Corporate social performance and financial performance relationship: A data envelopment analysis approach without explicit input

Abstract

The aim of this paper is twofold: to provide a novel methodology for the development of a multidimensional and aggregated measure of Corporate Social Performance (CSP) based on Data Envelopment Analysis (DEA), and to investigate the relationship between CSP and financial performance (FP) while accounting for endogeneity issues. Hence, we exploit several estimators from both static panel and dynamic panel data models to show that the GMM estimator is more adequate than the traditional estimators based on fixed or random effects. Our results show that corporate social performance impacts negatively and significantly financial performance.