Assessment on the social responsibility of Taiwan's manufacturing industry

Abstract

An assessment on the social responsibility of Taiwan's manufacturing industry over the period 19912001 has been undertaken. Corporate environmental performance indices have been utilised to test for causal relationships between environmental performance and economic and financial performance. The two-stage least squares analysis and multiple regression approaches result in the following three findings: (1) three aspects of economic performance net income, return on assets and return on equity have a substantial negative effect upon a Taiwanese company's environmental performance; (2) a Taiwanese company's financial performance has a negative substantial effect upon the company's environmental performance and (3) a Taiwanese company's corporate environmental quality performance can affect investors' actions in the stock market, which will lead to changes in the company's market risk and cost/benefit ratio. The outcome suggests the need for management to improve environmental performance, thereby decreasing operational risk and better ensuring the long-term operation and development of a company.