: Evidence from Indonesian State-Owned Enterprises

Abstract

The purpose of this paper is to analyze the realization of Partnership and Community Development Program as stipulated by the regulations of State-Owned Enterprises Minister and whether they have effect on financial performance and firm risk.  The regulations require State-Owned Enterprises to allocate 2% of net income for each of the following programs: Partnership Program and Community Development Programs.  The research design is quantitave method.  Data are collected from Sustainability Reports and Annual Reports published by State-Owned Enterprises for the period of 2007 to 2017. The results of hypothesis test indicate that Partnership Program does not influence financial performance and firm risk. Meanwhile, Community Development Program has a significant and positive effect on financial performance. Furthermore, Community Development Program has a significant and negative effect on firm risk.

Keywords: partnership program, community development program, state-owned enterprises, financial performance, firm risk

DOI: 10.7176/RJFA/10-20-10

Publication date:October 31^st 2019