Indonesian mining companies’ social responsibility performance: the role of ownership structure and sharia compliance

Mai, Muhamad Umar et al. Article Indonesian mining companies’ social responsibility performance: the role of ownership structure and sharia compliance Cogent Business & Management Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Mai, Muhamad Umar et al. (2024) : Indonesian mining companies’ social responsibility performance: the role of ownership structure and sharia compliance, Cogent Business & Management, ISSN 2331-1975, Taylor & Francis, Abingdon, Vol. 11, Iss. 1, pp. 1-18, https://doi.org/10.1080/23311975.2024.2396738 This Version is available at: https://hdl.handle.net/10419/326535 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Cogent Business & Management ISSN: 2331-1975 (Online) Journal homepage: www.tandfonline.com/journals/oabm20 Indonesian mining companies’ social responsibility performance: the role of ownership structure and sharia compliance Muhamad Umar Mai, Mochamad Edman Syarief, Iwan Setiawan, Dian Imanina Burhany, Nafisah Ruhana, Hanudin Amin & Mohd Raziff Jamaluddin To cite this article: Muhamad Umar Mai, Mochamad Edman Syarief, Iwan Setiawan, Dian Imanina Burhany, Nafisah Ruhana, Hanudin Amin & Mohd Raziff Jamaluddin (2024) Indonesian mining companies’ social responsibility performance: the role of ownership structure and sharia compliance, Cogent Business & Management, 11:1, 2396738, DOI: 10.1080/23311975.2024.2396738 To link to this article: https://doi.org/10.1080/23311975.2024.2396738 © 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group Published online: 06 Sep 2024. Submit your article to this journal Article views: 1345 View related articles View Crossmark data Citing articles: 1 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oabm20 Accounting, corporAte governAnce & Business ethics | reseArch Article Cogent Business & ManageMent 2024, VoL. 11, no. 1, 2396738 Indonesian mining companies’ social responsibility performance: the role of ownership structure and sharia compliance Muhamad umar Maia , Mochamad edman syariefa, iwan setiawana, Dian imanina Burhanya, nafisah ruhanaa, hanudin Aminb and Mohd raziff Jamaluddinc aDepartment of accounting, Politeknik negeri Bandung, indonesia; bLabuan Faculty of international Finance, university Malaysia sabah, Malaysia; cDepartment of Hotel Management, universiti teknologi MaRa, Malaysia ABSTRACT implementing and communicating corporate social responsibility (csr) is the primary foundation for businesses to accomplish the sustainable Development goals. in this perspective, mining operations are seen as one of the most harmful corporate activities when compared to other businesses that utilize natural resources; therefore, these companies must strongly implement and demonstrate higher csr. the Feasible generalized least squares (Fgls) model was employed in this study to investigate the role of ownership structure and sharia compliance in improving the csr performance of indonesian mining companies that were operated between 2012 and 2021. the findings reveal that institutional ownership, foreign ownership, and sharia compliance are essential factors in increasing mining companies’ csr performance, but state ownership and ownership concentration are not. this study addresses a vacuum in the current csr literature for mining businesses. Furthermore, it gives extra information and insight for practitioners, including the indonesian government as the csr regulator, investors, management, and non-governmental organizations (ngos). this is one of the first studies to examine ownership structure and sharia compliance in relation to mining companies’ csr performance, notably in indonesia, Feasible generalized least squares. 1. Introduction the sustainable Development goals (sDgs) were introduced by the united nations in 2015. since then, companies have released a number of reports to give stakeholders a better understanding of their sustainability activities (Jan, lai, Draz, et al., 2021). in this scenario, it is believed that companies need to implement and realize corporate social responsibility (csr) as the main foundation for achieving sDgs (Al-Dhamari et al., 2022; Blagov & petrova-savchenko, 2021; umar et al., 2023). therefore, for more than three decades, csr has emerged as a critical issue (Jan, lai, siddique, etal., 2023; Jan, lai, & tahir, 2021). this is not only due to increased awareness of consumers, investors, and regulatory pressures (pérez etal., 2017) but also as a factor related to the company’s performance in the long run (Al-Dhamari etal., 2022; Y. Zhang etal., 2020). therefore, it is not surprising that in recent years, companies have dedicated annual report sections, or report separately, and provided websites to disclose their various csr activities (correia et al., 2020). According to elkington (1997), csr practices are based on three main aspects of sustainability, namely economic, social, and environmental. thus, csr is one of the main ways for companies to show that their operations are not harming society. through csr practices, companies strive to show that their presence contributes significantly to the economic, social, and environmental improvements of the wider community to achieve perfection (Zaid, Wang, et al., 2020). © 2024 the author(s). Published by informa uK Limited, trading as taylor & Francis group CONTACT Muhamad umar Mai umar[email protected] Department accounting, Politeknik negeri Bandung, Jalan gegerkalong Hilir, Desa Ciwaruga, Bandung Barat 40559, indonesia https://doi.org/10.1080/23311975.2024.2396738 this is an open access article distributed under the terms of the Creative Commons attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. the terms on which this article has been published allow the posting of the accepted Manuscript in a repository by the author(s) or with their consent. ARTICLE HISTORY received 13 August 2023 revised 26 July 2024 Accepted 29 July 2024 KEYWORDS csr performance; indonesian mining companies; ownership structure; sharia compliance; feasible generalized least squares SUBJECTS environmental economics; economics; finance; business, management and accounting 2 M. uMAr MAi etAl. however, there are certain groups of firms, including those that exploit natural resources, whose operations can give rise to air pollution, noise, and a wider range of socio-environmental conflicts (Méndez & rodríguez, 2016). in this context, mining companies are considered one of the most destructive businesses compared to other business activities that exploit natural resources. Mining firms cause many social and environmental issues at each of their operational sites because they utilize dangerous chemicals in mineral processing and produce permanent rock deposits and toxic effluent, which is frequently referred to as tailings (sarkar, 2013). however, until now mining companies have survived and even continue to be developed in countries with supporting natural resources. this is because these companies are able to create jobs and generate a lot of foreign exchange, which in turn can boost the countries’ economic growth. given the bad and good implications of mining company operations, stakeholders can only expect higher csr from these corporations in order to mitigate the consequences of their poor presence in the community (saenz, 2022). the importance of csr to mining companies has prompted academic researchers to examine this matter, resulting in a huge increase in the variety and volume of csr literature on such companies in recent times (Aboud & Yang, 2022; chen etal., 2020; Dwekat etal., 2021; Kim etal., 2019). however, the existing csr literature of mining companies is largely developed based on studies that focus on the opinions of communities in mining operation areas about the csr demonstrated by the companies (Al Farooque etal., 2020; Khalid etal., 2019; pons etal. 2021; Yang & chen, 2022). researchers have reported that: the csr of mining companies in ghana is perceived as bad faith and inauthentic aimed only at appeasing various stakeholders (Khalid etal., 2019); the csr of nigerian mining companies falls far short of the expectations of local communities from several points of view, including economic, environmental, philanthropic, and legal (Al Farooque etal., 2020); the debate on the csr of mining companies is increasingly fierce in developing countries with the poor environmental and health conditions, as a consequence, stakeholders expect greater environmental responsibility from these companies (pons et al., 2021); and hazardous working conditions and the presence of undisclosed information are key csr issues that need to be addressed urgently to achieve effective and integrated csr in the chinese mining company sector (Yang & chen, 2022). the final analysis of these previous studies suggests that mining corporations’ csr has not perfectly met stakeholder expectations. thus, these findings may be viewed as less relevant by csr decision-makers in mining corporations. if future study takes the same technique, the outcomes may be similar; thus, new approaches to csr research in mining businesses are required. this study differs from previous csr research on mining corporations. it aims to explore the relationship between ownership structure, sharia compliance, and csr performance in indonesian mining businesses. previous research on non-mining companies discovered that institutional ownership, foreign ownership, and ownership concentration all play a key impact in boosting csr performance (chang etal., 2021; t. Zhang etal., 2022). Meanwhile, ifada etal. (2019) proved that sharia organizational culture plays an important role in improving the csr performance of islamic rural banks in indonesia, and lui et al. (2021) reported that islamic commercial banks show higher csr performance than conventional ones. in the context of sharia, csr represents the concept of brotherhood with each other (Abu Al-haija & Kolsi, 2021). the goal of sharia institutions is equal distribution of communal welfare, which is done by csr based on sharia principles (Zafar & sulaiman, 2020). thus, performing and expressing higher csr is mandatory for sharia institutions (Khan et al., 2019a). this study was carried out in indonesia because the development of the mining industry in this country is very promising, and it always ranks in the top 10 in the world as a country with very high mineral reserve potential. Besides, indonesia ranks fourth in the country with the largest population and has the largest Muslim population in the world. currently, this country has 62 mining companies, 73.81% of which are categorized as sharia and the remaining 26.19% are declared as conventional firms. in indonesia, sharia-compliant organizations are determined based on the Decree of the chairman of the capital Market and Financial institutions supervisory Agency number: Kep-208/Bl/2012. this ruling establishes numerous conditions for organizations to be included in the sharia category, for example, forbidding trade that (1) does not include the delivery of goods/services, (2) makes, distributes, deals, and/or delivers haram goods or services, (3) includes goods/services that harm morals or create losses, and (4) involves bribery. however, the average csr performance of mining companies in indonesia during the 2012–2021 period as measured by the global reporting initiative (gri) 3rd generation (g3) indicator was cogent Business & MAnAgeMent 3 still low, namely 0.2611. therefore, by focusing on ownership structure and sharia compliance as key determinants of indonesian mining companies’ csr performance, the study is expected to contribute to at least two goals. First, it fills gaps in the csr literature of mining companies, especially in indonesia. second, it increases the awareness and insight of practitioners, including the indonesian government as the csr regulator, investors, management, community empowerment institutions (ngos), and other parties who care about social and environmental issues. the rest of the paper is structured as follows. section 2 provides a description of the theory and the development of hypotheses. section 3 contains the methodology. section 4 provides a description of the results and their discussion. section 5 is conclusions and implications. Finally, in part 6, this paper presents limitations and recommendations for future studies. 2. Literature review and hypotheses development 2.1. Literature review 2.1.1. CSR and business objectives csr is defined as a management concept in which companies integrate social and environmental issues into their business operations (uniDo, 2020). it shows that companies are not only obliged to maximize value for their shareholders but should also aim to improve people’s welfare and protect the environment (endrikat etal., 2021). indeed, maximizing revenue is still considered the main target to ensure the survival of the company (Ali et al., 2021). however, the involvement of the business world in social and environmental programs has become increasingly relevant in recent years because businesses cannot be judged solely on the basis of their financial performance and reports (shahzad et al., 2022). since risks to businesses are not only related to financial results but also occur in other areas, stakeholders need reliable and precise information regarding the impact of the company’s presence on the social and environmental conditions in which it operates. As a result, the company’s management must be responsible for balancing the financial and non-financial goals of their business (Jan, lai, & tahir, 2021) and must function in the best interest of all stakeholders (Jan et al., 2022; shah et al., 2022). Mining companies are considered one of the most damaging business activities to the natural environment and have a high potential to cause social conflicts. consequently, these companies are required to disclose higher csr for the sustainability of their business. evaluation of organizational sustainability will help companies develop long-term relationships with the right stakeholders, which in turn can reduce social costs and environmental risks, increase customer support and loyalty, and build the company’s image (Jan, lai, Asif, et al., 2023). in other words, corporate sustainability ensures the company’s role and commitment to sustainable development in three key aspects such as economic, social, and environmental sustainability (p. A. Khan et al., 2022). 2.1.2. Ownership structure and corporate social responsibility corporate governance serves as the foundation for csr, which is an umbrella term that encompasses responsible governance; hence, organizations with strong corporate governance procedures promote ethics, transparency, and social responsibility (ruangviset etal., 2014). corporate governance is crucial for implementing ethical practices in the relationship between companies and employees, customers, creditors, shareholders, and other stakeholders (gallego-Álvarez & pucheta-Martínez, 2020). it also helps prevent negative impacts on csr culture (Adnan etal., 2018; ebaid, 2022). Furthermore, Alfraih & Almutawa (2017) noted that corporate governance establishes norms and procedures to promote openness and more dependable disclosure. According to Aboud and Yang (2022), ownership structure is one of the most important elements in corporate governance that can affect company operations and determine the nature of principal-agent relationships. certain ownership structures, including state ownership, institutional ownership, foreign ownership, and ownership concentrations, are able to encourage companies to achieve higher transparency and social responsibility disclosure (chang etal., 2021). this view is supported by the agency, stakeholder, and legitimacy theories. According to agency theory, one way to overcome the agency problem is to concentrate ownership on a certain group of people or parties who form large holdings (Jensen & 4 M. uMAr MAi etAl. Meckling, 1976). large ownership can give rise to a high ability to control the actions of managers, which in turn can improve company performance, including csr performance (garas & elMassah, 2018). however, the shortcoming is that large ownership can result in self-dealing problems that have the potential to harm the interests of minority shareholders (shleifer & vishny, 1997), which in turn can reduce company performance, including csr performance (Dam & scholtens, 2013). la porta etal. (1999) suggested three hypotheses to explain the relationship between substantial ownership and business performance: convergence of interest, entrenchment, and neutrality. the convergence of interest hypothesis explains that concentrated large interests have incentives and power to monitor managers and reduce agency problems, which in turn can improve company performance (Dong et al., 2017). conversely, the entrenchment hypothesis argues that a high level of ownership concentration increases incentives to expropriate the wealth of minority shareholders (Bouvatier etal., 2014), which can reduce company performance, including csr performance (Abu Qa’dan & suwaidan, 2019). Meanwhile, the neutrality hypothesis contends that there is no relationship between ownership concentration and company performance because the maximization of corporate value is decided by external factors, e.g. environmental conditions, markets, and the company’s own operations (Kuzey & uyar, 2017). stakeholder theory argues that in addition to being responsible to shareholders, companies must also have a high concern for various groups in society that will affect company performance (Freeman, 1984). in this context, stakeholder theory assumes that there is a contractual relationship between stakeholders and executive managers, wherein, managers are committed to meeting the expectations of various stakeholders in order to obtain their approval. the theory believes that companies with high institutional ownership tend to be subjected to public scrutiny; thus, they have a high incentive to engage in high csr because their accountability to the public is a concern (Ananzeh et al., 2022). several empirical studies support this view by showing that higher institutional ownership is associated with higher csr performance (Dakhli 2021; suyono & Farooque, 2018). According to legitimacy theory, companies should report more csr in order to legitimize their existence in society, retain it, and achieve societal approval. the theory posits that corporations would seek measures to ensure that their operations adhere to societal standards and ethics (Faisal etal., 2012; Kilian & hennigs, 2014). According to Kostova etal. (2008), one strategy for foreign-owned enterprises to gain legitimacy in the host country is to develop a good symbolic image. Meanwhile, to establish a positive image in foreign markets, companies must engage in numerous social activities that align with the expectations of the people in the host country in order to gain more support (orazalin, 2019). state enterprises must take more socially responsible actions to further legitimize their existence (Aboud & Yang, 2022) because they are owned by the entire society in the country (hu et al., 2018). in the context of sharia, csr represents the concept of brotherhood from one to another (Abu Al-haija & Kolsi, 2021), thus, expressing high csr is mandatory for sharia institutions (Khan etal., 2019a). however, Mohammed and Muhammed (2017) found that the profit loss sharing (pls) principle applied by sharia banks results in more complicated agency problems. this is because agency problems in islamic banks are not only limited to the separation between principals and agents but extend to the separation of cash flow control and bank compliance with sharia rules. in other words, the agency problems faced by islamic banks are more intense than those of conventional banks (Mohammed & Muhammed, 2017). it has the potential to reduce bank performance, including csr performance. A further question is whether compliance with sharia rules is able to overcome the agency problems islamic banks face so that they can show higher csr performance than conventional ones. the existing empirical literature provides mixed evidence on the relationship between sharia compliance and banks’ csr performance, for example, Aracil (2019) discovered that islamic banks’ csr is more philanthropically oriented than conventional banks in turkey; lui et al. (2021) proved that islamic banks disclose higher levels of csr than conventional banks in Malaysia; and shahwan and habib (2023) reported that there is no significant difference between the csr performance of sharia and conventional banks, for the egyptian context. 2.1.3. Mapping Indonesia’s mining industry towards SDGs united nations (un) member states, including indonesia, have agreed to develop their countries’ business models to align with the sustainable Development goals (sDgs). the state of indonesia, through presidential regulation number 59/2017, is committed to the successful implementation of the sDgs cogent Business & MAnAgeMent 5 to achieve the 2030 development agenda, which includes 17 goals (indonesian sDgs road Map, 2018, https://www.unicef.org/indonesia/media/1626/). the goals include no poverty; no hunger; good health and well-being; quality education; gender equality; clean water and sanitation; affordable and clean energy; decent work and economic growth; industry, innovation, and infrastructure; reducing inequality; sustainable cities and communities; responsible consumption and production; climate action; life below water; life on land; peace, justice, and strong institutions; and partnerships for the goals. in addition, indonesia’s commitment to mapping its mining industry is demonstrated through several legislative regulations, including (1) law number 40 of 2007 which states that companies that carry out their business activities in the field of and/or related to natural resources are obliged to carry out social and environmental responsibilities; (2) law number 4 of 2009 which states that holders of Mining Business permits (iup) are required to compile community development and empowerment programs; (3) government regulation (pp) number 23 of 2010 as amended by government regulation number 8 of 2018 concerning the implementation of Mineral and coal Mining Business Activities; and (4) government regulation number 47 of 2012 (pp 47/2012) which affirms that every company has social and environmental responsibilities. in addition, according to pp 47/2012, companies that do not carry out social and environmental responsibility are subject to sanctions in accordance with the provisions of laws and regulations. 2.2. Hypotheses development 2.2.1. State ownership and CSR performance referring to legitimacy theory, Aboud and Yang (2022) argued that state-owned enterprises should be able to take more socially responsible actions to further legitimize their existence. see (2009) affirmed that a higher level of state ownership further encourages executive managers to achieve non-financial goals in accordance with policies implemented by the state. these social or political goals can put stronger pressure on companies to demonstrate higher csr. thus, although sahasranamam et al. (2020), ismail et al. (2018), and Kabir & thai (2017) reported no relationship between state ownership and the csr performance of non-mining companies in developing countries, the majority of studies reported the opposite. state ownership is positively related to csr performance in china (Aboud & Yang, 2022; hu et al., 2018; Khan et al., 2019b; Ma & chen, 2023). the chinese market has experienced a number of economic turmoil in recent years as shown by many chinese companies created or taken over by the state (liu & Zhang, 2017). state shareholders are the majority owners of many companies in the chinese market, putting them as controlling or concentrated owners. thus, the positive relationship between state ownership and csr performance is supported by the convergence of interest hypothesis. this positive relationship was also proven by Alkayed and omar (2022) in Jordanian non-mining companies and Matuszak etal. (2019) in polish conventional banks. studies of the relationship between state ownership and the csr performance of mining companies are rare. however, according to legitimacy theory and most previous research in non-mining industries, we estimate that indonesian mining companies with larger state ownership will demonstrate better csr performance. As a result, the initial hypothesis proposed is that: h1. state ownership improves the csr performance of mining companies in indonesia. 2.2.2. Institutional ownership and CSR performance referring to stakeholder theory, Ananzeh et al. (2022) argued that companies with high institutional ownership tend to be subjected to public scrutiny. As a result, they have more intention to engage in high csr because their accountability to the public is a concern. According to ren et al. (2023), institutional ownership acts as an active monitor that prioritizes the risk of policy uncertainty over physical risk; thus, they are able to reduce the greenhouse gas emissions of chinese companies. in addition, Zhou and gan (2022) found that institutional investor visits improve the csr performance of chinese companies. several previous studies support this theoretical view by reporting that high institutional ownership is associated with high csr performance (chang etal., 2021; Dakhli, 2021; nurleni etal., 2018; suyono and 6 M. uMAr MAi etAl. Farooque 2018). however, lapointe-Antunes etal. (2006) argued that institutional investors tend to lower csr performance due to institutional blocks that are often held by financial institutions, especially banks. this negative relationship was supported by Abu Qa’dan and suwaidan (2019) in their study in Jordan. Meanwhile, salehi et al. (2017) reported that there is no significant relationship between institutional ownership and csr performance in tehran. in conclusion, the existing empirical literature on the relationship between institutional ownership and csr performance provides mixed evidence. however, based on stakeholder theory and the majority of previous research, we estimate that mining businesses in indonesia with stronger institutional ownership demonstrate better csr performance. so the second hypothesis formulated is: h2. institutional ownership improves the csr performance of mining companies in indonesia. 2.2.3. Foreign ownership and CSR performance According to legitimacy theory, foreign-owned enterprises can gain legitimacy in the host country by establishing a good symbolic image (Kostova et al., 2008). Also, in order to obtain legitimacy in foreign markets, foreign investors must carry out a large number of social activities that are in line with the expectations of the people in the host area and publicize them. thus, it is not surprising that foreign ownership is considered a key factor that determines csr practices in vietnamese companies (Kabir & thai, 2021). the majority of studies in non-mining companies have also reported that foreign ownership is associated with higher crs, for example, Baba and Baba (2021) in nigeria and Manogna and Mishra (2021) in india. in addition, Zaid, Abuhijleh, etal. (2020) discovered that banks with higher foreign ownership disclose broader and more transparent information about their csr than those owned by local and state investors. however, Abu Qa’dan and suwaidan (2019), using a sample of Jordanian manufacturing companies, proved that foreign ownership has no correlation with csr performance. it can be seen that the relationship between foreign ownership and a mining company’s csr performance has gotten relatively little attention. however, based on legitimacy theory and the bulk of past research findings on non-mining companies, it is projected that indonesian mining companies with greater foreign ownership will perform better in terms of csr. thus, the third hypothesis developed is that: h3. Foreign ownership improves the csr performance of mining companies in indonesia. 2.2.4. Ownership concentration and CSR performance the existing literature provides three main hypotheses regarding the relationship between ownership concentration and company performance, namely the interest convergence hypothesis, the entrenchment hypothesis, and the neutrality hypothesis. A number of previous studies in non-mining companies have reported numerous positive, negative, and no relationship results between ownership concentration and csr performance, supporting all three hypotheses. several studies discovered a positive relationship between the two, supporting the convergence of interest hypothesis, for instance, the studies of Aboud and Yang (2022) in chinese, Fallah and Mojarrad (2019) in iran, and garas and elMassah (2018) in the gulf cooperation council (gcc) countries. some others reported a negative relationship between ownership concentration and csr performance, supporting the entrenchment hypothesis, for example, Ananzeh etal. (2023) and Abu Qa’dan and suwaidan (2019) in Jordan and seckin-halac etal. (2021) using a sample of companies’ information stored in the Asset4 database. Finally, other studies do not find a significant relationship between ownership concentration and csr performance, supporting the neutrality hypothesis, such as the studies of lin and nguyen (2022) in vietnam, Fatma and chouaibi (2021) in europe, and Kuzey and uyar (2017) in turkish. studies on the relationship between ownership concentration and csr performance in the context of mining companies are rarely conducted. Meanwhile, the existing literature shows mixed arguments and evidence regarding the relationship between the two variables. nonetheless, we expect mining companies in indonesia with a high concentration of ownership to show high csr because these companies demand higher csr to achieve the sDgs. therefore, the fourth hypothesis developed is: h4. ownership concentration improves the csr performance of mining companies in indonesia. cogent Business & MAnAgeMent 7 2.2.5. Sharia compliance and CSR performance Agency problems in islamic banks are not limited to the separation between principal and agent but extend to the separation of cash flow control and bank compliance with sharia rules (Mohammed & Muhammed, 2017). sharia-compliant companies come under stronger pressure than conventional ones with regard to their obligations to implement and disclose csr. these sharia-compliant companies face additional pressure in the form of sharia rules that require them to demonstrate higher csr performance (Khan et al., 2019a). currently, the literature on the relationship between sharia compliance and csr performance focuses on the banking sector. ifada etal. (2019), for example, found that islamic organizational culture plays an important role in improving the csr performance of islamic rural banks in central Java province, indonesia. in addition, lui et al. (2021) proved that islamic banks reveal a higher level of csr than conventional banks in Malaysia. in the context of non-bank companies, Qoyum et al. (2022) revealed that companies in indonesia and Malaysia with islamic labels have better environmental and social performance than those with non-islamic labels. in addition, hassan et al. (2022) discovered that companies that comply with sharia rules are more likely to engage in sustainable and responsible practices, especially in the environmental dimension. studies on the relationship between sharia compliance and csr performance of mining companies are rarely conducted. the existing literature shows mixed evidence regarding the relationship between the two variables. nonetheless, consistent with existing literature, mining companies in indonesia that comply with sharia rules are expected to show higher csr to achieve the sDgs. therefore, the fifth hypothesis developed is: h5. sharia compliance improves the csr performance of mining companies in indonesia. 3. Methodology 3.1. Sample selection the sample of this study was mining sector companies listed on the indonesia stock exchange (iDX) for the 2012–2021 period. the distribution of samples by type of sub-sector of mining companies, namely coal production, oil and gas production and refinery, gold, iron and steel, diversification of metals and minerals, copper, and aluminum is presented in table 1. Data regarding csr performance was taken from companies’ annual and sustainability reports. Data on ownership structure and other variables were obtained from companies’ annual reports. Meanwhile, data on sharia compliance referred to the Decree of the chairman of the capital Market and Financial institutions supervisory Agency number: Kep-208/ Bl/2012. 3.2. Measuring corporate social responsibility (CSR) this study intends to investigate the role of ownership structure and sharia compliance in improving the csr performance of mining companies in indonesia. csr performance as a dependent variable was determined using content analysis methods consistent with previous studies examining the relationship between corporate governance and the csr disclosure index (Dwekat et al., 2021; suyono & Farooque, 2018). the csr disclosure index was estimated based on the g3 gri guidelines which have a total of 79 indicators consisting of environmental, social, and economic indicators. the value of the csr disclosure Table 1. sample distribution of mining companies in indonesia. sub-sector number of companies number of observations Coal production 33 274 oil and gas production and refinery 6 50 gold 3 27 iron and steel 10 79 Diversification of metals and minerals 5 43 Cooper 1 10 aluminum 4 40 total 62 523 Source: indonesia stock exchange (iDX) Report. 14 M. uMAr MAi etAl. 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