Correlation Analysis between Corporate Social Responsibility and Financial Performance of Chinese Food-processing Enterprises

Yu-Jin Fu,Ju-Qin Shen

doi:10.19026/ajfst.7.2521

Abstract

This study is to clarify the relationship between corporate social responsibility and the enterprise financial performance. On the basis of the stakeholder theory and social contract theory which explain the connotation of corporate social responsibility, this study uses the panel data from 63 listed Chinese food-processing companies to empirically test whether corporate social responsibility can significantly affect the financial performance. After putting forth the research hypothesis and quantifying the research index in the perspective that corporate social responsibility is the contract followed by various stakeholders, correlation analysis and multiple regression are commenced in the research process. The regression result shows that partly of the variables reflecting corporate social responsibility, such as the ratio of net cash flow from operating to liabilities and the ratio of business taxes and surcharges to main business income, are positively correlated with variables describing financial performance, while others, such as the ratio of social donation expenditure to main business income, are not.

Highlights

Latest reviews: Since the early 1980s, the study of Corporate Social Responsibility has become a hot topic in the academic circle all around the world.Most researches indicate that fulfilling corporate social responsibility will have a positive impact on financial performance. Preston and O'Bannon (1997) studied the financial performance of 67 American enterprises and their social responsibility from 1982 to 1992
Some scholars took the level of corporate social reputation as dependent variable and size, productivity, profitability as independent variables in a multiple regression analysis to study the relationship between corporate social responsibility and financial performance (Stanwick and Stankwick, 1998)
PR indicates whether a certain company comply with laws and ISO14000 certification implies whether this company takes its role as being environmental friendly

Summary

Introduction

Latest reviews: Since the early 1980s, the study of Corporate Social Responsibility has become a hot topic in the academic circle all around the world.Most researches indicate that fulfilling corporate social responsibility will have a positive impact on financial performance. Preston and O'Bannon (1997) studied the financial performance of 67 American enterprises and their social responsibility from 1982 to 1992. Most researches indicate that fulfilling corporate social responsibility will have a positive impact on financial performance. Preston and O'Bannon (1997) studied the financial performance of 67 American enterprises and their social responsibility from 1982 to 1992. Rate of Return on Total Assets, Rate of Return on Net Assets and The Profit Rate of Investment were used to represent corporate financial performance, while the results of a survey of corporate social reputation were used to represent corporate social responsibility. Some scholars took the level of corporate social reputation as dependent variable and size, productivity, profitability as independent variables in a multiple regression analysis to study the relationship between corporate social responsibility and financial performance (Stanwick and Stankwick, 1998). Lev et al (2010) took consumer satisfaction as an intermediary in their research studying the relationship between corporate social responsibility and financial performance. Apart from them, some other scholars emphasized the important role played by corporate social responsibility in improving financial performance as well (Hansen et al, 2011; Muller and Kraussl, 2011)

Methods

Results

Discussion

Conclusion