Looking for Evidence of the Relationship between Corporate Social Responsibilities and Corporate Financial Performance in an Emerging Market

Abstract

Purpose – The purpose of this paper is to examine the relationships between the determinants of corporate social responsibilities (CSR) and corporate financial performances (CFP) of public listed companies in Malaysia. Design/Methodology/Approach – A longitudinal data was collected and doing the analysis by using panel data from the year 1999 until 2011 of annual report from the 10 public listed companies (PLCs) in Malaysia. The statistical power with fixed effect and random effect model was utilized. Findings – The paper found that only one of the CSR dimensions which is community involvement was found that are positively related to the financial performances based on the study in the annual report. While, the other three dimension which are employee relation, product dimension and environment dimension not influence the corporate financial performances. This is show that limited evidence of the relationship between CSR and CFP in the long term. Practical Implication – These findings suggest that Malaysian PLCs should be actively involved in their CSR activities because CSR has a significant effect to the improving corporate social performances of entire companies. Originality/Value – The paper contributes the suggestion and motivation to the managers towards the CSR practices. This study conduct that the research on relationship between two components which are CSR and CFP.