Does CSR Materiality Affect Financial Performance in Taiwan

Abstract

This study explores the relationship between a firm’s performance on corporate social responsibility (CSR) materiality and its financial performance. It develops measures for evaluating firms’ performance on CSR materiality. Using the sample of listed firms in Taiwan’s electronics and financial industries, this paper shows that firms rated higher in environmental, social, and governance sustainability significantly outperform those rated lower. Furthermore, negative sustainability behaviors have more significant impacts on firms’ financial performance than positive sustainability behaviors. Finally, the positive relationship between financial performance and the performance on CSR materiality is more significant in the electronics sector than in the financial sector. Key words: Materiality, corporate governance, corporate social responsibility, CSR disclosure, financial performance