Corporate Social Responsibility Financial Performance Research Articles

Corporate social responsibility expenditure and financial performance: the moderating role of family ownership

Purpose The paper aims to examine how Indian non-financial service sector companies’ financial performance is influenced by their corporate social responsibility (CSR) expenditures. The paper also analyses whether family ownership has a moderating role in the CSR expenditure–financial performance association. Design/methodology/approach The study includes 288 non-financial service sector companies listed in India with 3,456 firm-year observations. Panel data regression analysis using data for 12 years, starting from 2010 to 2021, is carried out. Findings The study reveals a positive influence of CSR spending on financial performance measures (Tobin’s Q and return on assets). Mandatory CSR policies also influence the company’s performance. Additionally, family ownership has a positive moderating effect on CSR expenditure–financial performance (Tobin’s Q). Research limitations/implications The study gives insights to the managers on how CSR expenditures can be used to maximise their benefits by supporting social causes, particularly in the case of firms with ownership structures where family involvement is there. Originality/value The prior studies analysing family ownership effect on the CSR–financial performance relationship are fewer, and in a country like India, where corporate philanthropy is a part of the family business culture, there is a need to understand how CSR spending influences firm performance.

The Moderating Role of Online Social Media in the Relationship between Corporate Social Responsibility Disclosure and Investment Decisions: Evidence from Egypt

Despite the spread and progress in the literature related to the disclosure of corporate social responsibility (CSR) performance around the world as one of the most essential tools for achieving sustainable development in society, its value relevance is still uncertain. Using a survey approach involving investors dealing in stocks of 60 enterprises listed on the Egyptian Stock Exchange (EGX) and included in the environmental, social, and governance index (S&P/EGX ESG index) and the equal-weight index (EGX100 EWI index), we empirically examine the importance of CSR financial performance disclosure by examining the extent to which it can influence investors’ choices. In addition, we assess whether company reputation acquired through online social media (OSM) influences the extent to which CSR performance disclosure influences such judgments. To examine these matters, we conduct two tests: the first examines the influence of disclosure of company environmental activities on investors’ decisions and the other examines the influence of disclosure of company social activities on investor decisions. Turning to our key results, we find that investment decision makers in both experiments tend to invest only in companies that have higher CSR performance scores. In the context of OSM, we provide and discuss empirical evidence that investment decision makers are more responsive to investing in companies included in the S&P/EGX ESG index, which have a positive e-reputation for CSR performance, than companies included in the EGX100 EWI index, which do not have such a reputation, which confirms that e-reputation, as one of the most important outputs of OSM, has a marginal impact on investment decisions and moderates the relation between disclosure of high CSR scores and investors’ decisions. Therefore, this paper presents a modern starting point for CSR experts and academics, particularly in the emerging markets. In general, our paper expands the CSR-related investment literature. In line with the affect-as-information theory, our paper also expands the OSM literature by indicating that the effects of OSM depend on the information context, where failure to provide information to investors or other stakeholders in a timely manner may render the information useless.

Unleashing the Role of CSR and Employees’ Pro-Environmental Behavior for Organizational Success: The Role of Connectedness to Nature

Corporate social responsibility (CSR) and an organization’s financial performance are well discussed in the literature. However, the role of employees to spur the financial performance, especially the mediating effect of employees’ pro-environmental behavior between CSR and financial performance, is not well explored. Literature also shows that connectedness to nature can drive the pro-environmental behavior of individuals. However, the role of connectedness to nature in a CSR–financial performance framework has not been realized. Observing the above knowledge gaps, the current study investigates the CSR-financial performance relationship in the SME sector of a developing country with the mediating effect of employees’ pro-environmental behavior. The current study also notes the conditional indirect effect of connectedness to nature in the above-mediated relationship. A self-administered questionnaire (n = 489) with a paper–pencil technique was employed for data collection. Structural equation modeling was considered to validate the hypothesized relationships. The findings revealed that CSR could lead an SME to a higher level of financial performance via pro-environmental behavior. It was also noted that connectedness to nature produces a significant conditional indirect effect. Such findings have seminal implications for the SME sector, which are discussed in detail. One important implication is to realize the importance of employees’ pro-environmental behavior, through CSR and connectedness to nature, to thrive the financial performance of an SME.

The impact of corporate social responsibility on firm financial performance: does audit quality matter?

PurposeThe purpose of this paper is to investigate the relation between corporate social responsibility (CSR) and firm financial performance, and how audit quality moderates this relationship.Design/methodology/approachThis study uses panel dataset of 200 French firms listed during 2007–2018 period. The direct and moderating effects were tested by using multiple regression technique.FindingsThe authors find that CSR has a positive impact on firm financial performance proxy with return on assets (ROA), return on equity (ROE) and Tobin's Q (TQ), suggesting that investment in social activities helps firms to achieve better financial results. The authors also find that the improvement effect of CSR on corporate financial performance is more pronounced for firms audited by Big 4 auditors.Research limitations/implicationsOne limit of this study is the selection of independent variables. We are limited to one variable, namely CSR engagement. Further studies may consider other independent variables, such as the age of the company, the type of industry, the composition of the board of directors, etc., in order to provide an in-depth analysis of corporate financial performance drivers.Practical implicationsThe findings have practical implications that may be useful to managers in their management of the firm. They encourage all board members to seriously weigh investing in developing strategies that promote the social behavior components in order to improve overall corporate performance.Originality/valueThe research adds to the current literature on CSR by revealing the impact of external auditor quality on the CSR–financial performance relationship. In addition, it investigates not only the overall CSR ratings but also each of CSR dimensions, namely environmental, social and governance.

Empirically examining the impact of corporate social responsibility on financial performance: evidence from Indian steel industry

PurposeThis paper aims to examine the impact of corporate social responsibility (CSR) on financial performance (FP) of Indian steel industry in terms of value-added (VAM), profitability (PM), market (MM) and growth measures (GM).Design/methodology/approachIt is an empirical study using secondary data of 40 companies for 14 years collected from CSR/annual reports/official websites of the companies and Prowess database. The panel regression analysis, MANOVA and univariate ANOVA have been conducted to examine the impact of CSR on FP.FindingsThe result indicates a positive impact of CSR on FP in terms of VAM, PM and GM, thereby indicating that more investments in CSR will generate wealth for shareholders, enhance profitability and sales. Moreover, this study shows no noticeable relationship between CSR and MM.Social implicationsThis study contributes to the literature on the CSR–FP relationship and also has implications for managers, investors and other stakeholders. Companies with higher CSR rating create a brand image, attract proficient employees, get greater profit, loyal customers and have less possibility of bribery and corruption. This study may result in being influential to companies confined not only to this sector but also reaching to the others, thus inspiring them to contribute their share of profit for the welfare of society.Originality/valueTo the best of the authors' knowledge, it is the first comprehensive study to examine the impact of CSR on FP of Indian steel industry by considering four dimensions for measuring FP. It provides evidence about the relationship between CSR and FP.

Intellectual capital: the missing link in the corporate social responsibility–financial performance relationship

PurposeThe purpose of this paper is to propose and empirically test intellectual capital (IC) as a mediator in the corporate social responsibility (CSR) and financial performance (FP) relationship.Design/methodology/approachThe empirical research was conducted on 345 European firms listed in the STOXX Europe 600 index. To evaluate the mediating effect of IC, we applied the four-step Baron and Kenny model, tested through an ordinary least squares regression analysis.FindingsThe findings highlighted a partial mediation of IC on the CSR–FP relationship, suggesting that the implementation of CSR strategies has a positive effect on the development of firms' IC, which in turn enhances firms' competitive advantage and superior long-term FPs.Originality/valueWe found a new mediator in the CSR–FP relationship and we contribute to a new line of research that aims to study environmental and sustainability aspects strictly interrelated with IC and performances (sustainable intellectual capital).

Corporate Social Responsibility and Financial Performance: The Moderating Role of Ownership Concentration in Turkey

The objective of this study is to investigate the impact of corporate social responsibility (CSR) engagement on firm financial performance in a developing country, Turkey, and to analyze the moderating role of ownership concentration in the CSR–financial performance relationship. The sample consists of non-financial public firms listed on the Borsa Istanbul (BIST)-100 index and covers the period between 2014 and 2018. Empirical results using an instrumental variable approach show that corporate social responsibility has a positive relationship with financial performance. Furthermore, findings indicate that this relationship is negatively moderated by ownership concentration even when endogeneity is controlled for.

An examination of the relationship between CSR disclosure and financial performance: The case of Polish banks

The purpose of this study is twofold. First, this study investigates the trends of corporate social responsibility (CSR) reporting and financial performance (FP) in commercial banks in Poland. Second, this study examines the impact of the CSR disclosure of the banks on their financial performance (ROA, ROE, NIM). Sample consists of 18 banks. The data from annual reports for the period of 8 years (2008 – 2015) were both hand collected and obtained from Notoria Servis Database. A content analysis is used to measure the level of CSR disclosures and a panel data analysis is employed to examine the CSR-FP relationship. Software: GRETL. Two key findings: (1) Positive relationship between banks’ CSR disclosures and their profitability measured by ROA and ROE. However, the relationship between banks’ CSR disclosures and NIM is negative. Statistical analysis did not report any significant effect of CSR activities on ROA, ROE and NIM ratios. (2) Banks’ CSR activities are not dominant predictor of their profitability as compared with control variables. To our best knowledge this research is the first quantitative analysis regarding banking sector in Poland. Further, this study was conducted in emerging market with different socio-economic context and regulations compared to developed market. The findings contribute to and increase the understanding of the relationship between CSR disclosures and FP. Finally, this study has important implications for policy makers, managers, investors, and others.

PENGARUH CORPORATE SOCIAL RESPONSIBILITY TERHADAP KINERJA KEUANGAN PERUSAHAAN (Studi Empiris Perusahaan Sektor Pertambangan dan Pertanian yang Terdaftar Di Bursa Efek Tahun 2012-2014)

ABSTRACTThis research was conducted to analyze the effect of Corporate Social Responsibility performance indicators Economic, Environmental, and Social on financial performance. This study was made to determine how the implementation of Corporate Social Responsibility Financial Performance. The method used in this research is quantitative method and the population is a company mining and agricultural sectors listed in Indonesia Stock Exchange in 2012-2014, using data analysis SEM (Structural Equation Modelling) by the application program PLS (Partial Least Square) version 3.2. 1. Results obtained indicate that Corporate Social Responsibility (CSR) of the three indicators Economic Performance (KE), Environmental Performance (KL), Social Performance (KS) to the company's financial performance and Agriculture Mining sector not significant coefficient -0317 parameter Corporate social yangberarti responsibility (CSR) to the financial performance had a negative relationship which means no direction opposite relationship. Keywords: Influence of Corporate Social Responsibility of the three indicators Economic Performance, Environmental, and Social the Financial Performance.

Corporate social responsibility, visibility, reputation and financial performance: empirical analysis on the moderating and mediating variables from Korea

PurposeThis paper aims to substantiate the mechanism through which corporate social responsibility (CSR) affects financial performance (FP). Specifically, this paper focuses on the moderating effect of visibility and mediating effect of reputation in the relationship.Design/methodology/approachThis paper investigates 175 Korean firms from 2010 to 2012 that have been listed in the Korean Economic Justice Index for all three years. The hypotheses are tested using various measures of visibility and the Korea’s Most Admired Company index as proxy for reputation. The logistics regression and the ordinary least square are used.FindingsThis paper initially demonstrates that the visibility moderates the correlation between CSR and reputation. On this finding, it further proves that CSR has positive effect on the long-run FP, measured in the Tobin’s Q, both directly and indirectly through reputation. However, the influence is irrelevant in the short run. In sum, visibility moderates the correlation between CSR and reputation, which mediates the CSR-FP relationship in the long run.Practical implicationsThis paper argues for the importance of visibility in practicing CSR, especially when reputation building and financial benefit is sought through CSR.Originality/valueDespite its strategic importance, the visibility of CSR has not been sufficiently studied. Moreover, as scholars have recently suggested that the CSR–FP relationship is rather indirect, there is even more significance in investigating the moderating and mediating variable. Hence, with the intuitive results, this paper lays an integral foundation in the literature.

Corporate social responsibility and firm financial performance

PurposeDespite the intensive research on corporate social responsibility (CSR) and firm financial performance, little is known about how the linkage between CSR and firm financial performance is heterogeneous across industries and how the performance implications are differentiated among specific categories of CSR activities. The purpose of this paper is to explore how the association between a firm’s engagement in CSR and firm financial performance is heterogeneous across industries and CSR categories.Design/methodology/approachUsing a sample of 17,083 firm-year observations representing 1,877 firms from the largest 3,000 US companies during years 1991 and 2011, the authors compare the association between CSR and firm financial performance across ten industry sectors defined by Global Industry Classification Standard and across the four CSR categories classified by Mandl and Dorr (2007).FindingsThe authors find that the association between the overall CSR activities and firm performance is heterogeneous across industries. CSR has significant positive implications for firms from most, but not all, industries. Comparing the performance implication of CSR practices targeting different stakeholder groups, the empirical results indicate that different types of CSR have different influences on financial performance of firms from different industry sectors.Research limitations/implicationsThis study provides new angles for managers in maximizing firm performance through CSR activities and suggests an important and interesting direction for researchers who engage in CSR research. Due to its heterogeneous nature, the CSR-performance relationship needs to be examined more specifically – across industries and different CSR categories. Findings from studies incorporating both company industrial sector and CSR categories would provide more meaningful and practical implications for managers.Practical implicationsThis study provides important managerial implications. First, to maximize firm performance through CSR activities, managers must interpret the linkage between CSR and firm financial performance from the perspective of a specific industrial sector and acknowledge the importance of CSR practices across different CSR categories. Second, the findings suggest that CSR practices aiming at different stakeholder groups generate different financial returns in different industries. Firms engage in CSR to satisfy different stakeholder groups. When budgets are tight, managers may give higher priority to the CSR practices that have stronger effects on firm financial performance.Originality/valueThis study advances our understanding of the CSR-financial performance relationship by exploring its heterogeneous nature across industry sectors and across specific categories. To obtain the biggest gain from CSR spending, managers must have a good understanding how a specific CSR category can contribute to the financial performance of their particular company in their particular industry.

Discussion of “Equity Financing and Social Responsibility: Further International Evidence”

Even though corporate social responsibility (CSR) has grown substantially in recent years, there has been limited empirical research on the relation between CSR and the perceptions of capital market participants. One stream of the literature focuses on the relation between CSR and firm cost of capital. The Wang et al. (forthcoming) study advances our understanding of the CSR–financial performance relationship by investigating whether CSR performance significantly reduces the cost of equity capital internationally. Future research on CSR should a) provide more in-depth economic intuition and address methodological issues related to differences in cross-country analyses, and b) investigate further and in greater detail the circumstances in which investments in CSR are not beneficial to the firms.

CSR and financial performance: complementarity between environmental, social and business behaviours

This article analyses the interactions between various dimensions of corporate social responsibility (CSR) that mediate the relationship between CSR and financial performance. We hypothesize that the absence of consensus in the empirical literature on the CSR–financial performance relationship may be explained by the existence of synergies (complementarity) and trade-offs (substitutability) between the different CSR components. We investigate such relationship using a final unbalanced panel sample of 1094 observations (around 300 firms per year) from 15 countries over the 2002–2007 period. Our results show that responsible behaviours towards employees (human resources dimension) and towards customers and suppliers (business behaviour dimension) appear as complementary inputs of financial performance, indicating mutual benefits and less conflict between those stakeholders. Conversely, responsible behaviours towards customers and suppliers and towards the environment appear as substitutable inputs of financial performance, suggesting more conflict between or over-investment towards those stakeholders.

No CPR for CSR: A Call to Abandon Search for the “Holy Grail”

Aguinis and Glavas (2013) offer a new attempt to explain the consistently weak but consistently inconsistent findings regarding the relationship of corporate social responsibility (CSR) to financial performance. Like many others writing in the field, Aguinis and Glavas appear to believe that further efforts to categorize types of CSR will somehow identify CSR forms that are financially rewarding. In this response, I challenge four assumptions underlying the Aguinis and Glavas manuscript: (a) that CSR has received little attention in the micro literature; (b) that CSR can be meaningfully conceptualized and operationalized; (c) that a continued search for the “holy grail” of a CSR–financial performance link is likely to be fruitful; and (d) that the “peripheral–embedded” distinction is useful and appropriate.

How Corporate Social Responsibility Engagement Strategy Moderates the CSR–Financial Performance Relationship

abstractWe propose that firm profits are shaped by how firms engage in corporate social responsibility. Recent research on the corporate social responsibility (CSR)–corporate financial performance (CFP) relationship proposes a variety of contextual and organizational factors to create a more robust link. However, few of these studies explore the role of the CSR engagement strategy. Drawing on absorptive capacity theory and related perspectives such as time compression diseconomies, asset mass efficiencies, and path dependence theory, we argue that when a firm engages in CSR slowly and consistently, focuses on related CSR dimensions, and starts with internal dimensions of CSR, CFP will be enhanced. With longitudinal data collected from 130 firms from 1995 to 2007, we find that firms benefit more when they adopt a CSR engagement strategy that is consistent, involves related dimensions of CSR, and begins with aspects of CSR that are more internal to the firm. The pace of the CSR engagement strategy, however, does not moderate the CSR–CFP relationship. This study helps fill the gap in CSR research by showing that, regardless of contextual factors, a firm can choose the proper strategy to enhance the financial benefits of the CSR engagement.