Source: data processed in 2025

Based on table 1, the profitability, measured by Return on Assets (ROA), for five companies in the agricultural sector demonstrated a significant decrease in 2023. Furthermore, according to Hidayat et al (2021), an ROA above 5.98% is considered favorable, however, the ROA for these five companies remained below this threshold. For instance, Bakrie Sumatera Plantations Tbk (UNSP) experienced a large decrease in ROA, dropping from 20.49% to 0.57% in 2023. Similar significant drops in profitability were observed in PT FAP Agri Tbk (FAPA), PT Sawit Sumbermas Sarana Tbk (SSMS), and PT Austindo Nusantara Jaya Tbk (ANJT). Since 2022, PT Mahkota Group Tbk (MGRO) has consistently recorded negative ROA values. This downward trend in ROA is attributed to a decrease in net income accompanied by an increase in total assets, indicating that companies are suboptimally utilizing their assets to generate profit, posing a significant challenge to sustaining and enhancing profitability. Profitability may be shaped by several variables, with liquidity being one of the influential components (Thinh et al., 2022). Liquidity functions as a benchmark for assessing whether a company can discharge its short-term obligations on time. When this capability is evident, the firm’s liquidity is usually perceived as strong if its current ratio exceeds 2 (Kasmir, 2019), meaning its current assets are twice its current liabilities. Companies with robust liquidity level are more likely to secure loans from creditors or investors (Isa & Mahardika, 2022).

The table below compares liquidity, as measured by the current ratio, and profitability, as measured by return on assets, for companies in the agricultural sector from 2021 to 2022.

Table 2 Liquidity and Profitability of Agricultural Sector Companies in 2021-2022

Source: data processed in 2025

As shown in Table 2, PT FAP Agri Tbk and PT Sawit Sumbermas Sarana Tbk both experienced a decrease in current ratio (liquidity). However, both companies showed an increase in profitability, contradicting the findings of (Aldboush et al., 2023) that good liquidity leads to increased corporate profitability.

In addition to liquidity, corporate social responsibility (CSR) disclosure is another factor that can influence profitability (Prayanthi & Budiarso, 2022). Companies that implement CSR initiatives inevitably face increased financial expenses, requiring substantial funds to be allocated for social responsibility activities (Meiryani et al., 2023). However, effectively implementing CSR can foster a positive corporate image, which can positively impact a company's financial condition. Consumers tend to favor products from companies with strong reputations in their communities (Solikhah, 2022).

This becomes even more important when it comes to the agricultural industry, whose operations have great potential to cause negative impacts. The operational processes of agricultural companies inherently possess the potential to cause significant negative environmental impacts, including water and soil pollution from pesticide use and waste, deforestation, and damage to marine ecosystems from illegal fishing (Barus et al., 2024). This has raised public awareness regarding the importance of CSR, thereby demanding that agricultural companies engage in social responsibility practices (Apriliyani et al., 2021).

The following table presents a comparison of CSR disclosure and profitability for agricultural sector companies in 2022 and 2023.

Table 3 CSR Disclosure and Profitability of Agricultural Sector Companies in 2022-2023

Source: data processed in 2025

As shown in Table 3, Bakrie Sumatera Plantations Tbk demonstrated a significant increase in CSR disclosure. However, this increase was not accompanied by a rise in ROA. Additionally, PT Austindo Nusantara Jaya Tbk increased its CSR disclosure but experienced a decline in profitability. These findings contradict those of Prayanthi & Budiarso (2022), who posited that increased corporate disclosure leads to higher ROA.

Previous research regarding the effects of liquidity and corporate social responsibility (CSR) disclosure on profitability has shown inconsistent findings. For example, Thinh et al (2022), Aldboush et al (2023) and Nguyen et al (2024) found liquidity has a positive and significantly impact on a company’s profitability performance. However, Isa & Mahardika (2022) found a negative effect. Ayoush et al (2021), Rachmawati & Jayanti (2023), and Jigeer & Koroleva (2023) found no significant influence. Similarly, Ahmad et al (2024) and Prayanthi & Budiarso (2022) found that CSRD positively impacts profitability. However, Fahad & Busru (2021) identified a negative effect, and Arief & Mutmainah (2024), Zega & Wahyudi (2023), and (Pratiwi et al., 2020) found no significant impact.

Due to the declining profitability of Indonesian agricultural companies and inconsistent prior research findings, this study investigates the relationship between liquidity, CSR disclosure, and profitability. This study lies in the use of data from agricultural enterprised listed on the Indonesia Stock Exchange (IDX) period 2021-2023. The 2021 period was chosen because SE OJK No. 16/SEOJK.04/2021 had been issued, which directly encouraged many companies to publish sustainability reports (Wijaya & Novianto, 2024). It contributes to scholarly literature by supplying new empirical insights from Indonesia's agricultural sector, which is currently facing significant profitability challenges. Additionally, it seeks to address the inconsistencies found in previous studies.

R. Edward Freeman initially proposed stakeholder theory in 1984. He asserted that companies should not solely focus on operational activities but also establish reciprocal relationships with and provide benefits to their stakeholders. Consequently, the viability of an enterprise is strongly rooted in the active contribution and commitment of its stakeholders (Dewi & Wardani, 2022).

According Global Reporting Initiative, stakeholders are defined as those individuals or entities potentially affected by, or capable of influencing, an organization’s activities, services, or products of its strategies and objectives (Rasyid et al., 2022). Gray, Khouhy, and adams cited in Adilla et al (2023), further emphasize that a company's going concern depends on stakeholder support and that corporate activities are directed toward securing such support. Meeting the demands of stakeholders will result in a positive reciprocal relationship on economic performance (Licandro et al., 2024).

According to Brigham and Houston, profitability represents indicators that integrate the effects of liquidity, asset management, and debt levels on a company's operational performance, therefore, these ratios serve as the ultimate reflection of all financial policies and operational decisions undertaken (Febriana et al., 2021). Profitability is defined as a ratio used to assess a company's capability to generate profit. A higher ratio value generally indicates a better financial condition for the company (Astuti et al., 2021).

According to Fred Weston, a company’s liquidity ratio illustrates its effectiveness in meeting short-term obligations (Kasmir, 2019). Adequate liquidity enables a company to fulfill its financial obligations promptly, ensuring smooth operational flow and, consequently, impacting its profitability (Nguyen et al., 2024).

Studies by Thinh et al (2022) and Atikah & Sastradipraja (2024) have demonstrated a significant positive influence of liquidity on profitability. These findings suggest that strong liquidity contributes to efficient company operations and enhances corporate profitability.

H1: Liquidity has a positive impact on profitability

According to the World Business Council for Sustainable Development, cited in Romli & Zaputra (2022), CSR is defined as a commitment to ethical behavior and legal operations that contribute to economic improvement and an enhanced quality of life for employees, local communities, and society at large. John Elkington, as cited in Pharmacista (2023), categorized the scope of CSR into three dimensions, commonly known as the triple bottom line: economic, environmental, and social.

Although it incurs significant additional costs and can affect the company's profitability when publicizing CSR, on the other hand, it can improve the company's reputation and encourage positive community interaction with its products and result in an increase in profitability (Meiryani et al., 2023).

Research by Prayanthi & Budiarso (2022) and (Ahmad et al., 2024) has indicated that CSR has a significant positive impact on profitability. This implies that higher levels of CSR are associated with increased company profitability.

H2: Corporate Social Responsibility Disclosure has a positive impact on profitability

Figure 1. Conceptual Framework

The following table presents the descriptive analysis results after removing outliers.

Source: Output SPSS 27, data processed in 2025

The descriptive statistics in Table 1 show that the liquidity ratio (CR) ranged from 0.10 to 8.80, with a mean value of 1.6534 and a standard deviation of 1.70720. The CSRD variable varied between 0.10 and 0.88, with an average of 0.5376 and a standard deviation of 0.21888. As for the ROA variable, it had a minimum of -0.08 and a maximum of 0.18, averaging at 0.0561 with a standard deviation of 0.06257.

Source: Output SPSS 27, data processed in 2025

Y = 0,016 + 0,020X1 - 0,010X2+ ϵ...........(1)

Partial Hypothesis (T-Test)

Table 6 T Test Result

Source: Output SPSS 27, data processed in 2025

Simultaneous Hypothesis (F-Test)

The F-value for all variables is 8.141, which > F-table value of 3.195. The sig. value is 0.001 < 0.05. It can be assumed that liquidity and CSR disclosure simultaneously influence profitability.

The significance value for the liquidity variable in relation to profitability was 0.001, which < sig 0.05 and t-value (3,737) > t-table (2,014). This finding indicates that liquidity significantly and positively influences profitability. In other words, an increase in a company's liquidity level leads to a correlating increase in its profitability.

This outcome supports stakeholder theory, which posits that a company's continued existence depends on the support and engagement of its stakeholders. Adequate liquidity enables a company to fulfill its financial obligations promptly (Nguyen et al., 2024). For example, sufficient cash reserves allow for the timely payment of employee salaries, which can motivate employees and improve operational efficiency, ultimately contributing to the production of high-quality goods or services. Furthermore, robust liquidity cultivates positive relationships with suppliers and creditors because prompt payment builds trust and strengthens strategic partnerships. Conversely, a company's inability to meet its financial obligations can lead to restricted access to funding due to a lack of trust from external parties. This can compromise product quality, diminish customer satisfaction, and negatively impact overall profitability (Fitrifatun & Meirini, 2024).

These research findings are consistent with prior studies conducted by Nguyen et al (2024), Thinh et al (2022), and Atikah & Sastradipraja (2024). However, the results of this study are opposite from those findings by Jigeer & Koroleva, (2023), Ayoush et al (2021), and Rachmawati & Jayanti (2023) whose research indicated no significant influence of liquidity on profitability.

The sig. for the CSR disclosure variable was 0.783 > 0.05 and t-value of - 0.277 < t-table of 2,014. This result indicates that CSR disclosure does not significantly impact on profitability, implying that the extent of a company's CSR disclosure does not affect its profitability. These findings align with previous research conducted Arief & Mutmainah (2024), Zega & Wahyudi (2023), and (Pratiwi et al., 2020) also found no significant influence of CSR disclosure on profitability.

This research finding does not support stakeholder theory, which asserts that a company meets the demands of stakeholders will result in a positive reciprocal relationship on economic performance. The observed lack of influence of CSR disclosure on profitability in this study may be attributed to the primary objective of CSR disclosure being more oriented towards cultivating corporate reputation and achieving long-term social legitimacy rather than directly gaining profitability or operational efficiency. Furthermore, these results contradict the findings by (Prayanthi & Budiarso, 2022) and (Ahmad et al., 2024), who suggested that profitability positively effected by CSR disclosure

The significance value obtained from the ANOVA table was 0.001, which is below 0.05 and f-value of 8,141 > f-table of 3,195. This indicates that liquidity and CSR disclosure, when considered simultaneously, have a significant influence on profitability. This implies that, in combination, both liquidity and CSR disclosure possess the capacity to affect the profitability.

Liquidity and CSR disclosure simultaneously have a significant influence on profitability. This means that together, liquidity and CSR disclosure can influence profitability in companies in the agricultural sector listed on the IDX. This outcome supports stakeholder theory, companies with good liquidity and awareness of the importance of CSR will build strong trust from suppliers, creditors, consumers, investors, and the wider community. This trust will in turn reduce business risk and strengthen the competitiveness of the company and impact overall profitability. Thus, liquidity and CSR become the main foundation for companies to achieve sustainable growth, drive innovation, and create long- term value for all stakeholders, which in turn will significantly increase profitability.