Impact Of Corporate Social Performance Research Articles

Impact of Corporate Social Performance on Financial Performance: Evidence from Islamic Banks, Conventional Banks and Social Banks

Purpose — This study aims to assess the impact of banking models on the relationship between corporate social performance (CSP) and corporate financial performance (CFP) in determining a viable model for sustainable banking. Design/Methodology/Approach — The study uses a cross-country sample of 117 financial institutions across 36 countries over an 8-year observation period between 2013 and 2020. To address heterogeneity and endogeneity issues, the authors use the System Generalised Methods of Moments (GMM) estimation models. The study also constructs a novel CSP Index as the independent variable for the research. This CSP Index comprises six indicators reflecting dimensions of financial inclusion and intermediation, serving as proxies for sustainable banking. Findings — The findings reveal that the distinct banking models have a significant impact and can alter the direction of the CSP-CFP relationship. Specifically, the conventional banking (CB) model exhibits a statistically significant negative association between CSP and CFP. Conversely, the Islamic banking (IB) model emerges as a promising avenue for sustainable finance, indicating that increased corporate social responsibility (CSR) activities within Islamic banks (IBs) lead to greater profitability. This difference arises from the inherent strengths of the IB system in conducting financial intermediation and inclusion activities. This contrasts with the CB model’s reliance on debt-based instruments, which exacerbates risk and detrimentally impacts financial performance. The findings also show that the social banking (SB) model has a significant effect on the CSP-CFP relationship. Originality/Value — The findings give new insights into the longstanding debate on the CSP-CFP relationship by examining the impact of banking models. Introducing a novel CSP Index, characterised by its objectivity and verifiability, addresses the prevalent issue of bias inherent in the CSP indices of previous studies.

Sustainable threads: analyzing the impact of corporate social performance, CSR message authenticity and information transparency on purchase intentions

With the deepening exploration of the study on corporate social responsibility (CSR), CSR has progressively gained significance for enterprises. This study aims to analyze the impact of fashion companies’ information disclosure on the intention of Chinese consumers who purchase clothing by providing information related to the environment, suppliers, manufacturing processes, and pricing. An experimental study was conducted using stimuli on 412 consumers in Shandong Province, China. The research results are as follows. First, it was found that consumers’ perception of Corporate Social Performance (CSP) has a positive effect on the authenticity of Corporate Social Responsibility (CSR) message and consumers’ subjective norms. Second, CSR message authenticity and consumer subjective norms mediate the perception of CSP in the process of leading to purchasing activities. Third, consumers perceive the authenticity of a company’s CSR activities according to the degree of transparent information disclosure of the cost and manufacturing process of its products. This study shows that the CSR information provided by the company is authentic depending on the degree of CSR information transparency of the company, and that it leads to a purchase intention when consumers judge that the company’s CSR activities are authentic. Accordingly, it is suggested that many fashion companies’ CSR activities lead to product purchases when they are continuously conducted on environmental, social problems, and transparency in the production process.

Does corporate social performance improve environmentally adjusted efficiency? Evidence from the energy sector

AbstractThis study analyses the impact of corporate social performance (CSP), proxied by the Environmental, Social and Governance (ESG) Index and its pillars and dimensions, on the environmentally adjusted efficiency (EAE) of 239 listed companies, over the period 2016–2021, in the global energy sector. The EAE index, estimated via data envelopment analysis (DEA), assesses the efficiency of companies by considering economic aspects alongside CO2 and energy consumption reduction targets. Our results support the hypothesis that only above a certain level of performance, do CSP practices positively influence EAE, so there is a non‐linear U‐shaped association between the overall ESG score and EAE. The same holds for the social and governance pillars, and the human rights and management subspecific dimensions, on EAE. Other ESG attributes show a positive linear relationship with EAE, namely the environmental pillar, the environmental innovation dimension and the shareholder dimension. Our paper has significant implications for companies, policy makers and researchers insofar as it estimates EAE and indicates which CSP practices should be invested in over the long term to have a positive effect on it.

Impact of Corporate Social Performance on Profitability: A Case Study of Listed Indian Companies

Purpose: This section outlines the main objective of the research and what the study aims to achieve. In this case, the purpose is to investigate the relationship between corporate social performance (CSP) and financial performance in firms listed on BSE and NSE. The purpose is to understand if there is a connection between these two aspects of business performance.
 
 Design/Methodology/Approach: This section describes the methodology and approach used to conduct the research. It mentions the data collection methods, data sources, and analysis techniques. In this case, the design/methodology/approach involves collecting seven years' mean data of corporate social responsibility (CSR) spending and three years' mean data of financial performance, followed by regression analysis to assess the relationship between CSP and financial performance.
 
 Findings: This section presents the key results and outcomes of the research. It summarizes what the data analysis and regression analysis revealed about the relationship between CSP and financial performance for the firms listed on BSE and NSE. This is where the main discoveries and insights are shared.
 
 Research, Practical & Social Implications: Here, the broader implications of the research are discussed. This includes how the findings of the study can impact future research in the field, practical applications for businesses, and the potential social consequences of the relationship between CSP and financial performance. It looks at the "So what?" aspect of the research.
 
 Originality/Value: In this section, the paper highlights the originality and value it brings to the existing body of knowledge. It discusses how the research contributes to the field and why it is important. This section emphasizes the significance of the study's findings and how they can add to the understanding of the topic.

Impact of Corporate Social Performance on Shareholder value

Impact of Corporate Social Performance on Shareholder value

Impact of corporate social performance on shareholder value

Impact of corporate social performance on shareholder value

Does corporate social performance improve bank efficiency? Evidence from European banks

This paper analyses the impact of corporate social performance (CSP) on bank efficiency in a sample of 108 European listed banks across 21 countries over the period 2011–2019. Simar and Wilson’s two-stage approach (Simar and Wilson in J Econom 136:31–64, 2007) has been applied, specifically using data envelopment analysis (DEA) at the first stage to estimate efficiency scores and then truncated regression estimation with double-bootstrap to test the significance of the relationship between bank efficiency and CSP as well as its different dimensions. Our results suggest evidence of a U-shaped relationship between CSP and efficiency, indicating that banks with either high or low corporate social performance levels are the most efficient. Considering the isolated effect of environmental, social, and governance dimensions, the same conclusion can be drawn for the latter two, while the former does not appear to have any effect on a bank’s efficiency. Our work contributes to the existing literature by providing a holistic procedure for assessing CSP in terms of efficiency, allowing us to study the separate effect of each component on bank efficiency. Our results have strong implications for regulators, policymakers, bank managers and investors supporting the changes in the EU Regulatory Taxonomy that lead banks to align their activities and strategies with the Sustainable Development Goals.

Investor sentiment, corporate social responsibility, and financial performance: Evidence from Japanese companies

Utilizing data from 367 Japanese companies from 2005 to 2019, this paper investigates the relationship between investor sentiment, corporate social performance (CSP), and financial performance (FP). The empirical results obtained from the panel fixed effects and instrumental variable regressions reveal a positive impact of firm-specific sentiment on future FP. Conversely, the market sentiment effect is mixed as it positively influences Tobin's Q but negatively influences the return on assets (ROA). The impact of CSP, measured by environmental, social, and governance (ESG) scores, on FP is similar to that of market sentiment. Specifically, we find that an effective ESG performance in the prior year, both the overall performance and the performance of the individual aspects, can escalate firm value but diminish firm profitability in the following year. We claim that the CSP–FP relationship weakens under the moderating influence of investor sentiment.

How and when corporate social performance reduces firm risk? The moderating role of corporate governance

AbstractThis study aims to explore the impact of corporate social performance (CSP) on firm risk, and it proposes the moderating role of corporate governance (CG) among this relationship. Although the literature on corporate social responsibility is extensive, there is still a lack of knowledge about how CSP influences firm risks, as well as the role of CG in this relationship. To fill this gap, we have empirically tested the impact of CSP on a firm's risk through a longitudinal analysis on S&P 500 firms from 2015 to 2019. Results show a significant negative relationship between CSP and firm risks, which is positively moderated by CG mechanisms. Our study contributes to the empirical research on corporate social responsibility and it provides insights for managerial decisions to encourage managers to pursue environmental and social practices that reduce the firm risk, with positive impacts on the firm value.

The pressure behind corporate social performance: Ownership and institutional configurations

AbstractResearch summaryDrawing on the “varieties of capitalism” literature, we develop an actor‐centered framework that explains firm‐level corporate social performance (CSP) by emphasizing the importance of considering owners' and other stakeholders' motives toward CSP—which can be instrumental, relational or moral—and their salience in the national institutional setting. Results from an international panel show that investment company (government) ownership has a stronger negative (positive) relationship with CSP in liberal markets, in which owners are the key stakeholder, as compared to coordinated markets, which counterbalance the interests of multiple stakeholders. Family and company ownership have weaker links to CSP across institutional settings. We discuss implications for research and practice and argue that CSP policies may hold more relevance in liberal rather than coordinated market economies.Managerial summaryExisting debates focus on the impact of corporate social performance (CSP) on firm outcomes. Less is known about the motives and pressures behind CSP, which may explain its variability across firms and institutional settings. We argue that powerful owners' motives are important for explaining CSP in liberal markets, where shareholders are the most important stakeholder, as compared to coordinated markets, which confer prominence to multiple stakeholders. Owners' motives are not homogenous and depending on the type of owners the link between ownership concentration and CSP can be negative (for investment companies) or positive (for governments). In coordinated markets, owners have a weaker impact on CSP, which is mostly attributable to their lower salience relative to stakeholders, rather than to a change in their motives.

Impact of Corporate Social Performance on Financial Performance: Case of Firms Listed on the Stock Exchange of Casablanca

This paper examines empirically the impact of corporate social performance (CSP) on financial performance (FP). The study relates to a panel of 32 firms listed on the Stock Exchange of Casablanca during the period of study from 2011 to 2017. The empirical findings obtained, by linear regressions on panel data, clearly find the lack of impact of the corporate social performance on the financial performance measured by the Return on Investment (ROI), Return on Equity (ROE) and Earnings Per Share (EPS) ratios. The influence of corporate social performance on financial performance is statistically insignificant. The financial performance of firms classified or not socially efficient are almost identical. Finally, the results obtained clearly show the absence of this causal link between corporate social performance (CSP) on financial performance (FP), which confirms the research hypothesis. Finally, since the relationship between these two performances could be non-linear, we can deepen this article using econometric methods that can analyze the non-linear effect such as quantile regression and the regime-change model.

CSR in the bond market: Pricing stakeholders and the moderating role of the institutional context

This study examines the impact of corporate social performance (CSP) on the spreads and credit ratings of corporate bonds on a global scale. The relationship is examined within the national legal and institutional environment and with regard to specific stakeholder practices. We construct and use a unique longitudinal, international dataset with a total of 5280 bond issues dating from 2003 to 2018 and spanning 40 countries worldwide.We provide evidence that more responsible firms benefit from lower bond spreads and improved bond ratings, while a higher degree of CSR-related controversies penalizes firms on both dimensions. Various, but not all, stakeholder relationships appear to generate a significant impact on spreads and bond ratings, with shareholders remaining crucial in both civil and common law countries, opposite to literature findings so far. Corporate governance is corroborated as a primary concern also in the debt market for common law economies, while societal stakeholders assume significance for civil law systems. Finally, findings highlight that stronger regulation and government involvement do not further promote the role of CSP in the debt market. On the other hand, free public criticism and media scrutiny generate a more pronounced effect of CSP on bond pricing providing support for the rewards associated with voluntary and proactive CSR.

The Pressure Behind Corporate Social Performance: Ownership and Institutional Configurations

Research summary: Drawing on the “varieties of capitalism” literature, we develop an actor-centered framework that explains firm-level corporate social performance (CSP) by emphasizing the importance of considering owners’ and other stakeholders’ motives towards CSP — which can be instrumental, relational or moral — and their salience in the national institutional setting. Results from an international panel show that investment company (government) ownership has a stronger negative (positive) relationship with CSP in liberal markets, in which owners are the key stakeholder, as compared to coordinated markets, which counterbalance the interests of multiple stakeholders. Family and company ownership have weaker links to CSP across institutional settings. We discuss implications for research and practice and argue that CSP policies may hold more relevance in liberal rather than coordinated market economies. Managerial summary: Existing debates focus on the impact of corporate social performance (CSP) on firm outcomes. Less is known about the motives and pressures behind CSP, which may explain its variability across firms and institutional settings. We argue that powerful owners’ motives are important for explaining CSP in liberal markets, where shareholders are the most important stakeholder, as compared to coordinated markets, which confer prominence to multiple stakeholders. Owners’ motives are not homogeneous and depending on the type of owners the link between ownership concentration and CSP can be negative (for investment companies) or positive (for governments). In coordinated markets, owners have a weaker impact on CSP, which is mostly attributable to their lower salience relative to stakeholders, rather than to a change in their motives.

How Corporate Social Responsibility Helps MNEs to Improve their Reputation. The Moderating Effects of Geographical Diversification and Operating in Developing Regions

AbstractMultinational enterprises (MNEs) can enhance their reputations through advanced social initiatives and management practices. These firms often locate facilities in developing countries to benefit from lax environmental and social regulations, and to reduce their operating costs. MNEs can, however, also contribute positively to the development of those countries through corporate social responsibility (CSR) activities. This paper argues that MNEs operating in developing regions can enhance their level of corporate reputation through the implementation of CSR initiatives that meet specific stakeholders' expectations of the firm's activities in these areas. In addition, we argue that MNEs with units based in different regions strengthen the impact of corporate social performance on corporate reputation. Based on a sample of 113 US MNEs from the chemical, energy, and industrial machinery industries over the period 2005–2010, our findings show that CSR has a positive effect on corporate reputation. In addition, MNEs' operations in developing regions intensify the positive relationship between corporate social performance and reputation, although geographical diversification does not necessarily enhance MNEs' reputation through corporate social performance. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

The impact of corporate social performance on the cost of debt and access to debt financing for listed European non-financial firms

This study addresses the controversial issue of how non-financial performance affects the cost of debt capital and access to it. The relationship between corporate social performance and two measures of debt cost (accounting-based and market-based) and the measure of debt access are analysed by means of a multi-theoretical framework combining economics with social theories. By observing a sample of listed European non-financial firms over an 8-year period from 2005 to 2012, we find a negative relationship between corporate social performance and interest rate. Consistent with this result, we find a positive relationship between corporate social performance and debt rating. Thus, corporate social performance has a positive role in reducing the cost of debt capital. Moreover, firms with better corporate social performance are more attractive to lenders in terms of leverage allowance. Overall, our findings provide deeper insight into the reasons why companies should improve their corporate social performance.

Impact of corporate social performance on finance performance

Corporate social performance brought company reputation, insurance or moral capital. It performed in the capital market as soon as the company experienced adverse events. The content of this research is the based on such judge. The paper analyzed the influence of corporate social performance on stock returns when there were adverse events of the listed companies. The empirical results show that the influence of corporate social performance on economic performance is not a direct result. The implementation of corporate social responsibility is to give enterprises more accumulation of social capital.

The Market Value of Corporate Social Performance in BRICS Countries: Differential Results Based on Panel Data Methods

Although the causal effect of social performance on financial performance is a critical issue for companies and their stakeholders, there has been no consistent econometric ap­proach in the relevant literature to examine this relationship yet. From this point of view, the main motivation of this study is twofold: first, it aims to reveal the differential results of static and dynamic panel data methods used to estimate the impact of corporate social performance (CSP) on corporate financial performance (CFP). Second, in order to take the initiative for a consistent and reliable estimation method of the causal relationship between CSP and CFP, this study aims at drawing attention to the challenges of system generalized method of moments, which is suggested as an efficient method to solve the endogeneity problem in dynamic models. To this end, the impact of CSP on CFP for a sample of BRICS countries was analyzed through both static and dynamic panel data specifications. The main results reveal that static panel data models estimated with pooled OLS, random and fixed effects result in inconsistent and biased parameter estimates. This study discusses that although the two-step system GMM is suggested as a reliable method to deal with the endo­geneity issue, some critical specifications should be considered while utilizing this method to achieve robust and efficient results.

Corporate sustainability and financial performance of Chinese banks

PurposeThis paper analyzes the connection between the sustainability performance of Chinese banks and their financial indicators to explore whether sustainability regulations can be implemented without decreasing the financial performance of the banking sector.Design/methodology/approachThe study examined reports and websites of Chinese banks, categorized different corporate sustainability aspects and conducted panel regression and Granger causality to analyze cause and effect variables.FindingsThe environmental and social performance of Chinese banks increased significantly between 2009 and 2013. Furthermore, a bi-directional causality between financial performance and sustainability performance of Chinese banks has been found. Based on institutional theory, this interaction may be influenced by the Chinese Green Credit Policy.Research limitations/implicationsThe findings suggest that corporate sustainability performance and financial performance are not a trade-off but correlate positively. Further research is needed to analyze the effect of financial regulations, such as the Chinese Green Credit Policy.Practical implicationsAccording to the good management theory by Waddock and Graves (1997) that claims a positive impact of corporate social performance on financial performance, Chinese banks can invest in corporate sustainability to increase their financial success and re-invest parts of the additional returns – also called slack resources – in sustainability activities.Social implicationsChinese banks are able to influence the economy to become greener and less polluting without sacrificing financial returns.Originality/valueThis is the first study to explore the sustainability performance of Chinese banks, including their products and services.

Corporate social performance and its relation with corporate financial performance: International evidence in the banking industry

The economic and financial crisis that began in 2008 has raised concerns over the impact of Corporate Social Performance (CSP) on Corporate Financial Performance (CFP). The controversies and scandals in regard to the role of banks in the crisis have revealed failures in some CSP dimensions and questioned the CSR policies of banks as a real strategic commitment to the main stakeholders. The financial sector has been one of the hardest hit by the crisis. We study whether banks adopted a strategic approach to CSP and the extent to which this approach attenuated the decrease in CFP during the crisis. To that end, we analyze the effect of four CSP dimensions on the CFP of 154 financial entities in 22 countries, most of them notably affected by the crisis, from 2005 to 2010. The results show that banks with better employee relationships and corporate governance had better CFP. Nevertheless, the crisis negatively moderated this effect in the latter, suggesting failures in corporate governance mechanisms. Contrary to what was expected, the product responsibility dimension did not positively influence CFP. We found evidence that, during the crisis, better relations with the community could be valued positively by investors, which, in turn, increases CFP. The results are relevant for managers and policymakers. We recommend that banks incorporate CSP concerns into their corporate governance mechanisms, review their commitment to customers and attach greater importance to relations with the community. Moreover, regulatory reforms are suggested to clarify the responsibilities of financial institutions in the design and marketing of banking products.

Impact of corporate social performance on financial performance of manufacturing companies (IMC) listed on the Tehran Stock Exchange

PurposeThis study aims to investigate the impact of corporate social performance (CSP) on financial performance of manufacturing companies listed on the Tehran Stock Exchange and thus contributes to understanding the significance of socially responsible investments for companies.Design/methodology/approachThe CSP was measured by a questionnaire composed of 53 items related to customers’ social performance of the firm, workers and environmental and community dimensions. Besides, corporate financial performance was measured by two measures, return on equity (ROE) and return on assets (ROA). In this study, 74 observations were investigated from 2006 to 2012. The data were analyzed using the multiple regression method.FindingsThe results of the study revealed that customers’ social performance of the firm has a negative impact on ROA of the firm. Besides, social performance of the workers dimension of the firm has a positive impact on ROA. The results, also, showed that none of the CSP dimensions affected the ROE of the firms.Originality/valueThe present study is useful for managers to develop future social performance policies that may lead to better financial performance in the long-term. The paper, also, contributes to the corporate social responsibility literature, as it presents empirical evidence of the effects of CSP on the financial performance in the manufacturing sector of developing countries.