Assessing the Relationship Between Corporate Social Responsibility and Financial Performance in the Oil and Energy Romanian Industry

Abstract

AbstractThe purpose of this study is to examine the influence of corporate social responsibility (CSR) on the financial performance (PF) of firms working in the oil and energy sector in the Romanian market in order to develop a realistic approach for evaluating company's profitability. Accounting metrics (ROA, ROE, ROIC, EPS), liquidity parameters (current ratio), and market-based indicators were used to assess the financial performance of the firm treated as a dependent variable (PBV). As per the findings of a regression analysis, CSR has a favorable impact on EPS but no impact on ROA, ROE, ROIC, or PBV. In the first model, the variable CA ANG had a negative impact on ROA and a negative impact on ROE (where the total number of workers indicates the company's size and the Long-term debt / Equity ratio represents the debt). Furthermore, CA ANG had a positive impact in the second model (where total assets indicate firm size and the ratio Total debt / Equity denotes debt), a negative influence in the two ROIC models, and a positive impact on the PBV. When it comes to size metrics, the total number of workers has a favorable impact on ROA and PBV. In the case of debt, the variable DT CP has a negative impact on ROE and ROIC, but the variable DTL CP has a positive impact on ROIC and a negative impact on PBV. The two models that included the liquidity ratio as a dependent variable were not statistically valid.KeywordsCorporate social responsibilityFinancial performanceFinancial indicatorsPaneRegression