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Does it Pay to Be Good...And Does it Matter? A Meta-Analysis of the Relationship between Corporate Social and Financial Performance

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In an era of rising concern about financial performance and social ills, companies’ economic achievements and negative externalities prompt a common question: Does it pay to be good? For thirty-five years, researchers have been investigating the empirical link between corporate social performance (CSP) and corporate financial performance (CFP). In the most comprehensive review of this research to date, we conduct a meta-analysis of 251 studies presented in 214 manuscripts. The overall effect is positive but small (mean r = .13, median r = .09, weighted r = .11), and results for the 106 studies from the past decade are even smaller. We also conduct sensitivity analyses to determine whether or not the relationship is stronger under certain conditions. Except for the effect of revealed misdeeds on financial performance, none of the many contingencies examined in the literature markedly affects the results. Therefore, we conclude by considering whether, aside from striving to do no harm, companies have grounds for doing good - and whether researchers have grounds for continuing to look for an empirical link between CSP and CFP.
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DOES IT PAY TO BE GOOD?
A META-ANALYSIS AND REDIRECTION OF RESEARCH ON THE RELATIONSHIP
BETWEEN CORPORATE SOCIAL AND FINANCIAL PERFORMANCE
Joshua D. Margolis
Harvard University
Boston, MA 02163-7819
Tel: (617) 495-6444
Fax: (617) 496-6568
email: jmargolis@hbs.edu
Hillary Anger Elfenbein
Haas School of Business
University of California
Berkeley, CA 94720-1900
Tel: (510) 643-9700
Fax: (510) 643-1412
email: hillary@post.harvard.edu
James P. Walsh
Ross School of Business
University of Michigan
Ann Arbor, MI 48109-1234
Tel: (734) 936-2768
Fax: (734) 936-0282
email: jpwalsh@umich.edu
July 26, 2007
Acknowledgments:
We are indebted to Desiree Schaan for her assistance with coding the articles. We also appreciate
insightful comments by Christopher Marquis and Nitin Nohria, research assistance by Alyssa
Bittner-Gibbs, and the collegiality of Janet Kiholm Smith and Daniel Turban for sharing
additional information about their published studies.
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DOES IT PAY TO BE GOOD?
A META-ANALYSIS AND REDIRECTION OF RESEARCH ON THE RELATIONSHIP
BETWEEN CORPORATE SOCIAL AND FINANCIAL PERFORMANCE
Abstract
The empirical link between corporate social performance (CSP) and corporate financial
performance (CFP) has been steadily investigated for 35 years. We conduct a meta-analysis of
192 effects revealed in 167 studies. The overall effect is positive but small (mean r=.13, median
r=.08). Looking deeper, we analyze these effects across nine categories of CSP. We find that the
association is strongest for the analysis of the specific dimensions of charitable contributions,
revealed misdeeds, and environmental performance and when CSP is assessed more broadly
through observer perceptions and self-reported social performance. The association is weakest
for the specific dimensions of corporate policies and transparency and when CSP is assessed
more broadly through third-party audits and mutual fund screens. Although the results suggest no
financial penalty for CSP, they indicate at least as strong a link from prior CFP to subsequent
CSP as the reverse. We conclude that if future research on the link persists, it should meet a
number of minimum standards. Ideally, though, efforts to find a link should be redirected to
better understand why companies pursue CSP, the mechanisms connecting prior CFP to
subsequent CSP, and how companies manage the process of pursuing both CSP and CFP
simultaneously.
Text: 33 pages
Figures and Tables: 25 pages
References: 19 pages
3
It’s 8:30am on a Friday in July, and Carol B. Tomé is starting to sweat. The chief financial officer of Home Depot
Inc. isn’t getting ready to face a firing squad of investors or unveil troubled accounting at the home improvement
giant. Instead, she and 200 other Home Depot employees are helping to build a playground replete with swings,
slides, and a jungle gym at a local girls’ club in hardscrabble Marietta, Ga. … Is this any way to build shareholder
value at Home Depot, where the stock has been stuck near $43, down 35% from its all-time high? (Business Week,
2005)
Can a corporation create wealth and do it in a way that does not harm society, and, in the
best of all worlds, even redress social ills? The question of whether “doing good and doing well
converge has waxed and waned over the past century (Morrissey, 1989; Wells, 2002), and it has
preoccupied thinkers for nearly 2000 years (Avi-Yonah, 2005). Some theories of the firm
emphasize reaching beyond a single-minded focus on wealth creation to attend broadly to
society’s needs, but the theory that now dominates legal and economic scholarship does not
(Allen, 1992; 1993). Commonly known as the “nexus of contracts” theory, it sees the firm as “a
legal fiction which serves as a focus for a complex process in which the conflicting objectives of
individuals (some of whom may ‘represent’ other organizations) are brought into equilibrium
within a framework of contractual relation” (Jensen and Meckling, 1976: 311). Even as
competing models of the firm gain influence, they must contend with this prevailing view (Blair
& Stout, 2006; Freeman, Wicks, & Parmar 2004), which may well continue to shape
assumptions about the firm for the foreseeable future (Hansmann & Kraakman, 2001).
Anyone who argues that the ultimate purpose of a firm involves anything more than
enhancing shareholder value must come to terms with this dominant theory. Attempts to mitigate
a firm’s ill effects on society or to fund projects that might directly benefit society are subjected
to a rigorous financial analysis. Indeed, the prevailing theory argues that society is best served if
these attempts can clear such a financial hurdle. In his appraisal of the longstanding controversy
regarding the purpose of the firm, Jensen (2002: 239) argued that “200 years’ worth of work in
economics and finance indicate that social welfare is maximized when all firms in an economy
maximize total firm value.” It is a tidy logic that puts the onus on corporate critics and social
advocates alike to show how a corporation’s social investment must benefit its shareholders.
Business Week’s (2005) skepticism about Home Depot’s community investment practices
certainly reflects this orientation.
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This theory may be so influential now because it allows managers and regulators alike the
freedom to (relatively easily) restructure the firm’s assets to best meet the demands of global
competition. The globalization of the firms’ factor and product markets, and its implications for
management and corporate governance, is by now a very familiar story (Bradley, Schipani,
Sundaram, & Walsh, 1999; Jensen, 1993; Parker, 1996). As globalization ushered in a period of
hypercompetitive business practices (D’Aveni, 1994), companies have struggled to survive, well
enough thrive. To see the firm as a bundle of contracts facilitates change. After all, contracts can
be renegotiated, even if the social costs are high (Shleifer and Summers, 1988; Uchitelle,
Battenberg and Kochan, 2007). And the changes driven by this economic logic have been
enormous. The conglomerate merger wave of the 1960s was unraveled in the 1980s (Shleifer &
Vishny, 1991), as firms shed their unrelated business units (Comment & Jarrell, 1995) and
learned to leverage their “core competencies” (Prahalad and Hamel, 1990) to meet their new
competitive realities. Then in the 1990s and early 2000s companies combined anew, searching
for the scale economies and competitive advantages considered essential to prosper in a global
marketplace – even though the economic benefits have sometimes proven elusive (Moeller,
Schlingemann & Stulz, 2005).
Seen in this context, it is no surprise to discover that performance, and especially
corporate financial performance, became the dominant dependent variable in organizational
research over the past thirty years (Walsh, Weber, & Margolis, 2003). Even if performance was
ancillary to the topic at hand, it served to legitimate the work as academically credible and
practically relevant (Staw, 1984). Indeed, the study of organizations is marked by all manner of
attempts to link management practices to corporate financial performance. Work on strategy
(McGahan & Porter, 1997), research and development (Wieser, 2005) and human resource
management (Delery & Doty, 1996; Huselid, 1995), to name just a few, attempt to establish a
connection between corporate practices and their financial results. The work on corporate social
performance is no exception.
Scholars have been searching for a link between corporate social performance (CSP) and
corporate financial performance (CFP) for thirty-five years. If only doing good could be
connected to doing well, then companies might be persuaded to act more conscientiously,
whether in cleaning up their own questionable conduct (Campbell, 2006) or in redressing societal
ills (Porter & Kramer, 2006). A positive link between social and financial performance would
5
legitimize corporate social performance on economic grounds, grounds that matter so much these
days (Useem, 1996). It would license companies to pursue the good—even incurring additional
costs—in order to enhance their bottom line and at the same time contribute more broadly to the
well-being of society.
The influence of this economic reasoning was apparent in the very first empirical CSP-
CFP study. Bragdon and Marlin (1972) motivated their research by examining whether or not
virtue must be its own reward. They looked at this question from both a manager’s and an
investor’s perspective:
Proponents [of what they called the orthodox economic logic] argue that corporate
managers can either control pollution or maximize profits but that the former can be
accomplished only at the expense of the latter. From the investor’s perspective, this in
turn implies that he can either invest in a profitable company or a “good” company
(which protects its environment) but that no company is likely to be both. (Bragdon &
Marlin, 1972: 9).
These words were written on the heels of Friedman’s (1970) well-known criticism of a firm’s
corporate social responsibility initiatives. Friedman took direct aim at any firm that contemplated
such activity, considering such investments to be theft and political subversion. In his view,
executives were taking money that would otherwise go to the firm’s owners in order to pursue
objectives that the executives, under the sway of a minority of voices, selected in a manner
beyond the reach of accepted democratic political processes. But when Bragdon and Marlin
(1972: 17) found a positive CSP-CFP relationship, they could comfortably remove any conflict
by concluding, “[W]e hope that we have made a step in the direction of laying to rest the
economic model that poses the alternative.” If they only knew. Thirty-five years later, Nakao,
Amano, Matsumura, Genba, and Nakano (2007:107) were still investigating this very same
question: “to examine, by multiple linear regression analysis, whether environmental
performance has a significantly positive effect on financial performance.” One hundred and sixty
seven studies, investigating 192 CSP-CFP effects, have been conducted since 1972. Figure 1
profiles this steady research activity. Our goal is to take stock of this research stream and with a
meta-analysis, see if we can answer the question of whether it pays to be good.
--------------------------------
Insert Figure 1 about Here
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We are not the first to distill this longstanding line of research. It is a testimony to the
power of the question that sixteen reviews of CSP-CFP research have already assessed whether
doing good pays. The first review was published nineteen years ago (Aldag & Bartol, 1978).
Since then, another twelve appraisals and three formal meta-analyses have appeared in print.
They all try to keep pace with the heavy volume of work investigating the relationship between
CSP and CFP. Table 1 captures the reviews as they appeared through time, the number of CSP-
CFP studies each review examined, and the citations each has garnered over the years.
--------------------------------
Insert Table 1 about Here
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Taken together, scholars have turned to these reviews 1,445 times for guidance. The
value of a review is a function of the breadth of extant work considered and the insights the
authors bring to its evaluation. The rigor of the analysis certainly matters too. Today, both
consumers of literature reviews (Bies, Bartunek, Fort, & Zald, 2007) and research
methodologists (Rosenthal, 1991) see formal meta-analyses as more valuable than a scholar’s
idiosyncratic reading of a literature. Indeed, later views of the CSP-CFP literature criticize earlier
reviews on just this point (e.g., Orlitzky, Schmidt, & Rynes, 2003). Not surprisingly, the three
most recent reviews of this literature have employed meta-analysis: Orlitzky, et al. (2003)
analyzed 52 CSP-CFP studies; two years later Allouche and Laroche (2005) analyzed 82 CSP-
CFP studies; and most recently, Wu (2006) analyzed 121 studies, with 39 of them focused on the
CSP-CFP relationship. Our goal is to expand and deepen these efforts in two ways. First, we
offer a comprehensive appraisal of the 167 studies conducted to date and, second, we draw
implications both for the CSP-CFP relationship and for future research.
Our paper proceeds in five steps. First, we provide a backdrop to our meta-analysis,
describing theoretical approaches to CSP and the CSP-CFP connection. Second, we lay out the
methodology for our meta-analysis. Third, we present the results in two forms, in the aggregate
and then by the type of study. Fourth, we assess the implications of these results, interpreting
what the results do and do not indicate about the relationship between CSP and CFP. And fifth,
we identify two paths for future research, and suggest that a new one—rather than the well-
traveled familiar one—will best honor the enduring motivation and prodigious efforts behind
prior research.
7
Corporate Social Performance and the Quest for a Link to Corporate Financial
Performance
Despite years of theoretical and empirical attention, researchers have encountered
significant challenges in both specifying and operationally defining the CSP construct (Barnett,
2007; Clarkson, 1995; Frederick, 2006; McWilliams, Siegel & Wright, 2006; Wood, 1991;
Wood & Jones, 1995). Prior reviews of the CSP-CFP work often decry a range of theoretical and
methodological faults and, in so doing, promote a continuing research stream that might rectify
the problems.
To date, corporate social performance has been theoretically defined in two basic ways.
One approach casts social performance as a multidimensional construct, encompassing a
company’s efforts to fulfill multiple responsibilities — economic, legal, ethical, and
discretionary (Carroll, 1979, 1999) — or encompassing a company’s principles, processes of
response to rising issues, and observable practices and outcomes (Wartick & Cochran, 1985;
Wood, 1991). A second approach casts social performance as a function of how a company treats
its stakeholders (Campbell, 2007; Clarkson, 1995; Cooper, 2004; Post, Preston, & Sachs, 2002).
Although theorists attempt to distinguish corporate social performance from corporate social
responsibility (CSR), sometimes subsuming CSP under the umbrella of CSR and sometimes the
reverse (Barnett, 2007; Carroll, 1979, 1999; Wood, 1991), the terms corporate social
performance and corporate social responsibility (CSR)—or “socially responsible behavior”—are
often used interchangeably in empirical studies. Despite extensive theoretical development,
researchers have encountered significant challenges operationally defining the theoretical
construct of corporate social performance (Clarkson, 1995; Wood & Jones, 1995). As a result,
indicators and measures of CSP vary widely and tend to capture either a single specific
dimension, such as philanthropic contributions or pollution control, or broad appraisals of CSP
as a whole. The increasing influence of stakeholder theory on the study of CSP has corresponded
with increased use of Kinder Lydenberg Domini’s Socrates database, which rates companies
across dimensions that reflect attention to different stakeholder groups
(http://www.kld.com/research/socrates/index.html).
Just as theoretical elaboration of the CSP construct has coalesced around two main
models, so too have theoretical accounts of the link between CSP and CFP (Jones, 1995; Preston
& O’Bannon, 1997). One model treats CSP as a distinctive resource—a way of treating others,
8
for example, or a way of running the company’s operations—that substantively generates
benefits or reduces costs, both of which improve financial performance. Heightened benefits may
include employee effort that emerges from treating them well, or innovative products and access
to markets that emerge from aiding non-profit enterprises. Decreased costs may include the
avoidance of potential penalties and regulation as a result of clean and safe operations, less
contracting friction with stakeholders as a result of honest dealing, or lower material costs from
reduced levels of pollution and waste. For theories that fall within this first broad model, the
mechanism that turns CSP into CFP is the value-creating impact of the efforts to do good. Those
efforts have the effect of reducing costs or increasing revenues.
In contrast, another set of theoretical accounts suggests that the appeal of CSP, rather
than its substantive impact, generates financial returns. Independent of the actual effects of
efforts to do good, the second model suggests that the appearance of doing good (or the
perception among key stakeholders that a company is doing good) generates demand for and
commitment to the company’s stock, jobs, or products. The value-creating mechanism is the
appearance of CSP. That appearance increases demand and commitment, directly driving up the
stock price, for example, or indirectly reducing hiring costs by intensifying employee
commitment, or indirectly generating revenue by increasing the likelihood that consumers will
purchase the company’s products.
Although the mechanisms that connect CSP to CFP may both be at work, and thus the
two models may well overlap, the underlying mechanisms do indeed differ. Consider two ways
in which helping non-profit organizations might contribute to a company’s financial
performance. The first model suggests that when a company collaborates with non-profits, the
company may strike upon unforeseen markets or innovative products, which open new sources
of revenue (Kanter, 1999). The second model suggests that by collaborating with non-profits, a
company gains because the public develops a general impression that the company is a good
citizen, which makes people more likely to pursue the company’s products and jobs, or to permit
the company to expand without extensive oversight.
Theories of how CSP and CFP are connected, as well as the evolving definition of CSP
(Carroll, 1999), both help explain why studies of the CSP-CFP link have proliferated (see Figure
1). With multiple dimensions and many stakeholders treated as indicators of CSP, and with
evolving specifications of their link to CFP, each new study can promise to contribute to a
9
definitive assessment of the CSP-CFP relationship. Each new study promises to isolate a
different dimension of CSP, or to reflect an improved conceptualization of the construct or its
theoretical connection to CFP. The diversity of CSP variables suggests that it may be
inappropriate to lump all studies and their effects together. As a result, we also analyze CSP-CFP
effects across nine categories of CSP.
METHODS
Study Selection and Inclusion
Our review of research on corporate social and financial performance encompasses
studies from 1972 through 2007. We selected studies to include in the meta-analysis in five
ways. First, we collected articles covered in the sixteen prior reviews of the literature that are
listed in Table 1. Second, we searched the ABI/Inform, JSTOR, and EBSCO databases using the
keywords “social performance,” “social responsibility,” “socially responsible,” “charitable,”
“philanthropy,” and “environment.” Third, we manually checked the table of contents of seven
of the top journals in the management field (Academy of Management Journal, Administrative
Science Quarterly, Journal of Management, Journal of Organizational Behavior, Organization
Science, Organizational Studies, and Strategic Management Journal). Fourth, we learned of
some papers through informal efforts, such as inquiries with colleagues, suggestions from
seminar participants where we presented related work, and papers mentioned by colleagues.
Fifth, we identified articles that were referenced by studies found using the four earlier methods.
To be included in this review, a study had to satisfy the following three criteria. First, the
manuscript had to include a measure of CSP for individual firms. Because CSP has traditionally
been defined broadly and operationally defined in many different ways, we considered any
empirical research that fit past conceptualizations. Second, the manuscript had to include a
measure of CFP for individual firms, usually an accounting rate of return or a market measure of
performance. Third, the manuscript had to report an effect size for the association between CSP
and CFP at the firm level or provide enough information for us to calculate an equivalent effect
size for this association. A total of 167 studies satisfied these criteria.
Because the majority of studies reported a zero-order correlation as the relationship
between CSP and CFP, in the other cases we converted the reported effects into the equivalent of
an effect size r (Rosenthal & Rosnow, 1991). In the case of multivariate analyses, we used
standardized regression betas if reported, or calculated the effect size r if a t-test, F-test, or Z-test
10
statistic was provided.
1
In such cases, the resulting effect size r is the equivalent of a partial
correlation that accounts for the influence of any control variables that were used in the original
analysis. In the case of t-tests that compared groups differing in their levels of CSP, or when
authors provided information on means, standard deviations, and sample sizes that could be used
together to calculate a t-statistic, we also converted such effects into an effect size r. All values
were coded so that positive effects represent a financial benefit for high CSP and negative effects
represent a financial cost for high CSP. Thus, the studies that were included could be
summarized in terms of a single indicator of effect size, which enabled us to make direct
comparisons across different studies.
2
In order to be conservative with respect to estimating the
CSP-CFP association, some studies were included if the text mentioned that the association was
tested but not statistically significant, in which case the effect size was presumed to be zero. All
effect sizes were computed by the second author, or computed by a doctoral student in finance
and checked by the second author, with an inter-coder reliability of .95.
Coding Procedure
We attempted to code the primary attributes of the empirical studies that the original
authors of the empirical studies consistently reported. Either the second author or a doctoral
student in finance coded each study, and both coded a subset of 50 studies in order to confirm
sufficient inter-rater reliability for continuous measures and inter-rater agreement for categorical
measures. The following five characteristics of each study were coded.
Type of CSP. Studies vary in the indicator used to measure CSP, sometimes opting to
examine a specific dimension of CSP and sometimes opting for a broad appraisal of CSP. We
sorted the collection of studies into one of the nine categories below, with the first five
representing specific dimensions of CSP and the last four representing different approaches for
capturing CSP broadly. If a single study reported results using measures that fell into different
categories, we sorted each separate result into its most appropriate category, resulting in a total
of 192 effects in 167 studies. However, we did not double-count by sorting any effect into more
than one category. Inter-rater agreement for categorizing the type of CSP was .96. These are the
nine categories, with the first five representing specific dimensions of CSP and the last four
1
We used the formula r = sqrt [F/(F+df)] when F-test statistics were reported, r = sqrt [t^2/(t^2+df)] when t-test
statistics were reported, and r = sqrt [Z^2/N] when Z-test statistics were reported (Rosenthal & Rosnow, 1991).
2
Because it was necessary to express the results of each study using a common statistic, we unfortunately had to
exclude 12 articles that reported effects using unstandardized coefficients, in cases when these coefficients could not
be converted into an effect size r based on other reported information.
11
representing different approaches for appraising CSP more broadly.
(1) Charitable contributions. This included cash donations or the establishment of a
philanthropic foundation. When the authors provided specific information, we excluded in-kind
donations, given that these often serve instrumental purposes such as marketing or the disposal
of obsolete inventory (Seifert, Morris, & Bartkus, 2003).
(2) Corporate policies. These studies examine a range of corporate policies, such as
companies that divested from apartheid South Africa, firms that did business in apartheid South
Africa and signed the Sullivan Principles for fair treatment of citizens, banks that offered low
income loans, and defense contractors that agreed to a code of ethics.
(3) Environmental performance. This category includes measures of impact on the
environment, whether objective or self-reported. We coded as objective any information
indicative of corporate environmental practices assessed by or reported to third parties, such as
the toxic release inventory, fines paid, and energy reduction expenditures. Objective data
includes self-reported data that is under regulatory oversight by third parties (e.g., Superfund site
liabilities). Self-reported data includes company insiders’ subjective perceptions of their
environmental performance. If a misdeed involved environmental practices, we included the
effect in this category rather than in category four below. So too, if self-reported data referred to
environmental performance, we included the effect in this category rather than in category six
below.
(4) Revealed misdeeds. This includes the public announcement of arrests, fines, guilty
verdicts in lawsuits, involuntary recalls, and other actions that indicate socially irresponsible
behavior.
(5) Transparency. The release of information by a company itself in publicly available
documents, such as annual reports, is used as an indicator of a company’s CSP. This category
includes all studies that use the disclosure itself—rather than the substance of what is being
discussed in the disclosure—as the indicator of social performance. The underlying aim of these
studies is to determine whether transparency pays. When researchers treated the specific content
disclosed as the indicator of CSP, the study was coded in one of the above categories capturing
that specific content (such as a misdeed).
Four categories reflect different ways researchers attempt to capture companies’ CSP
more broadly, rather than specific dimensions of the construct. These four forms of broad
12
appraisal include:
(6) Self-reported social performance. One method for capturing a company’s social
performance more broadly used surveys that ask companies to report their own conduct in
response to journalists’ or researchers’ inquiries. The difference between this and the previous
category, transparency, is that the present category involves a researcher or media outlet
approaching the company for its self-report, rather than a voluntary and active decision on the
part of the company to release information. For example, companies are asked to rate the
importance of social responsibility and philanthropy (Goll & Rasheed, 2004). Self-reported
social performance related to the environment is included only in the environmental performance
category above.
(7) Observers’ perceptions. Two methods of assessing corporate social performance rely
on external observers. The first method relies upon observers’ intuitive impressions of a
company’s CSP. Observers include industry insiders, executives at other companies, business
school faculty members, and undergraduate business students. The most common form of
observer perceptions involves ratings from the Fortune magazine database of most admired
companies (60.0%).
(8) Third-party audits. The second method that uses observers to assess corporate social
performance involves the systematic assessment of data by investigators who evaluate a
company along a set of criteria. We refer to these as third-party audits. The most common
examples are the Kinder Lydenberg Domini (KLD) index, which evaluates companies on eight
dimensions, its precursor developed by the Council on Economic Priorities (CEP), and
equivalent organizations in other countries. Other examples include the U.S. Department of
Labor and Working Woman magazine, which both award recognition for companies whose labor
policies are deemed especially progressive. We also include the assessments of investment fund
managers, except in the case of assessments that yield a marketed investment vehicle, which we
categorize instead as screened mutual funds. In the case of audits that reported results about one
distinct category of CSP already listed above, notably the environment, we included those
studies only within the distinct category.
(9) Screened mutual funds. A growing number of studies examine the performance of
mutual funds that use screens to limit the companies included in the funds to those meeting
certain criteria of social performance. These screens are considered indicators of included
13
companies’ general CSP. We excluded those papers that tracked companies screened on the basis
of their industry membership (e.g., gambling, tobacco) rather than on a company-level basis. We
include those studies that compare entire stock performance indices, such as those comparing the
Domini 400 versus the Standard & Poor’s 500.
Type of CFP. We list the specific measures of financial performance examined by the
original authors. Further, we coded measures into two broad categories: accounting-based
measures of financial returns (e.g., Return on Assets, Return on Equity) versus market-based
measures of financial value (e.g., stock returns, market/book value ratio). A small number of
studies used measures of financial performance that did not fit this dichotomy (e.g., bond returns
in D’Antonio, Johnsen, & Hutton, 1997; observer ratings of “economic performance” in
Clarkson, 1988; dividend yields in Greening, 1995) and these were included in overall effects but
not listed in the breakdown by category. Inter-rater agreement for categorizing CFP measures
was .97.
Number of firms included. We recorded the total number of firms that were included in
a study’s sample. For two sets of studies, this was not always possible. First, for studies of the
stock market reaction to specific events, the authors often reported the number of events rather
than firms, and a given firm could generate more than one of the events. Second, studies of
screened mutual funds rarely listed the number of underlying securities. However, some studies
compared a specific portfolio of companies to a benchmark consisting of an entire marketplace,
in which case we noted as the number of firms the specific portfolio that the authors described.
Inter-rater reliability for determining the number of included firms was 1.00.
Timing of CSP and CFP measurements. We recorded the year or range of years for
both the CSP and CFP measures. Although many studies had a stated goal of examining the
influence of CSP on CFP (indicating a particular direction of causality), there are three main
choices regarding the timing of these measures: the measure of CSP precedes the measure of
CFP; the measure of CFP precedes the measure of CSP; or they are measured concurrently
(operationally defined as occurring within 12 months of each other). Event studies—in which
researchers observe the stock market reaction to discrete news announcements—were coded as
having the CSP measurement preceding CFP because the timing of both CSP and CFP were
specified precisely in such studies. We coded as concurrent those studies in which the
measurement of CSP and CFP were nested. For example, Alexander and Buchholz (1978)
14
measured CSP in 1971-1972 and CFP for the period 1970-1974. We also coded as concurrent
any studies of screened mutual funds that were actively managed, with the logic that fund
managers continually monitor the current social performance of firms included in their
portfolios. However, we coded CFP to precede CSP in those studies in which researchers
conducted retrospective analyses of the financial performance of stocks that were later included
in screened funds. Inter-rater agreement for the timing of CSP and CFP measures was .94.
Control variables. We noted whether control variables were incorporated into the
estimate of the CSP-CFP effect size. We coded for the most common control variables of
industry, firm size, and risk. Some studies are coded as having no control variables even though
the authors did include controls in the study because the effect size for the CSP-CFP value was
taken from a zero-order correlation matrix that did not account for the effect of control variables.
In addition, we coded the methodological attribute of whether effect sizes resulted from event
studies. These effects are coded as including all control variables because, in event studies, each
company serves as its own matched control when its stock price is compared before versus after
a news announcement.
Industries can vary in their social responsibility practices. Some industries may be
considered more “dirty” than others, such as heavy manufacturing or chemicals; some industries
may be growing versus declining; and stakeholders may vary in the degree of regulation and
scrutiny to which they subject different industries (Bowman & Haire, 1975; Griffin & Mahon,
1997; Spencer & Taylor, 1987). Reporting rules that apply to entire industries can promote
responsible behavior, but can also constrain it (i.e., mandating strict itemization for charitable
donations). We considered industry to be controlled either when it was explicitly entered as a
control variable in the authors’ original analyses, when it was incorporated into the research
design using samples matched on industry, or when the study sampled from within a single
industry.
Firm size is a worthwhile control variable because larger firms may have greater
resources for social investments, attract greater pressure to engage in CSP or—just the
opposite—succumb to a diffusion of responsibility (Wu, 2006). Wu’s (2006) recent review
regarding firm size indicated a small positive relationship between firm size and CSP and
between firm size and some measures of CFP. We considered firm size to be controlled either
when it was explicitly controlled in the original analyses or when the study sampled from firms
15
of similar sizes (e.g., the Fortune 500 focus on revenues, or assets, or the total number of
employees).
Firm risk is also an important factor to control because stable firms with lower risk
generally appear more likely to engage in CSP (Alexander & Buchholz, 1978; Brown & Perry,
1994; Chen and Metcalf, 1980; Cochran & Wood, 1984). Moreover, CSP has been linked to the
risk profile of firms (Orlitzky & Benjamin, 2001). Indeed, given the strong relationship between
risk and financial returns, O'Neill, Saunders, & McCarthy (1989) found that their CSP-CFP
correlations disappeared for risk-adjusted financial performance measures. We considered risk to
be controlled when it was included in the model explicitly as a control variable (e.g., regression
models or the CAPM financial model), when authors used a risk-adjusted measure of CFP or, in
the case of portfolio analyses, when the authors or mutual fund managers who constructed the
portfolio selected companies based on risk levels equivalent to a control sample or the larger
stock market.
Finally, we coded whether effect sizes resulted from “event studies”—in which the stock
price of a given company is observed before and after a specific event or announcement—
regardless of which of the nine specific types of CSP was represented by the event. These studies
are unique in that they are unusually precise because companies serve as their own matched
control and, when done correctly (McWilliams & Siegel, 1997), confounding events are
excluded. Event studies also isolate a specific mechanism for any association between CSP and
CFP, namely, the stock market’s reaction to news regarding a firm’s CSP. Inter-rater agreement
across all controls was .92.
RESULTS
Table 2 lists the studies included in this meta-analysis, the key attributes of each study,
and the effect size r for the CSP-CFP association. Table 3 summarizes the results of our
analyses, including the effect size overall, by timing of the CSP and CFP measures, and by type
of CFP measure, with all of these listed for all studies and separately for each CSP category.
Table 3 also lists the number of studies and total number of companies in each category of study,
the significance test for the size of the CSP-CFP effect (Rosenthal, 1991), and the results of a
heterogeneity analysis that indicates whether there are substantial differences in effect sizes
across the various studies (Hedges & Olkin, 1985; Rosenthal, 1991).
16
---------------------------------------
Insert Tables 2 and 3 about here
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The diversity of CSP indicators and measures raises questions about whether these all
capture a single underlying construct. However, because of the widespread interest in corporate
efforts to do good and the contention that all indicators and measures of CSP capture, in some
way, the underlying propensity of a company to do good, we did calculate a single, cumulative
effect for all 192 effects. This analysis reveals a mean effect size of r=.132. As described above,
in the case of studies reporting the results of multivariate analyses, these effects are the
equivalent of a partial correlation that accounts for the effects of control variables. The median
effect size (r=.082) and weighted average effect size (r=.101), which accounts for the size of
each study, were lower than the mean effect size. That suggests that the overall mean is inflated
by large effect sizes from a small number of studies that used relatively smaller samples of
companies. When effect sizes are compared across the types of CFP measures, CSP generally
appears to predict accounting-based measures (r=.180) better than market-based measures
(r=.104). That said, market-based measures may be more appropriate for gauging the impact on
shareholder wealth (Mackey, Mackey, & Barney, 2007).
To examine the potential influence of moderator variables, we conducted additional
analyses. For results aggregated across all types of CSP, we did not find an influence on effect
sizes from including (or excluding) control variables, nor were there large aggregate differences
between studies in which the timing of CSP measures preceded, followed, or concurred with
measures of CFP. However, for each of the four studies that included all three types of timing
(Boyle, Higgins, & Rhee, 1997; McGuire, Sundgren, & Schneeweis, 1988; Preston & O’Bannon,
1997; Seifert, Morris, & Bartkus, 2003)—which arguably offer the most precise comparison—
there is a monotonic fall in the effect size from CFPCSP (average r=.275) to concurrent
(average r=.120) to CSPCFP (average r=.080). All four studies revealed this same pattern. A
binomial probability test suggests that this ordering of responses from the highest to lowest CSP-
CFP effect size is unlikely to occur by chance alone. Given that there are six different ways to
place the three types of timing in order from the highest to lowest, the chance of each study
showing this pattern is 1/6. The probability that all four studies would conform randomly to this
pattern is less than eight in ten thousand.
17
Event studies—which map precisely the stock market effects of releasing news regarding
CSP—appeared to have slightly larger effect sizes than those of conventional studies (r=.175
versus r=.118; median effects r=.189 versus r=.067). In event studies, the impact of a company’s
social performance is measured through a comparison of the stock market’s valuation of that
company’s stock preceding and following the announcement of positive or negative news. The
use of event-study methodology in research on the link between CSP and CFP has been
criticized (McWilliams & Siegel, 1997), most notably because these studies have used long
event windows, introducing the possibility that other events account for stock price movement,
and because, indeed, these studies have not adequately controlled for other confounding events
that could account for abnormal returns. Nonetheless, the consistency of our results for event
studies suggests that the market may read the announcement as new information indicating
future financial performance. The market may infer the company’s social performance to be an
indicator of the quality of management, to augur consumer demand for the firm’s products and
services as a result of the company’s social performance, to promise higher or lower costs
incurred from other stakeholders, or to provide greater insurance against damaging events
(Freedman & Stagliano, 1991; Peloza, 2006). Social performance may also attract demand for
the stock among investors with strong preferences for social responsibility (Mackey, et al., 2007)
or among market investors in general who believe that other investors will adjust their demand
for a firm's shares, for example if the company is now worthy of inclusion or exclusion from
socially screened funds. Alternatively, the market may simply assume that doing good generates
financial gains through some unspecified mechanism.
To investigate the relationship between CSP and CFP with greater precision, we sorted
studies into the nine categories described above and analyzed the cumulative effect within each
category. Effect sizes differed significantly across these categories, F(8, 183) = 4.12, p<.001. We
summarize the results by category in Table 3 and below, reporting the overall effects as well as
any noteworthy influence of moderator variables for those analyses with sufficient power to
warrant them.
Charitable Contributions
Thirteen studies examined the effect of corporate financial performance upon charitable
contributions. The average r was. 239. The effect was stronger when CFP was measured prior to
the philanthropy (r=.332) or after (r=.292) than when the two were measured concurrently
18
(r=.198). Studies using accounting measures of financial performance showed larger effects
(mean r=.281, median r=.203) than those using market-based measures (mean r=.147, median
r=.055). Taken together, these findings suggest that slack resources promote generosity towards
charitable endeavors (Seifert, et al., 2003). Companies are more able or willing, or they face
stiffer pressure, to donate when they do well.
Corporate Policies
Corporate policies are the one form of social responsibility without a significant
association to financial performance (r=.019, ns, weighted r=.038, median r=.005). However,
there is a trend in which prior financial performance does predict future socially responsible
policies (r=.111), but concurrent (r=.-.031) and CSPCFP (r=.011) studies do not reveal any
meaningful trends.
Environmental Performance
A large sample of 44 studies examined environmental impact, including objective
measures such as the toxic release inventory, fines paid, and energy reduction expenditures, as
well as subjective perceptions of environmental performance. Effect sizes were larger for self-
reported (r=.190) than for objective environmental measures (r=.095).
Revealed Misdeeds
Announcements of negative events, such as regulatory violations, lawsuits, and fraud,
were the topic of 16 studies, generating an average r of .223, with a smaller r=.104 average when
weighted by sample size, due largely to the result of one outlier (Jarrell & Peltzman, 1985;
r=.563, N=22). These findings are consistent with Frooman’s (1997) earlier meta-analysis,
finding that the stock market reacts negatively to news announcements that a company has done
something socially irresponsible. Although companies are punished at the time misdeeds are
exposed (r=.227) and afterward (r=.239), a company’s financial performance—whether good or
bad—does not predict future revealed misdeeds (r=-.004). When misdeeds are revealed, the
market may interpret them as an indicator that the firm will incur greater costs from penalties or
from stakeholders less willing to cooperate, or will suffer lower revenues due to reduced future
demand for the firm’s products and services resulting from the company’s damaged reputation in
consumers’ eyes. Exposed misdeeds may also be read by the market as an indicator of poor
judgment among top managers, or of imminent decline in demand for the stock as investors with
a preference for responsible companies shy away from it.
19
Of course, this effect only captures the wealth effects for those caught doing some
misdeed. The wages of unrecognized sin may be quite handsome. Further, the effect is larger for
market-based measures (r=.239) versus accounting-based measures (r=.113), suggesting that the
mechanism for this effect is more likely to be the reaction of investors, rather than revealed
information about the health of corporate operations. This weak link to an accounting
performance measure is consistent with Staw and Szwajkowski’s (1975) work. They found that
the influence of having a munificent environment on corporate crime was related to the
munificence of the industry environment, rather than that of the individual firm.
Transparency
Fourteen studies examined the influence of transparency. The average effect size r was
.078 and median was r=.024. Effect sizes are larger for those studies that control for firm size
(r=.102 versus r=.034), but smaller for those studies that control for industry (r=.046 versus
r=.156). The slight positive trend in the mean but not median value can be attributed largely to
two studies (Anderson & Frankle, 1980; Verschoor, 1998) that did not control for industry.
Results were stronger for CSP measured before CFP (r=.191) than for CFP measured before CSP
(r=.079) or concurrent measurement (r=.029). Taken together, these results suggest that the
market reacts positively to company disclosures regarding socially responsible behavior.
Self-reported Social Performance
For nine studies using self-reported social performance, the average r was .210 (weighted
r=.128). The largest effects were found in one study in which executives were asked to report
both social and financial performance of the company in a single survey (Reimann, 1975, r =
.570, N=19) and in one study analyzing the relationship between responses of rank-and-file
employees and the company’s financial performance of the previous five years (Hansen &
Wernerfelt, 1989, r=.482, N=60). Effect sizes were smaller for studies that controlled for risk
(r=.039 versus r=.292), but larger for studies that controlled for industry (r=.312 versus r=.076).
The three of these studies that controlled for risk (Aupperle, Carroll, & Hatfield, 1985; O’Neill et
al., 1989; Starik, 1990) together reveal an average effect of r =.039. There did not appear to be
an overall influence based on timing, given that the CSPCFP association of r=.272 was based
on a single study, versus r=.200 for CFPCSP and r=.171 for concurrent measurement.
Observers’ Perceptions
20
For the 25 studies that use observers’ perceptions, the average r is .287. Studies using
accounting measures of financial performance reveal a stronger relationship (r=.320) than those
using market-based stock performance (r=.190). The effect size is smaller for studies that control
for risk (r=.167 versus r=.316), but larger for studies that control for industry (r=.440 versus
r=.131). When analyzed according to timing, the findings reveal a stronger relationship between
CFP that was measured prior to CSP (r=.328) than either concurrent CFP and CSP (r=.279) or
CSP measured prior to CFP (r=.157). In general, these studies show that there is a reasonably
sized relationship between corporate social performance, as measured by observers' perceptions,
and corporate financial performance. However, the results suggest that the strongest direction of
causality goes from CFP to CSP, which is consistent with the possibility that observer
perceptions are biased by a company’s recent financial performance (Brown & Perry, 1994).
Third-party Audits
The 28 studies that rely on third-party audits to assess CSP reveal an average r of .080
and an average r weighted by sample size of .037. Studies that used accounting measures of
financial performance had an average r of .114 versus .059 for those using market-based
measures of financial performance. When analyzed according to temporal direction, the findings
reveal a stronger relationship when CFP was measured prior to CSP (r=.142) compared to
concurrent measurement (r=.041) or measuring CSP prior to CFP (r=.096). Taken together, these
28 studies suggest a mild relationship between CSP and CFP, but this link is unduly influenced
by large effect sizes among studies with smaller samples (e.g., Shank, Manullang, & Hill, 2005;
r=.261, N=11) and appears to flow primarily from CFP to CSP, rather than the other way around.
Screened Mutual Funds
A growing number of studies examine the performance of mutual funds that use screens
to limit the companies included in the funds to those that meet certain criteria of social
performance. The increasing number and sophistication of these studies warrant a detailed
review by financial economists. Our analysis of 29 studies in this category reveals an average r
of .024 (median r=.021). Within this group of studies most effects were negligible, but there
were also several outliers showing gains for socially screened mutual funds relative to other
funds (e.g., Luck & Pilotte, 1993; r=.324) and others showing losses for screened funds relative
to comparative benchmarks (Schroder, 2003; r=-.515). Because the number of underlying
21
companies included in these funds was typically not reported, we could not conduct significance
testing nor calculate weighted means.
Summary Patterns
A formal meta-analysis like ours is preferred to a simple count of the positive, negative
and non-significant effects (Hunter & Schmidt, 1990). Nevertheless, when taken together, it is
interesting to observe that across all of the effects we coded from these studies, 58% are a non-
significant relationship, 27% a positive relationship, and 2% a negative relationship between
CSP and CFP. An additional 13% did not report sample size, so it was not possible to test for
significance. The meta-analytic results and the results of the vote counting procedure corroborate
each other in this instance—companies do not appear to suffer financially for their socially
responsible investments.
Critics of meta-analysis have argued that biases in the publication criteria of editors are
reflected in biased samples of studies used by meta-analytic researchers. In particular,
statistically significant results are more likely to be published (see Rosenthal, 1991). We address
this “file drawer problem” in two different ways. First, we gathered unpublished manuscripts
through informal efforts, as described above, in order to access studies from researchers’ file
drawers. Second, we computed a sensitivity analysis to measure just how many items must
languish in file drawers before the results of this meta-analysis would be affected. Using
Rosenthal’s (1991) formulas, we found that it would take at least 15,767 studies with an average
effect size of zero for the CSP-CFP association to no longer be statistically significant at p=.05.
That is, it would require over 82 times more null effects than we have here to render the current
results non-significant.
The sensitivity analysis gives us some confidence in these results. However, the absolute
size of this overall CSP-CFP effect is considered to be “small”: “small” effects are defined as
those around r=.10; effects are considered to be “medium” if they are about r=.30 and “large” if
they are greater than r=.50 (Rosenthal & Rosnow, 1991: 446). We did a second sensitivity
analysis to address the number of studies that would need to languish in file drawers to bring the
average effect up to the “medium” level. It would take at least 321 additional studies with a
medium-to-large average effect size of r=.40 for the overall CSP-CFP association to reach the
criterion for a medium effect size of r=.30. The 321 medium-to-large effects needed to boost the
present small effect to just barely medium-sized would amount to 1.67 times more effects than
22
the total body of 192 currently included. Using a more liberal criterion, it would take at least 130
additional effects with r=.40 to reach a moderate effect size of r=.24, or 68% more studies than
the current pool of available research from the last 35 years. To underscore just how unlikely this
might be, only 18 of 192 effects (9.4%) in our current dataset reach r=.40 or above.
DISCUSSION
After thirty-five years of research, the preponderance of evidence indicates a mildly
positive relationship between corporate social performance and corporate financial performance.
The overall average effect of r=.132 across all studies is statistically significant but, on an
absolute basis, it is small (Rosenthal & Rosnow, 1991), particularly considering the weighted
average of r=.101 and the median value of r=.082. These meta-analytic results lead to four broad
sets of implications.
Financial Impact of CSP
Companies do not seem to be richly rewarded for engaging in CSP. Friedman’s (1970)
concern about theft, however, may be misplaced: companies are not overtly penalized for CSP
investments. Penalties only accrue to firms that do wrong and perhaps only if they are caught. In
sum, the financial implications of CSP can be best understood as an interrelated set of three
findings.
First and most clear, revealed corporate misdeeds are costly to companies. Our analysis
of the financial impact of wrongdoing in 16 studies echoes Frooman’s (1997) earlier meta-
analytic result. Although the anecdotal evidence about recent scandals highlights just how grave
the consequences can be for companies and their executives who are caught doing wrong, it is
very difficult to estimate the likelihood that these kinds of misdeeds will be unearthed
(Schnatterly, 2003). Dubious firms may risk these sanctions because crime just might pay.
Second, on the other side of the ledger—doing good—our findings indicate that CSP
does not systematically destroy shareholder value. The overall effect of CSP on CFP is positive.
Only 2% of the individual studies reported a significant negative effect. Across our analyses by
CSP type, the average effects were nearly always positive and the occasional negative values
were negligible. There may well be less affirmative support for CSP’s positive financial impact
than there is for the negative financial impact of doing wrong, but managers who dedicate
corporate resources to social performance do not seem to be imposing a direct cost on their
shareholders. Companies can do good and do well, even if companies do not always do well by
23
doing good. This result provides some legitimacy for CSP when high-status public figures, such
as Kofi Annan (2001), so publicly call for CSP investments (Walsh, 2005).
Third, our findings suggest that CFP would seem to be an unlikely rationale or
justification for pursuing CSP. The small overall relationship between prior CSP and subsequent
CFP, the varied results across categories of CSP, and questions about causal direction all suggest
that more lucrative financial impact might attend investments other than CSP, providing better
returns on the next marginal dollar of corporate spending. Given these relatively low returns on
investment, unearthing alternative motivations for CSP warrants systematic inquiry, as we
suggest below.
Variation
CSP has come to encompass multiple dimensions, both in its theoretical specification and
in its empirical operational definition. Our findings indicate that those dimensions bear different
relationships to CFP. Relative to the overall effect size, the association is stronger for charitable
contributions, revealed misdeeds, self-reported social performance, and observer perceptions.
The CSP-CFP relationship is weaker for corporate policies, transparency, third-party audits, and
screened mutual funds.
Stronger results. In the case of charitable contributions, firms that performed well—and
particularly those with strong accounting performance—tended in the future to donate more
money and create more philanthropic foundations. For revealed misdeeds, we found no evidence
that poorly performing companies are more likely to engage in disreputable behavior. However,
when disreputable behavior is revealed to the public, it results in current and future penalties in
financial performance, particularly by the stock market. In the case of self-reported social
performance and observer perceptions, the CSP-CFP relationship may reflect a vulnerability to
halo biases such that CSP assessments are consistent with financial performance (Brown &
Perry, 1994).
Weaker results. Socially responsible corporate policies appear to be somewhat more
likely for companies that enjoy past financial success, but the presence of those policies does not
predict current or future financial success. Transparency appears to be valued by the market, but
third-party audits and screened mutual funds reveal effects of small magnitude, in particular
when CSP is measured first.
24
Signal in the noise. This mixed set of effects reveals just how complex the reality of the
CSP-CFP relationship may be, and just how difficult it is to measure and assess that relationship.
The complex reality emerges when results are considered in terms of the causal mechanisms they
suggest. Effects showing a positive relationship linking prior charitable contributions, revealed
misdeeds, and transparency to subsequent CFP suggest that it is the appearance of CSP, rather
than its substantive impact on a company’s operations, that affects subsequent financial
performance. Yet the larger effect sizes for observer perceptions and self-reported social
performance, compared to those for third-party audits and mutual fund screens, indicate that
appearances can be deceiving. Reporters and observers alike may succumb to biases that
confound CSP with CFP. The impact of environmental performance on CFP may result from the
attractiveness of the company to shareholders, customers, and employees, but it may also be a
function of the substantive reduction in costs produced by environmental performance. Moving
in the other causal direction, effects showing a positive relationship between prior financial
performance and subsequent charitable contributions and corporate polices suggest that wealthier
firms have the slack resources to engage in these practices, or that they encounter greater
pressure to do so. So too the link between prior CFP and self-reported social performance and
third-party audits suggests that more prosperous firms do more—or perceive that they do more—
–of what third-party auditors are likely to monitor.
The variation in results across types and measures of CSP may itself be the most
important signal to emerge from the 35 years of research on the connection between CSP and
CFP. That variation tells us how complex the relationship might be to unravel, which carries
important implications for how future research might make progress in wrestling with that
complexity. We turn to those implications below.
Direction of Causality
We find relatively consistent evidence that the link is as strong, if not stronger, when CFP
predicts subsequent CSP than the reverse causality, particularly for those studies including all
three types of measurements, and for the areas of charitable contributions, observer perceptions,
and third-party audits. While these results reinforce findings from two prior meta-analyses
(Allouche & Laroche, 2005; Orlitzky, et al., 2003), these findings tend to get overlooked.
Motivation for studying the link may revolve around efforts to establish the positive financial
effects of CSP, but the evidence of an association should direct our attention equally to
25
understanding how CFP ultimately gives rise to CSP, and not just the reverse. Although accounts
exist of why CFP makes subsequent CSP possible—slack resources or opportunism (Preston &
O’Bannon, 1997)—little has been written about the mechanics of how companies with strong
CFP end up engaging in greater CSP. That too has implications for future research, which we
elaborate below.
Assessing CSP
Beyond the relationship between CSP and CFP, our meta-analysis permits assessment of
CSP along three dimensions: its legitimacy, its value, and its effectiveness. First, is CSP
legitimate—is it a legitimate activity for society’s economic institutions? Despite some
normative opposition to the use of corporate resources to advance social purposes, our results
indicate that no damage is done to the purported owners of those resources. This means that CSP
cannot be delegitimized on economic grounds. Our findings may stop short of offering economic
grounds for a heavy investment in social performance, but by revealing no systematic negative
effects on CFP, our findings do suggest that it is not economically illegitimate for companies to
engage in CSP. It would seem that on economic grounds, the positive findings of this meta-
analysis—however mild and attenuated those findings might be—support the legitimacy of CSP.
Second, is CSP of value for companies? Is it worth their effort and investment? While
CSP may not transgress economic duties, it is open to question whether or not valuable benefits
accrue to companies that engage in CSP. The mild effect sizes for CSP open the possibility that
other areas of corporate activity are likely to have larger effects on financial performance. For
example, Wieser’s (2005) meta-analysis of research and development found an average 29%
return on research and development, with a lower bound of 7%. Nonetheless, we suspect that
well performing firms ignore CSP at their peril. Failure to invest in CSP can leave a company
hampered. As just one example, consider Wal-Mart’s late awakening to CSP. It has generated
enough opponents to stall its efforts to buy a bank and launch a credit card business (Leonhardt,
2006). Post, et al. (2002) spoke at length about how a firm needs society’s license to operate.
Given the positive CFPCSP link, it may be that wealthy companies risk their “operator’s
license” if they avoid such investments (Campbell, 2007).
Third, is CSP effective? It may be legitimate for companies to concern themselves with
CSP, and the returns to companies may make some level of commitment worthwhile, but are
corporate efforts in social performance effective in achieving benefits for society? Here,
26
unfortunately, research remains meager, and CSP-CFP studies say little, leaving perhaps the
most fundamental questions unexplored: for whom are corporate efforts to do good effective and
for what purposes are company efforts effective?
In all, CSP proponents and opponents alike will find evidence for both joy and concern in
the implications of the results reported here. For proponents, the positive relationship found
across most categories of studies, no matter its magnitude, provides an economic defense for
CSP. Even CSP mavens are excited by the financial implications of these results. In an article
entitled “Holy Grail Found: Absolute, Definite Proof CSR Pays Off,” Kelly (2004:5) took stock
of the earlier findings (Orlitzky et al., 2003) and declared that socially responsible investors can
cash in on this knowledge: “Knowing that responsible companies outperform, savvy investors
have a head start in locating future winners before the broad market does.” Yet the results are not
strong and, across the nine categories, they often recede even further when the proper controls
are put in place or when only the effect of CSP upon subsequent CFP is examined. Rather than a
salubrious convergence of doing good and doing well, our meta-analytic results may indicate that
CSP advances neither objective. A mild effect size may be the product of corporate efforts to do
just enough CSP to avoid running afoul of social critics but not enough CSP to incur significant
costs that would incite economic critics.
For opponents, the small effect sizes place CSP investments in a suspect light. The
stronger relationship between preceding CFP and subsequent CSP, when combined with the
weak CSPCFP result, suggests that such investments might be a waste of free cash flow.
These monies might be put to other more productive uses or returned to the shareholders if no
other positive Net Present Value investments are available. On the other hand, it may be that in
this era of intense corporate scrutiny, CSP investments do provide some latitude for the firm to
pursue its wealth objectives.
Ironically, 167 studies later, managers may be exactly where they were in 1972: seeking
criteria to judge when CSP makes sense and guidance about how to advance both CSP and CFP,
if they are both worthy of pursuit but not entirely consistent. The continuing quest to substantiate
or repudiate a link between CSP and CFP may be of little value. While the quest is seductive, it
may be time to let this particular question rest. There may be other aspects of the CSP-CFP
relationship that are now more important to investigate.
FUTURE DIRECTIONS
27
If fundamental tensions persist and major questions linger, what are the implications for
subsequent research? One option would be to drop the topic altogether. If CSP contributes little
economically, then those caught in the zeitgeist of investor capitalism might argue that it is no
longer worthy of attention. However, the mere fact of CSP should puzzle these proponents (see
Esrock & Leichty (2000) and Maignan & Ralston (2002) for documentation of companies’ CSP
activities). If CSP has limited financial impact, what explains companies’ investments in it? In
addition, some scholars will challenge the premise that CSP has limited economic value (Barnett,
2007; Orlitzky et al., 2003). They might argue that if only the relationship were better specified
and operationally defined, then stronger results would emerge or understanding would develop
regarding contingencies moderating the relationship. Therefore, we see two paths forward. The
well-traveled one may yield some additional insight, but we fear it will exact a high opportunity
cost. After all, there are only so many people who investigate these questions. It may be time to
take the path less traveled. This other path invites researchers to examine broader questions,
prompted by our meta-analytic results, about the relationship between the corporation and
society. We consider each path in turn.
The Well-Worn Path of Refinement
Virtually all past reviews of the CSP-CFP relationship call for more and better research
into the CSP CFP relationship (Margolis & Walsh, 2001:20-24). We will not make that call
but we acknowledge that other scholars may be drawn to continue the quest. Future efforts to
examine the link should endeavor to do it well. Anyone who hopes to publish the 168
th
study
must meet four criteria. First, their data about CSP should consist of behavioral measures, such
as quantifiable outputs or third-party audits, and the assessment process for those must be clear
and open to validation. We suggest that researchers find alternatives to the convenient yet
difficult to validate measures such as the Fortune ratings of admired companies and company
insiders’ self-reported impressions. Second, the study must control for at least industry, risk and
size, if not R&D spending and advertising expenditures (McWilliams & Siegel, 2000). Third,
researchers need to assess CSP and CFP at different time periods; the direction of causality must
be theoretically articulated and empirically assessed. In our data, only 34% of effects (66 of 192)
featured measures of CSP that temporally preceded measures of CFP, surprisingly low if the
aspiration has been to establish a sequential link. Fourth, the CSPCFP causal mechanisms
need to be articulated and tested. Too many studies speculate about mechanisms that explain
28
results or end with a call to investigate them. It is time to study mechanisms systematically. CSP
investments might help to recruit a high quality workforce (Backhaus, Stone, & Heiner, 2002),
attract a unique customer base (Sen & Bhattacharya, 2001), or provide insurance against some
unforeseen crisis (Schnietz & Epstein, 2005). CSP might bear upon CFP in some other way as
well. Although it is important to test the conditions under which CSP is more likely to contribute
to CFP (Barnett, 2007; Mackey et al., 2007; Rowley & Berman, 2000), it is as essential to
document the causal chain of connection. No matter how well measured the constructs, research
must move beyond simply assessing the magnitude of the CSP-CFP relationship. Research must
now show how CSP comes to bear upon CFP.
With these minimum standards in place, research on the link between CSP and CFP
should improve. But toward what end? Some scholars (Orlitzky et al., 2003) see merit in further
studies, especially those that examine the conditions under which CSP will influence CFP
(Barnett, 2007; Rowley & Berman, 2000). In contrast, we wonder whether ongoing research
efforts might be better devoted to other questions. Another set of CSP-CFP studies is unlikely to
change the general trend reported here, as our sensitivity analyses indicate, let alone convince the
opponents of the value of CSP (Tetlock, 2000).
A New Path of Exploration
Perhaps Bragdon and Marlin’s (1972) hope to stop sparring with economics can be
realized these 35 years later. The core dilemma may no longer be how to pursue social good
when it is seen to come at the expense of doing well. Globalization has turned up the competitive
heat on firms, but it has also brought them face-to-face with human misery of all kinds.
Corporations face public pressure to redress far-reaching societal problems (Margolis & Walsh,
2003) while keeping pace with market pressures to produce competitive products and financial
pressures to reduce costs and improve returns. The contemporary challenge facing managers and
scholars alike is therefore to learn how companies can navigate in a world that demands a firm
do good and do well. Understanding how companies endeavor to do both, side-by-side, might
best command scholarly attention in the years ahead. If the fundamental objective is to
understand the coexistence of CSP and CFP, then three compelling questions deserve as much
attention as any effort to determine if and when CSP pays: (1) Why do firms pursue CSP? (2)
How do companies pursue CSP? (3) How do firms pursue CSP and CFP simultaneously?
29
Why do firms pursue CSP? Consistent with past meta-analyses, we find that companies
with superior CFP are more likely to engage in CSP (Allouche & Laroche, 2005; Orlitzky et al.,
2003). What motivates these companies to engage in CSP? By understanding why and how the
firms more likely to engage in CSP—those high in CFP—do so and what benefits arise (for them
and for their intended beneficiaries), researchers may generate insight into why and how
companies in general should engage in CSP.
Research could begin by examining what propels companies that do well to attempt to do
good, perhaps even comparing them to other successful companies that do not do as much. At
least four motivations seem plausible: risk mitigation, external expectations, generalized
reciprocity, and guilt. As firms get bigger or more prosperous, reputation risks are more costly.
CSP may be a means of reducing risk—a means of buying reputation insurance (Peloza, 2006).
Indeed, well-known companies often find themselves to be targeted by social activists (Spar &
LaMure, 2003). Second, as firms become more prosperous and thus more prominent, external
expectations of their generosity may escalate, leading to an increase in appeals and pressure to
give. The CFPCSP results we found also suggest that society may not be inclined to turn to
struggling firms for help. A firm’s first order of business is to create a high quality good or
service and sell it at a fair and profitable price. Only successful firms may be asked for additional
social investments (Campbell, 2007). Third, executives within a financially successful firm may
initiate CSP due to a sense of reciprocity. Much as successful individuals begin to assume they
owe something to those around them, so too may those who run successful companies (Frank,
2007). A fourth motivation puts a harder edge on reciprocity. Guilt, rather than gracious
reciprocity, may also propel companies that do well to endeavor to do good. Guilt has been
shown to arise from distress over inequity—when people “benefit more than others do” and feel
unduly rewarded—and it motivates efforts to reduce those inequities (Baumeister, Stillwell, &
Heatherton, 1994: 260). Guilt about reaping rewards without compensating others equitably may
trigger managers at firms high on CFP to engage in CSP.
As managers’ motivations gain attention from researchers, there is bound to be variance.
Why do some companies in an industry lead (e.g., Target) and others follow (e.g., Wal-Mart)?
Some firms resist these pressures altogether. Why do companies in an industry shy away from
these investments (e.g., ExxonMobil), while others trumpet their investments so loudly (e.g., BP
and Shell)? Much remains to be learned.
30
How do firms pursue CSP? Beyond the motivations to pursue CSP, systematic
understanding of how companies pursue CSP is essential. A first vein of research would
investigate how companies establish a general commitment to CSP. How does CSP gain traction
within companies? What rationale within the company do managers use first to “sell”
(Andersson & Bateman, 2000; Bansal, 2003) and subsequently to explain (Sonenshein, 2006)
their involvement in CSP? A second vein of research would examine the specific commitments
that companies make. Descriptive research needs to be done to catalogue the sorts of activities
and initiatives in which companies engage, documenting the methods companies use to engage
in CSP and unearthing the factors that may account for variance in corporate activities and
practices. Esrock and Leichty’s (2000) and Maignan and Ralston’s (2002) look at firms’ self-
presentations on their web pages is just a start. This descriptive research effort would set up
theory-building research into how companies pursue their CSP investments, augmenting the
early work that points to geographical and network influences on CSP choices (Galaskiewicz,
1997; Marquis, Glynn, & Davis, 2007).
Doing good and doing well. The mechanics of how companies engage in CSP implicate
important and often overlooked managerial questions. Thirty years ago, Merton (1976: 88)
wondered, “Does the successful business try first to profit or to serve?” It is a question, he
observed, that “must at one time or another plague every corporate executive.” The simple
answer “do both,” Merton recognized, “escapes the dilemma by swift flight from it,” begging the
question of “how to do both in appropriate scale.” The challenge for companies lies in doing well
and doing good (Margolis & Walsh, 2003; Paine, 2002; Porter & Kramer, 2006; Vogel, 2006),
whether it is finding ways for the two to converge or finding ways to manage the tensions, real or
only apparent, that managers experience in trying to do both.
It is essential for future research on CSP to investigate how organizations and managers
do both. What are the structures, strategies, processes, and practices that companies and the
individuals within them use that enable them to do both? Akin to research on ambidexterity
(Tushman & O’Reilly, 1997), which explores how companies pursue multiple and sometimes
competing objectives, future research can identify the organizational conditions and practices
that prove most effective for facilitating coexistence of efforts to do good and do well, and which
organizational attributes impede those endeavors. What matters are the organizational practices
that advance the impact of CSP investments not only upon the company itself (Bartel, 2001;
31
Porter & Kramer, 2006) but also upon the intended beneficiaries of those investments (Margolis
& Walsh, 2003). Research that investigates how to do good and do well can accomplish so much
more than simply extending the 35-year quest for a link between the two.
LIMITATIONS
Although we have tried to provide the most comprehensive review to date of empirical
research reporting on the relationship between CSP and CFP, several factors limit the
conclusions that we can draw. First, the meta-analysis is limited to the collection of studies that
are available for inclusion. That is, we can only examine what is and not what should be. Our
findings are qualified by all of the same limitations of the underlying empirical work that it
incorporates. We would have welcomed research with better measures, more control variables,
and a greater sensitivity to temporal sequencing. They just do not exist. We are also limited by
the possibility that our collection of studies excludes unpublished work, although our efforts to
obtain such work and the results of our sensitivity analysis mitigate this concern. Second, as we
discussed above, some studies had to be excluded from our analysis because it was not possible
to summarize their results in terms of a consistent effect size r. Third, we were prevented from
including significance tests on the influence of measurement timing or type of financial variable,
given the inconsistent overlapping nature of these variables. That is, in the case of financial
variables, some studies included only market measures, some included only accounting
measures, and some included both types. This made straightforward comparisons non-
independent and thus statistically problematic.
A further limitation of our study is also related to the statistical independence of data. We
were unable to include a number of advanced meta-analytic techniques—such as controlling for
unreliability in the effect size estimates—because many studies sampled from the same
underlying pool of companies. For example, large U.S. firms such as Johnson & Johnson or IBM
may have been included within dozens of our studies. Many studies used exactly the same data
sets, such as the Fortune 500 or Domini 400 firms. Some previous meta-analytic reviews of this
research area have even exacerbated this problem by including multiple effect sizes within a
single article as if they were separate studies, for example counting a study with five years of
data and three types of accounting measures as if it were 15 studies (Orlitzky et al., 2003; Wu,
2006). We did this only in the case of studies reporting distinct types of CSP, in which case we
reported studies as if they contained two effects or, at most, four (i.e., Griffin & Mahon (1997)
32
included charitable contributions, environmental performance, observers’ perceptions, and third-
party audits). Strictly speaking, meta-analysis assumes that each study represents an independent
sample (Judge, Thoresen, Bono, & Patton, 2001; Rosenthal, 1991) and, as such, the results of the
present paper—as well as other reviews of this topic—should be considered approximate and
descriptive rather than precise statistical tests. Fortunately, although violations of statistical
independence make significance tests highly suspect, the effect sizes themselves remain unbiased
estimates of the true CSP-CFP relationship (Rosenthal, 1991). The main goal of the present study
was to examine the absolute size of estimated effects rather than dwell on their relative
significance levels.
CONCLUSION
The sustained pursuit of a link between CSP and CFP may well reflect a deeper and
intensifying quest for meaning. That quest for meaning, Robert Merton (1976) observed,
becomes particularly fierce as societies achieve material security and organizations are asked to
deliver more than material welfare. Merton (1976: 88) suggested that members of society begin
to ask “affluence for what? and for whom, and what beyond affluence?” and business leaders
feel the repercussions:
The leaders of business in the morally more sensitive society of our time are coming to
recognize that they must pay the price of a growing commitment to the moral purposes of
the larger society. Acting in terms of an authentic moral commitment is not cost-free
(Merton, 1976: 86).
The steady flow of studies of the CSP-CFP relationship, even while sustaining a bridge to the
economic logic that has come to dominate the study of organizations, may also constitute a
response to two symptoms of the quest for meaning that Merton identified: the practical
symptom of business leaders’ need to justify the cost of “an authentic moral commitment” and
the scholarly symptom of researchers’ thirst for the deeper purpose that business serves for
society. Much as research on the financial impact of CSP may have been a harbinger of broader
efforts to identify the financial impact of other organizational practices, so too an underlying
quest for purpose and meaning beyond economic profitability—a quest that is now finding its
way into organizational scholarship broadly considered (Sandelands, 2003) and in such specific
areas as leadership (Podolny, Khurana, & Hill-Popper, 2005)—may have manifested itself first
in research on CSP. Efforts to identify the impact of CSP on CFP are, at least in part, efforts to
33
legitimize CSP and thereby create space for broader purposes in business activity—to establish
that business can be about doing good, not just doing well.
Whatever accounts for vigorous interest in the connection between CSP and CFP, the
justification of CSP rests on a range of considerations beyond CFP. The contribution any
corporate practice makes to economic welfare cannot alone justify that practice. Principles of
justice indicate that advancing economic welfare cannot justify the suspension or violation of
other rights and duties (Rawls, 1974), which have as strong a moral claim upon corporate
conduct as does the pursuit of its financial objectives. Ultimately, the merits of CSP, even merits
that transcend the link to financial performance, must be weighed.
The impact that organizations have on our lives, along with the meaningful purposes that
people (employees, customers, citizens, and investors) seek to pursue through them, implicates a
much larger question confronting organizational scholars. How do we live with organizations
that shape the distribution of costs and benefits, advantages and burdens within society? How do
we live with organizations that infuse our lives with meaning, or fail to? These kinds of
compelling questions might orient (some say must orient) future research on organizations
(Walsh, Meyer, & Schoonhoven, 2006). Demands for organizations with which we can live—
organizations that do well and do good—call not for the facile dismissal of companies’ economic
function. Rather, they call for careful inquiry into what companies do and can do to manage
these multiple demands. The demands and the challenge of meeting them will not recede with a
simple correlation between CSP and CFP, no matter its magnitude.
34
FIGURE 1
CSP-CFP Studies 1972-2007
1
5 5
4
5
3
5
7
8
9
8
19
28
15
14
6
16
9
0
5
10
15
20
25
30
1972-
73
1974-
75
1976-
77
1978-
79
1980-
81
1982-
83
1984-
85
1986-
87
1988-
89
1990-
91
1992-
93
1994-
95
1996-
97
1998-
99
2000-
01
2002-
03
2004-
05
2006-
07
Numb er of Art icles
35
TABLE 1
Prior Reviews of the CSP-CFP Relationship
Authors (Year)
Number of
Articles
Reviewed
Number of
Times
Cited by
Others*
Aldag and Bartol (1978) 10 14
Arlow and Gannon (1982) 7 57
Cochran and Wood (1984) 14 146
Aupperle, Carroll, and Hatfield (1985) 10 205
Wokutch and McKinney (1991) 20 13
Wood and Jones (1995) 34 150
Pava and Krausz (1996) 21 98
Griffin and Mahon (1997) 51 232
Preston and O'Bannon (1997) 8 66
Richardson, Welker, and Hutchinson (1999) 14 8
Roman, Hayibor, and Agle (1999) 46 82
Margolis and Walsh (2001) 95 96
Margolis and Walsh (2003) 127 134
Orlitzky, Schmidt, and Rynes (2003) 52 155
Allouche and Laroche (2005) 82 0
Wu (2006)
39
2
*Citation counts assessed using Google Scholar on July 26, 2007
36
TABLE 2
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
1 Alexander and
Buchholz
(1978)
40 Observer
perceptions
Surveys of students and
business people (data
from Vance, 1975)
Risk-adjusted
stock returns
Large national corporations
(Fortune 100 equivalent)
1971-2 1970-4
.078 .078 .078 No Risk, Size
2 Anderson and
Frankle (1980)
314 Transparency Beresford's Social
Involvement Disclosure
scale: Content analysis of
annual reports, i.e., self-
reported disclosures,
dichotomized into those
who did vs. did not make
disclosures in 1972
Stock returns Fortune 500 companies listed
on the NYSE with financial
data available for fiscal years
ending 12/31
1972 1972-3
.297 .297 .297 No Risk, Size
3 Asmundson and
Foerster (2001)
N/A Screened
mutual funds
Varies depending on the
fund
Fund returns Socially responsible equity
mutual funds of Canadian
equities with 5-year (4 total)
and 10-year (2 total) histories
1990-1999 1990-1999 .038 .038 .038 No Risk
4 Aupperle et al.
(1985)
192 Self-report Forced-choice self-report
survey based on Carroll's
(1979) concept of
concern for society
Risk-adjusted
ROA
Large firms in the Forbes 1981
directory whose CEOs
responded to self-report survey
1982 1977-82
.120 .120 .120 No Risk, Size
5 Aupperle et al.
(1985)
171 Corporate
policies
Use of social forecasting,
having a CSR committee
on the corporate board
Risk-adjusted
ROA
Large firms in the Forbes 1981
directory whose CEOs
responded to self-report survey
1982 1977-82
.044 .044 .044 No Risk, Size
6 Bagozzi,
Epstein and
Wisner (2001)
215 Environment
(self-report)
Survey to rate own
company relative to
others in the industry on
compliance with
environmental
regulations, limiting
environmental impact
beyond compliance, and
preventing and mitigating
environmental crises
(data from Judge &
Douglas, 1998)
Self-reported
ROI and earnings
growth relative
to others in
industry
Questionnaire sent to 725 U.S.
firms from the 1992 World
Environmental Directory,
randomly chosen among those
with a corporate environmental
officer listed. 30% response
rate, primarily from large firms
Survey
around
1992-1995
Survey
around
1992-1995
.244 . 244 .244 No Size,
Industry
7 Barnett &
Salomon (2006)
N/A Screened
mutual funds
Varies by fund Fund returns 67 Funds tracked by the Social
Investment Forum
1972-2000 1972-2000 -.009 -.009 -.009 No Risk
8 Barth and
McNichols
(1995)
850 Environment
(objective)
Estimates of firm cost
due to liabilities of
Superfund sites
Stock returns Firms with Superfund site data
from EPA filings and
Environmental Data Resources
Inc.
1982-1991 1982-1991 .091 .091 .091 No Size
9 Bauer, Derwall
and Otten
(2007)
88-
130
Screened
mutual funds
Varies by fund Fund returns Canadian ethical and
conventional mutual funds of
Canadian equities
1/94-1/03 1/94-1/03 -.025 -.025 -.025 No Risk, Size
37
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
10 Bauer, Koedijk
and Otten
(2005)
N/A Screened
mutual funds
Varies by fund Fund returns 103 ethical mutual equity funds
in U.S., U.K. and Germany,
each matched to 3 conventional
funds by fund age and size.
Effect "not significant",
presumed zero.
1/90-3/01 1/90-3/01 .000 .000 .000 No Risk, Size
11 Belkaoui (1976)
100 Transparency Whether pollution
expenditures were
disclosed in the Annual
Report
Risk-adjusted
stock returns
50 firms voluntarily reporting
pollution control information in
1970 annual reports, with 50
matched firms not reporting
1970 1969-71,
month
-12 to -1
-.044 -.095 .007 -.044 No Size,
Industry,
Risk
12 Belkaoui and
Karpik (1989)
23 Transparency Reputational scale
(among business people)
on social performance
from Business and
Society Review's
"Industry Rates Itself",
1972
ROA, stock
returns
Leading corporations surveyed
both by Business and Society
Review's 1972 "Industry Rates
Itself" and Ernst and Ernst
1973 survey of social
responsibility disclosure
1972
report
release
ROA 1973,
Returns
%1970-
1974
.168 -.104 .417 .417 -.104 No Size
13 Belkaoui and
Karpik (1989)
23 Observer
perceptions
Reputational scale
(among business people)
on social performance
from Business and
Society Review's
"Industry Rates Itself",
1972
ROA, stock
returns
Leading corporations surveyed
both by Business and Society
Review's 1972 "Industry Rates
Itself" and Ernst and Ernst
1973 survey of social
responsibility disclosure
1972
report
release
ROA 1973,
Returns
%1970-
1974
.072 -.225 .356 .356 -.225 No Size
14 Bello (2005) N/A Screened
mutual funds
Varies by fund Fund returns Socially repsonsible domestic
equity funds in Morningstar
database, each matched with
two conventional funds by net
asset size
1/1994 -
3/2001
1/1994 -
3/2001
.060 . 060 .060 No Risk, Size
15 Berman, Wicks,
Kotha, Jones
(1999)
81 Third-party
audit
KLD ratings in 5
categories: employee
relations, diversity, local
communities,
environment, product
safety/quality
ROA Top 100 firms on the 1996
Fortune 500 list that were
publicly traded 1991-1996
1991-1996 1991-1996 .089 .089 .089 No Size
16 Blacconiere and
Northcut (1997)
72 Environment
(self-report)
Annual Report
disclosures related to five
aspects of environmental
performance
Stock returns Chemical firms (defined by 2-
digit SIC code) with available
EPA Superfund data (liability
related to hazardous waste
sites)
1983-4
Annual
Reports
Events
1985 to
1986
day -1 to
+1
.189 .189 .189 Yes Company
is its own
control
17 Blacconiere and
Northcut (1997)
72 Environment
(objective)
Estimate of firm cost
liabilities for Superfund
sites
Stock returns Chemical firms (defined by 2-
digit SIC code) with available
EPA Superfund data (liability
related to hazardous waste
sites)
1983-4
EPA
reports
Events
1985 to
1986
day -1 to
+1
.260 .260 .260 Yes Company
is its own
control
38
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
18 Blacconiere and
Patten (1994)
47 Environment
(self-report)
Annual Report
disclosures related to five
aspects of environmental
performance
Stock returns Impact after Union Carbide
Bhopal accident on similar
companies (NYSE/ASE firms
with one of the same 4-digit
chemical SICs as Union
Carbide and at least 10% of
their revenues in chemical and
industrial gases)
firm 10K
report
prior to
day 0
day 0
(12/3/84)
to +4
.233 .233 .233 Yes Company
is its own
control
19 Blackburn el al.
(1994)
88 Third-party
audit
Council of Economic
Priorities ratings of
consumer product firms
ROA, stock
returns
Consumer product firms
examined by the Council on
Economic Priorities (1989)
1989 1989
-.014 -.014 -.045 .047 No
20 Bollen and
Cohen (2004)
416 Screened
mutual funds
Varies by fund Fund returns Equity mutual funds in the
CRSP U.S. Mutual Fund
Database with at least 2 years
of data, identified by a list from
the Social Investment Forum
1961-2002 1961-2002 .021 .021 .021 No Risk, Size
21 Bosch and Lee
(1994)
<=
121
Revealed
misdeeds
FDA disciplinary actions:
recalls of existing
products, bans of
products, warnings,
investigations, product
withdrawals, allegations
of false advertising
Stock returns Food and drug firms with FDA
decisions announced in the
Wall Street Journal
1962-1989 day -5 to
+5
.141 .141 .141 Yes Company
is its own
control
22 Bowman (1978)
46 Transparency Mention of CSP in
Annual Reports
ROS Computer industry, firms doing
business in only one SIC code
1974 1972-4
.190 .190 .190 No Industry
23 Bowman and
Haire (1975)
82 Transparency Content analysis of
annual reports
ROE 1973 Moody's list of firms in
food processing industry
1973 1969-73
.351 .351 .351 No Industry,
Size
24 Boyle, Higgins
and Rhee
(1997)
61 Corporate
policies
Defense contractor
signing of Packard
Commission agreement
to define a code of ethics
for the defense industry
to exclude defective
pricing, kickbacks, false
claims
Stock returns Top 100 defense contracting
organizations (in terms of
contract dollars awarded).
Contractors not publicly traded
or with confounding news
announcements dropped from
sample.
Companies listed in Appendix
7/3/1986 day -2 to
+2
-.041 .178 -.116 -.184 -.041 Yes Industry,
Risk
25 Bragdon and
Marlin (1972)
17 Environment
(objective)
Pollution control indices EPS growth,
ROE, ROC
Pulp and paper companies
studied by CEP
1970 1965-70
.211 .217 .203 .211 No Industry
26 Brammer and
Millington
(2004)
315 Charitable
donations
Corporate charitable
contributions
ROS Publicly listed UK
manufacturing and service
companies (finance companies
excluded)
1989-
1990,
1998-1999
1989-1990,
1998-1999
.485 . 485 .485 Yes Industry,
Size
27 Brammer,
Brooks, &
Pavelin (2006)
451 Environment
(objective)
Ethical Investment
Research Service (EIRIS)
audit of environmental
performance
Stock returns Firms appearing in the UK
FTSE All-share Index
weighted index for which data
were available, excluding
investment trusts
2002 2002-2005 -.076 -.076 -.076 No
39
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
28 Brammer,
Brooks, &
Pavelin (2006)
451 Third-party
audit
Ethical Investment
Research Service (EIRIS)
audit of environmental
performance
Stock returns Firms appearing in the UK
FTSE All-share Index
weighted index for which data
were available, excluding
investment trusts
2002 2002-2005 .002 .002 .002 No
29 Brown (1997) 108 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment", controlling
for "halo effect" of past
financial performance;
comparison of top vs.
bottom quartile of ratings
Stock returns Fortune annual survey. Survey
data adjusted by Brown and
Perry (1994)
1982-1991
average
1982-1992
pooled
.046 .046 .046 No Size
30 Brown (1998) > 149 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment", controlling
for "halo effect" of past
financial performance;
comparison of top vs.
bottom quartile of ratings
Stock returns Fortune annual survey for >4
years from 1982-1991. Survey
data adjusted by Brown and
Perry (1994)
firm
average
1982-1991
1984-1996
pooled
.054 .054 .054 No Size
31 Brown and
Perry (1994)
234 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment", controlling
for "halo effect" of past
financial performance;
comparison of top vs.
bottom quartile of ratings
ROA, ratio of
market / book
value
Firms rated by Fortune 1991 1988-91
.440 .440 .420 . 460 No
32 Brown,
Helland, &
Smith (2006)
701 Charitable
donations
Whether a firm has a
charitable foundation
Net income Large firms listed in the
Corporate Giving Directory
1999 1999 .125 .125 .125 No Industry,
Size
33 Buehler and
Shetty (1976)
232 Self-report Questionnaire reported of
a structural change in
CSR, defined as change
in corporate policy
(mission statement) or
organization (i.e. develop
group within firm to
manage CSR) in terms of
urban affairs (urban
renewal, hiring of
minorities, etc.),
consumer affairs
(warranties, labeling,
quality, safety, etc.), or
the environment.
ROA Fortune 1250 largest US firms
(19% response rate); Note
authors list results as "not
significant" so coded as zero.
N/L,
presumabl
y late
1960s-
1972
%1967-
1972
.000 . 000 .000 No
34 Chauvin and
Guthrie (1994)
62 Third-party
audit
Announcement that firm
is on the annual list of
'Best Companies for
Working Mothers'
Stock returns Publicly traded firms on
Working Mother magazine's
list of 'best' employers
1986-1991 day -2 to
+2
.317 .317 .317 Yes Company
is its own
control
40
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
35 Chen and
Metcalf (1980)
18 Environment
(objective)
CEP measures of
environmental
performance
ROE, P/E ratio Pulp and paper industry firms
reviewed by CEP
1970 1968-73
.069 .158 -. 021 No Industry,
Size
36 Clarkson (1988)
32 Observer
perceptions
Evaluation by MBA
students of firm's Social
Orientation, categorized
into 4 groups: reactive,
defensive,
accommodative,
proactive
Observer-rated
"economic
performance"
relative to
industry during
last 5 years: loss,
below average,
average or above
average
Large Canadian firms 1983-1985 1983-1985
.874 .874 No Size,
industry
37 Clemens (2006) 76 Environment
(self-report)
Survey completed by
high-ranking executive
about environmental
performance,
investments, and
consciousness
Self-reported
profitability,
growth, and
ROA
Small private firms from a
2003 survey of steel industry
scrap yards (46% response
rate)
2003-2004 2003-2004 .400 .400 No Industry,
Size
38 Cochran and
Wood (1984)
39 Observer
perceptions
Company ratings of
social responsiveness
made by business
journalist Moskowitz
(1972)
Earnings/assets,
earnings/sales,
excess market
valuation
US industrial firms Composite
from 1972-
5
1970-4,
1975-9
.303 .296 .310 .181 .517 No Industry
39 Conine and
Madden (1986)
163 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment"
Observer-rated
"value as a long-
term investment"
10 largest companies in each
industry included in Fortune
ratings
1983-5
(but
correlation
s are
within
year)
1983-5 (but
correlations
are within
year)
.715 .715 .715 No Size,
industry
40 Cowen et al.
(1987)
95 Transparency Number of Annual
Report disclosures,
assessed by Ernst &
Whinney survey
ROE Fortune 500 companies from
ten industries
1978 1976-78
-.060 -.060 -.060 No Industry,
Size
41 D'Antonio,
Johnsen and
Hutton (1997)
140 Screened
mutual funds
Domini 400 Social Stock
Index firms compared to
firms in Lehman Brothers
Corporate Bond Index
Difference in
bond returns
Domini 400 Social Stock Index
firms with bond issues listed in
the University of Wisconsin's
Fixed Income Database
5/90-3/96 5/90-3/96
.277 .277 No
42 Davidson and
Worrell (1988)
96 Revealed
misdeeds
Event of 5 types of
corporate crimes: bribery,
criminal fraud, tax
evasion, illegal political
contributions or antritrust
violations of price-fixing
and bid-rigging. Event
day is the Wall Street
Journal announcement
Stock returns Fortune's list of 800 largest
corporations
1970-1988 day -5 to
+5
.028 .028 .028 Yes Company
is its own
control
43 Davidson and
Worrell (1992)
31 Revealed
misdeeds
Comparison of impact for
product recalls that were
government-mandated vs.
voluntary
Stock returns Firms in non-automotive
industries making product
recall announcements in the
Wall Street Journal
-90 to 90
days,
between
1968-1987
-90 to 90
days
.406 .406 .406 Yes Company
is its own
control
41
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
44 Davidson,
Worrell and
Cheng (1994)
<= 47 Revealed
misdeeds
Announcement of OSHA
(Occupational Safety and
Health Administration)
penalty
Stock returns Firms with reported OSHA
violations in Wall Street
Journal, New York Times,
Washington Post and Los
Angeles Times
1979-1989 day -1 to
+1
.194 .194 .194 Yes Company
is its own
control
45 Derwall and
Koedijk (2005)
306 Screened
mutual funds
Varies by fund Bond returns Eight U.S. bond mutual funds
labelled by the Social
Investment Forum as being
socially responsible. Each fund
is matched to 5 conventional
funds in the CRSP Mutual
Fund database.
9/87-3/03 9/87-3/03 .054 .054 No Risk
46 Derwall,
Gunster, Bauer
and Koedijk
(2005)
62 Environment
(objective)
Environmental ratings by
Innovest Strategic Value
Advisors
Stock returns U.S. companies in Innovest
database (database rates 1200
firms globally)
7/95-12/03 7/95-12/03 .217 .217 .217 No Industry,
Risk, Size
47 DiBartolomeo
and Kurtz
(1999)
650 Screened
mutual funds
Domini 400 Social stock
index
Stock returns Domini 400 Social stock index
compared to S&P 500
5/90-1/99 5/90-1/99
.000 .000 .000 No Industry,
Risk
48 Diltz (1995) 159 Environment
(objective)
Ratings by the CEP
regarding environmental
performance; portfolio
pair constructed of good
vs. poor ratings
Stock returns All firms evaluated by Council
on Economic Priorities in
1991.
1991
report
release
1989-1991
.258 .258 .258 No Size, risk
49 Diltz (1995) 159 Charitable
donations
Ratings by the CEP
regarding charitable
giving; portfolio pair
constructed of good vs.
poor ratings
Stock returns All firms evaluated by Council
on Economic Priorities in
1991.
1991
report
release
1989-1991
.022 .022 .022 No Size, risk
50 Diltz (1995) 159 Third-party
audit
Ratings by the CEP in 9
categories: status of
women in management,
status of minority
members in management,
animal testing,
information disclosure,
community outreach,
South Africa, family
benefits, military, nuclear
safety; 9 portfolio pairs
constructed of good vs.
poor ratings
Stock returns All firms evaluated by Council
on Economic Priorities in
1991.
1991
report
release
1989-1991
-.003 -.003 -.003 No Size, risk
51 Dooley and
Lerner (1994)
86 Self-report CEO self-reported
orientation towards
employees, community,
and government
ROA Fortune 500 industrial and
service firms for which EPA
pollution data was available
and CEO completed survey
1989 N/L
.124 .124 No Industry,
Size
52 Dooley and
Lerner (1994)
86 Environment
(objective)
EPA data on total toxic
pollution release
ROA Fortune 500 industrial and
service firms for which EPA
pollution data was available
and CEO completed survey
1989 N/L
-.330 -.330 No Industry,
Size
42
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
53 Dowell, Hart
and Yeung
(2000)
89 Environment
(self-report)
Investor Responsibility
Research Center survey
of multinational
environmental policy into
3 categories: local (the
corporation adheres to
local standards only),
U.S. (applies U.S.
standards wherever it
does business), or
stringent global (firm's
internal standards higher
than any national
standard)
Tobin's q -
market value
over replacement
cost of tangible
assets
S&P 500 multinational
corporations - with
manufacturing or mining SIC
codes, and operations in
countries with GDP per capita
below $8000
1994-1997
panel data
1994-1997
panel data
.062 . 062 .062 No Industry,
Size
54 Fogler and Nutt
(1975)
9 Objective
environment
P/E ratio, Stock
returns
9 of the 12 pulp and paper
companies studied by Bradgon
& Marlin (1972)
1970 (year
preceding
1971 CEP
report)
P/E ratios
1971-2,
stock
returns 0
days before
vs. 10 days
after 1971
article
release
-.053 -.053 .000 -.105 No Industry
55 Fombrun and
Shanley (1990)
154 Charitable
donations
Data on charitable giving
and existence of a
foundation
ROIC, market-
to-book value
ratio, dividend
yield
Companies from Fortune's
1985 corporate reputation
survey with data available on
charitable giving and other
factors (154 of the 292 firms)
1984 1984-5
.055 .055 .085 .010 No Industry,
Size
56 Freedman and
Jaggi (1982)
109 Transparency Extent of environmental
self-report disclosures in
Annual Report,
regardless of valence
ROA and ROE, 2
operating ratios
Firms from high polluting
industries, excluding utilities -
chemical, oil refining, steel,
paper and pulp
1973 1973-4
-.194 -.194 -.194 No Industry
57 Freedman and
Jaggi (1986)
56 Transparency Extent of environmental
self-report disclosures in
Annual Report,
dichotomized into low
(not zero) vs. high
disclosure
Stock returns Firms from high polluting
industries, excluding utilities -
chemical, oil refining, steel,
paper and pulp
Annual
report
1973-1974
Same
annual
report
.023 .023 .023 No Industry
43
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
58 Freedman and
Stagliano
(1991)
27 Transparency Annual Report disclosure
in firm's 10K report
regarding potential costs
of stricter OSHA
standards for safety and
health of work
environment into 4
categories: disclosed that
standard would have little
impact on operations,
disclosed only non-
quantitative data about
effects, disclosed
quantitative data about
estimated costs, and no
disclosure
Stock returns Firms in Cotton Textile Mill
(SIC 2200) and Knitting Mill
(SIC 2250) industries
Annual
reports
presumabl
y around
year of
article
day 0 to +3
.129 .129 .129 Yes Company
is its own
control
59 Fry and Hock
(1976)
135 Transparency Analysis of Annual
Reports, where a
photograph relating to
CSR receives 0.5 points
and each paragraph 1
point, normalized by total
pages.
ROI Firms from 15 different
industry groups with sales from
$2M to over $1B. Results
listed as "not significant",
presumed zero.
Annual
reports
presumabl
y around
year of
article
Annual
reports
presumably
around
year of
article
.000 .000 .000 No
60 Galaskiewicz
(1997)
40 Charitable
donations
Corporate charitable
contributions
Firm's financial
performance
quartile ranking
based on ROS,
ROA, ROE
relative to
industry
Companies in Minneapolis-St
Paul metropolitan area with >=
200 employees
1979-
1981,
1987-1989
1979-1981,
1987-1989
.363 . 363 .363 No Industry,
Size
61 Galbreath
(2006)
38 Third-party
audit
Audit by Australian firm
Reputation Measurement
regarding employee
treatment and social
impact
ROA, ROE,
Mean value-
added
Australian top-100 companies
with financial data available
2000 2001 .014 .014 .056 -.069 No Size
62 Galbreath
(2006)
38 Environmental
(objective)
Audit by Australian firm
Reputation Measurement
regarding environmental
performance
ROA, ROE,
Mean value-
added
Australian top-100 companies
with financial data available
2000 2001 -.052 -.052 .076 -.310 No Size
63 Goll and
Rasheed (2004)
171 Self-report Response to three survey
questions adapted from
Aupperle (1984),
regarding the importance
they place on three
dimensions of
"discretionary social
responsibility"
ROA, ROS 645 largest manufacturing
firms in Business Week's top
1000 companies (1985)
surveyed with a 25% response
rate. Subsample analyzed had
70% or more of total sales in
one 4-digit SIC.
1985-1986 1985-1986 .221 .221 .221 No
64 Graves and
Waddock
(1994)
430 Third-party
audit
Kinder, Lydenberg,
Domini (KLD) social
audit
ROA, ROE S&P 500, for which
institutional ownership and
CSP data available
1990 1990
.090 .090 .090 No Size
44
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
65 Graves and
Waddock
(2000)
22 Observer
perceptions
Collins and Porras
identify 18 firms from
CEO surveys that have
reputation of being
"highly visionary", and
matched to other firms in
the same industry with
the same founding date.
ROE, ROA,
ROS, Stock
returns
Companies from sample used
in book "Built to Last" by
Collins and Porras, they are
identified as result of CEO
surveys and all founded before
1950, so they are likely all
large firms.
N/L 1989-1996 .417 .412 .433 No Industry,
Size
66 Greening
(1995)
102 Environment
(objective)
US department of energy
data on programs to
manage energy savings;
Survey of expert
stakeholders, including
regulators and public and
private-funded
environmental and
consumer groups
ROA, EPS,
dividend yield
Utility companies for which
government data available on
energy management activities,
and for which stakeholders
responded to a reputational
survey
Energy
data 1990-
91, survey
1992
1992
.094 .104 .083 .130 No Industry
67 Gregory,
Matatko and
Luther (1997)
N/A Screened
mutual funds
Varies depending on the
fund
Fund returns 18 UK ethical mutual funds
matched to non-ethics screened
funds by fund type, age and
size
1986-1994 1986-1994 -.004 -.004 -.004 No Risk, Size
68 Griffin and
Mahon (1997)
7 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment"
ROS, ROE, ROA
Large US firms in the chemical
industry
1992 1992
.198 .458 .072 .198 No Industry,
Size
69 Griffin and
Mahon (1997)
7 Charitable
donations
Corporate philanthropy ROS, ROE, ROA
Large US firms in the chemical
industry
1992 1992
.165 .533 -.017 -.017 No Industry,
Size
70 Griffin and
Mahon (1997)
7 Third-party
audit
Kinder, Lydenberg,
Domini (KLD) social
audit
ROS, ROE, ROA
Large US firms in the chemical
industry
1992 1992
.041 .164 -.020 No Industry,
Size
71 Griffin and
Mahon (1997)
7 Environment
(objective)
Toxics Release Inventory
(reverse-coded)
ROS, ROE, ROA
Large US firms in the chemical
industry
1992 1992
-.451 -.679 -.306 No Industry,
Size
72 Grossman and
Sharpe (1986)
N/A Corporate
policies
Firms on the 1984 IRRC
list of divesting from
South Africa versus those
doing business in South
Africa
Stock returns All firms listed on NYSE. Note
effect sizes become positive for
1976-1983, perhaps reflecting
changing political views
Data
published
in 1984,
presumed
continuous
over time
1960-1983
-.101 -.101 -.101 No Risk, Size
73 Guerard
(1997a)
1300 Third-party
audit
Kinder, Lydenberg,
Domini (KLD) social
audit dichotomized into
firms satisfying KLD
versus unscreened stocks
(criteria are military,
nuclear power, alcohol,
tobacco, gambling and
environment).
Vantage Global Advisors'
database. Results listed as "not
significant", presumed zero.
1987-1994 1987-1994
.000 .000 .000 No
45
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
74 Guerard
(1997b)
1200 Third-party
audit
Kinder, Lydenberg,
Domini (KLD) social
audit dichotomized into
firms satisfying KLD
versus unscreened stocks
(criteria are military,
nuclear power, alcohol,
tobacco, gambling and
environment).
Vantage Global Advisors'
database. Results listed as "not
significant", presumed zero.
1987-1996 1987-1996
.000 .000 .000 No
75 Gunthorpe
(1997)
60 Revealed
misdeeds
Announcement in the
Wall Street Journal of
illegal or unethical
behavior: that the firm or
it's senior management is
under investigation, the
object of a law suit, or
that an indictment has
been issued
Stock returns Firms reported on in Wall
Street Journal
1988-1992 day -5 to
+5
.087 .087 .087 Yes Company
is its own
control
76 Hall and Rieck
(1998)
<= 27 Charitable
donations
Article in the Wall Street
Journal that firm
announces a voluntary
charitable donation
Stock returns Firms reported on in Wall
Street Journal - confounding
events deleted from sample
1982-1995 day -5 to
+5
.444 .444 .444 Yes Company
is its own
control
77 Hall and Rieck
(1998)
<= 40 Environment
(objective)
Article in the Wall Street
Journal that firm
announces a voluntary
action to benefit the
environment
Stock returns Firms reported on in Wall
Street Journal - confounding
events deleted from sample
1982-1995 day -5 to
+5
-.067 -.067 -.067 Yes Company
is its own
control
78 Hall and Rieck
(1998)
<= 32 Corporate
policies
Article in the Wall Street
Journal that firm
announces a voluntary
social action such as
sanctioning women's
rights, offering child-care
services, etc.
Stock returns Firms reported on in Wall
Street Journal - confounding
events deleted from sample
1982-1995 day -5 to
+5
-.116 -.116 -.116 Yes Company
is its own
control
79 Hamilton
(1995)
50 Environment
(objective)
Media coverage on Toxic
Release Inventory (TRI)
pollution data
Stock returns Firms in EPA's first Toxic
Release Inventory (TRI) data
release of June 19, 1989 - we
use in calculations only a
subset of this sample - those
firms who received media
coverage on TRI data during
1989
6/19/1989 day 0 to +5
.351 .351 .351 Yes Company
is its own
control
80 Hamilton, Jo
and Statman
(1993)
N/A Screened
mutual funds
Varies depending on the
fund
Fund returns Socially responsible equity
mutual funds (32 total)
identified by Lipper Analytical
Services as of December 1990
compared to 320 randomly
selected non-SRI mutual funds
in Lipper database
1/81-12/90 1/81-12/90 .000 .000 .000 No Risk
46
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
81 Hansen and
Wernerfelt
(1989)
60 Self-report Survey Of Organizations
(SOO) survey items of
employee perceptions of
welfare and working
conditions
ROA Fortune 1000 firms across
industries
Varies,
during
1970s-80s
5 years
preceding
.482 .482 .482 No Industry,
Size
82 Harper and
Adams (1996)
<=
1307
Environment
(objective)
Notification that a firm is
a Potentially Responsible
Party (PRP) for a
Superfund site
Stock returns Publicly traded firms named by
the EPA as responsible
Superfund parties. Effect listed
as "not significant", presumed
zero.
1980 -
1989
day -5 to
+5
.000 .000 .000 Yes Company
is its own
control
83 Hart and Ahuja
(1996)
127 Objective
environment
Percentage change in
emissions efficiency
index (ratio of reported
emissions in pounds to
company revenues)
reported by the toxic
release inventory (TRI).
ROA, ROE, ROS
S&P 500 firms in
manufacturing, mining or
production. Concurrent effect
listed as "not significant",
presumed zero. CSP-CFP
effect listed as "positive and
significant".
1988-1989 1989 .000 .000 "positive
and
significant
"
.000 No Industry,
Size
84 Heinze (1976) 28 Observer
perceptions
Ratings by the National
Affiliation of Concerned
Business Students
(NACBS)
ROS, ROA 28 large US corporations that
had been selected for ratings by
the NACBS
1972 1972
.057 .057 .057 No Size
85 Herremans et
al. (1993)
76 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment"
Stock returns Large US manufacturing firms
rated by Fortune that had
consistent ratings over 5 year
period; matched pairs good and
poor reputation in same
industry
1982-7 1982-7
.229 .229 .229 No Industry,
Risk, Size
86 Hersch (1991) <=
123
Revealed
misdeeds
Lawsuit filing that
charges firm with
violating equal
employment opportunity
law
Stock returns Firms reported on in Wall
Street Journal
1964-1986 day -2 to
+1
.022 .022 .022 Yes Company
is its own
control
87 Hickman, Teets
and Kohls
(1999)
N/A Screened
mutual funds
Varies depending on the
fund
Fund returns Six socially responsible equity
mutual funds in Morningstar
database with at least 4 years
of data
12/91-
11/95
12/91-
11/95
-.050 -.050 -.050 No
88 Hill,
Ainscough,
Shank, &
Manullang
(2007)
33 Third-party
audit
Companies appearing in
at least 2-3 screened
mutual funds
Stock returns Companies later held in
screened mutual funds in the
US, Asia, and Europe,
compared with market
benchmarks
N/L,
presumabl
y approx
2005
1995-2005 .075 .075 .075 No Risk, Size
47
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
89 Hillman and
Keim (2001)
308 Third-party
audit
KLD ratings across 9
categories, separates
categories into categories
representing CSR to
primary stakeholders
(employee relations,
diversity issues, product
issues, community
relations, and
environment) and
representing social issues
(alcohol/tobacco/gamblin
g, military, nuclear
power, international)
Market Value
Added (minus
debt and invested
equity)
Firms rated by KLD, which are
primarily from the S&P 500
1994 1995-1996 .001 .001 .001 No Industry,
Risk, Size
90 Hoffer, Pruitt
and Reilly
(1988)
3 Revealed
misdeeds
Automobile safety recalls Stock returns Big 3 auto fir ms 1975-1981 day -5 to
+5
.286 .286 .286 Yes Company
is its own
control
91 Hylton (1992) N/A Screened
mutual funds
Varies depending on the
fund
Fund returns "Better-known" social
investment mutual funds, with
data provided by the Social
Investment Forum
1987-1992 1987-1992
-.027 -.027 -.027 No Risk
92 Ingram (1978) 287 Transparency Disclosures across five
topic areas in Annual
Reports
Stock returns Large US firms in the Fortune
500 from 1970-76
1970-76 1970-76
.025 .025 .025 No Industry,
Risk, Size
93 Ingram and
Frazier (1983)
27 Transparency Prevalence of discussion
of environmental quality
control in the President's
letter of the Annual
Report
ROI Firms from metal
manufacturing and fabricating
industry. Effect listed as "not
significant", presumed zero.
1978 1978
.000 .000 .000 No Industry,
Risk, Size
94 Jarrell and
Peltzman
(1985)
22 Revealed
misdeeds
Product recall
announcements, which
are major safety recalls in
the case of automobile
companies
Stock returns Drug firms, Big three auto
firms (GM, Ford, Chrysler)
1974-1982
(drugs),
1967-1981
(auto)
day -4/-5 to
+5
.563 .563 .563 Yes Company
is its own
control
95 Johnson and
Greening
(1999)
252 Third-party
audit
KLD ratings of
responsible behavior
towards communities,
women and minorities,
employee relations, and
product quality
ROA, ROE, ROS
A random sample of firms
from KLD database (mostly
Fortune 1000 firms) - with
managerial, institutional
ownership data
1993 1991-1992 .098 .098 .098 No Industry,
Size
96 Johnson and
Greening
(1999)
252 Environment
(objective)
KLD ratings of
environmental
performance
ROA, ROE, ROS
A random sample of firms
from KLD database (mostly
Fortune 1000 firms) - with
managerial, institutional
ownership data
1993 1991-1992 .133 .133 .133 No Industry,
Size
48
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
97 Jones and
Murrell (2001)
51 Third-party
audit
Inclusion in Working
Mother list, selected
according to following
criteria: salaries in
relation to competitors,
advancement
opportunities available to
women, on-site child
care, familiy benefits
such as maternity leave,
job sharing, flextime
Stock returns Firms that made Working
Mother magazine's list of the
top family-friendly companies
for the first time between 1989-
1994
1989-1994 day -1 to
+1
.217 .217 .217 Yes Company
is its own
control
98 Jones and
Rubin (2001)
<= 73 Objective
environment
Report of a negative
environmental incident,
excluding events that
directly hurt the customer
were excluded
Stock returns Oil and electric utility firms
reported on in the Wall Street
Journal
1970-1992 day -1 to 0
.049 .049 .049 Yes Company
is its own
control
99 Judge and
Douglas (1998)
170 Environment
(self-report)
Self-report measures of
environmental
management: functional
coverage, amount of
resources provided,
integration into strategic
planning, environmental
performance
Self-reported
ROI, earnings
growth, and
change in market
share relative to
others in industry
Questionnaire sent to 725 U.S.
firms from the 1992 World
Environmental Directory,
randomly chosen among those
with a corporate environmental
officer listed. 30% response
rate, primarily from large firms
Survey
around
1992-1995
Survey
around
1992-1995
.173 . 173 .173 No Size,
Industry
100 Karpoff and
Lott (1993)
71 Revealed
misdeeds
Announcement of
corporate crimes or fraud
(against customers,
suppliers, employees or
investors) reported by the
Wall Street Journal
Stock returns Firms reported on in Wall
Street Journal
1978-1987 day -1 to 0
.266 .266 .266 Yes Company
is its own
control
101 Karpoff, Lee
and Vendrzyk
(1999)
98 Revealed
misdeeds
News announcement that
firm is suspected or
convicted of committing
procurement fraud
Stock returns U.S. defense contractors
(mostly large firms)
1983-1995 day -1 to 0
.207 .207 .207 Yes Company
is its own
control
102 Karpoff, Lott
and Wehrly
(2005)
<=
423
Environment
(objective)
Announcement in the
Wall Street Journal that a
firm is being investigated,
accused or has settled
charges of an
environmental violation
Stock returns Firms reported on in Wall
Street Journal
1980-2000 day -1 to 0
.252 .252 .252 Yes Company
is its own
control
103 Kedia and
Kuntz (1981)
30 Charitable
donations
Charitable donations as
% of NI
ROA Commercial banking firms 1977 1977
-.288 -.288 No Industry
104 Kedia and
Kuntz (1981)
30 Corporate
policies
Banks issuing low
income loans and
minority enterprise loans
ROA Commercial banking firms 1977 1977
.005 .005 No Industry
105 Khanna,
Quimio and
Bojilova (1998)
91 Environment
(objective)
Improvement over time
in Toxic Releases
Inventory (TRI)
emissions data
Stock returns U.S. chemical industry report
release
1989-1994
day 0 to +1
-.209 -.209 -.209 Yes Company
is its own
control
49
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
106 King and Lenox
(2001)
652 Environment
(objective)
Measures of
manufacturing emissions
from the EPA 's Toxic
Release Inventory (TRI)
data
Tobin's q (market
value over
replacement cost
of tangible
assets)
Publicly traded U.S.
manufacturing firms
1987-1996 1988-1997 .037 .037 . 037 No Industry,
Size
107 King and Lenox
(2002)
614 Environment
(objective)
Total facility emissions
of toxic chemicals from
EPA 's Toxic Release
Inventory (TRI) data;
note that measure is by
facility, not firm
ROA, Tobin's q
(market value
over replacement
cost of tangible
assets)
Publicly traded U.S.
manufacturing firms
1991-1996 1992-1997 .056 .056 .048 .063 No Industry,
Size
108 Klassen and
McLaughlin
(1996)
<=98 Environment
(objective)
NEXIS newswire search
of environmental events,
separated into positive
events (e.g., international
news media
environmental award)
and negative events (e.g.,
crises identifed with the
keywords "oil",
"chemical", "gas leak",
"explosion" along with
words "spill" and
"environment")
Stock returns NYSE/AMEX firms (see Notes
on CSR Measure).
Observations with
"confounding events" dropped.
1985 -
1991
day -1 to
+1
.438 .438 .438 Yes Company
is its own
control
109 Konar and
Cohen (1997)
128 Environment
(objective)
Whether first toxic
emissions data release
during July 1989 resulted
in a media report
Stock returns Manufacturing firms subject to
reporting requirements of toxic
emissions
7/19/1989 0 to 5 days
.264 .264 .264 Yes Company
is its own
control
110 Konar and
Cohen (2001)
233 Environment
(objective)
Two measures provided
by Investor
Responsibility Research
Center, the pounds of
toxic chemicals emitted
per dollar revenue of firm
(TRI data) and number of
environmental lawsuits
pending in 1989
Tobin's q (market
value over
replacement cost
of tangible
assets)
S&P 500 companies in
polluting industries, mostly
manufacturing
1988-1989 1989
.240 .240 .240 Yes Industry,
Size
111 Kreander, Gray,
Power and
Sinclair (2002)
N/A Screened
mutual funds
Ethical vs. non-ethical
mutual funds
Fund returns 40 European ethical investment
funds matched to 40
conventional funds by age,
country, size and geographic
investment universe
1996-1998 1996-1998 .010 .010 . 010 No Risk, Size
112 Kreander, Gray,
Power, &
Sinclair (2005)
N/A Screened
mutual funds
Varies by fund Fund returns 30 ethical mutual funds
compared with 30 matched
conventional funds
1995-2001 1995-2001 .000 .000 . 000 No Risk
113 Kumar, Lamb
and Wokutch
(2002)
87 Corporate
policies
Doing business in South
Africa upon the lifting of
investment sanctions
Stock returns KLD listing of firms with
equity interests in South Africa
at the time of lifting sanctions
9/24/1993 -30 to 50
days
.168 .168 .168 Yes Company
is its own
control
114 Kurtz and
DiBartolomeo
(1996)
650 Third-party
audit
Domini 400 Social stock
index
Stock returns Domini 400 Social stock index
compared to S&P 500
5/90-9/93 5/90-9/93
.000 .000 .000 No Industry,
Risk, Size
50
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
115 Laplante and
Lanoie (1994)
<=21 Environment
(objective)
Announcements of
environmental actions
against firms: violation of
environmental regulation
for which it is likely that
regulator will undertake
legal action, or
announcement that legal
action has been
undertaken
Stock returns Environmental events
published in Canadian
newspapers, typically firms in
pulp and paper, mining,
petroleum and chemical
industries
1982-1991 day -30 to
+30
-.026 -.026 -.026 Yes Company
is its own
control
116 Lashgari and
Gant (1989)
99 Corporate
policies
Compliance with the
Sullivan principles code
of conduct for fair labor
practices developed for
U.S. businesses operating
in South Africa
ROI, ROE Large, well-established firms
monitored for compliance by
Arthur D. Little, Inc.with
respect to the Sullivan
principles.
1977-1983 1977-1983
.036 .036 .036 No
117 Levy and Shatto
(1980)
55 Charitable
donations
Corporate gift giving Net Income (not
a financial ratio)
Large public utility firms 1976 1976
.720 .720 .720 No
118 Luck and
Pilotte (1993)
643 Screened
mutual funds
Domini 400 Social stock
index
Stock returns Domini 400 Social stock index
compared to S&P 500
5/90-9/92 5/90-9/92
.324 .324 .324 No Industry,
Risk, Size
119 Luo &
Bhattacharya
(2006)
113 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment"
ROA, Stock
returns, Tobin's q
Companies rated by Fortune
that also have marketing data
available from ASCI.
2001-2003 2002-2004 .153 .153 .190 .135 No Size
120 Luther and
Matatko (1994)
N/A Screened
mutual funds
Varies depending on the
fund
Fund returns UK open-ended ethical-
screened mutual funds with 32
months history, with at least
80% of their equity portfolio
invested in the UK
8/89 - 3/92 8/89 - 3/92
.314 .314 .314 No Risk, Size
121 Luther, Matat ko
and Corner
(1992)
N/A Screened
mutual funds
Varies depending on the
fund
Fund returns UK open-ended mutual funds
identified by Ethical
Investment Research Service in
May 1990 with at least 2 years
of return data
5/88-6/90 5/88-6/90
-.084 -.084 .000 No Risk
122 Mahoney and
Roberts (2004)
214 Environment
(objective)
Canadian Social
Investment Database
(CSID) ratings of
environmental
performance, designed to
mirror the KLD Ratings
ROA, ROE, ROS
Firms in Toronto Stock
Exchange 300
1995-1999 1995-1999 .063 .063 .063 No
123 Mahoney and
Roberts (2004)
214 Third-party
audit
Canadian Social
Investment Database
(CSID) ratings of social
responsibility designed to
mirror the KLD ratings,
along the dimensions of
community, diversity,
employee relations,
international, product and
business practices
ROA, ROE, ROS
Firms in Toronto Stock
Exchange 300
1995-1999 1995-1999 .012 .012 .012 No
51
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
124 Mallin,
Saadouni and
Briston (1995)
N/A Screened
mutual funds
Varies depending on the
fund
Fund returns UK ethical funds identified by
Finstat, each matched to a non-
ethical fund with same
establishment date and fund
size
1986-1993
Funds
have
varying
sample
periods
1986-1993
Funds have
varying
sample
periods
-.232 -.232 -.232 No Risk
125 McGuire et al.
(1988)
98 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment"
Stock returns,
ROA, and
growth in sales,
assets, and
income
Fortune 500 firms 1982,
1983,
1983-5
(reported)
1982-5
.107 .225 .056 . 039 .160 .000 No Risk, Size
126 McGuire,
Schneeweis and
Branch (1990)
131 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment"
Stock returns,
ROA
Fortune 500 firms 1982 1977-
1981/2,
1982-
1984/5
.319 .503 . 109 No Risk, Size
127 McWillia ms
and Siegel
(1997)
22 Third-party
audit
U.S. Department of
Labor presents annual
award to firm with high-
quality affirmative action
policy (around 6 firms
receive awards per year)
Stock returns Firms receiving award from the
U.S. Department of labor
1986-1992 -10 to +10
days
-.211 -.211 -.211 Yes Company
is its own
control
128 McWillia ms
and Siegel
(1997)
21 Revealed
misdeeds
Major settlement
announcement by firm
found guilty of
discrimination against
underrepresented
minority employees
Stock returns Large U.S. firms 1986-1992 -10 to +10
days
.021 .021 .021 Yes Company
is its own
control
129 McWillia ms
and Siegel
(2000)
524 Screened
mutual funds
Domini 400 Social stock
Index
Stock returns Firms in the S&P 500 and
Domini 400 Social stock Index
1991-1996 1991-1996 .043 .043 . 043 No Industry,
Risk, Size
130 Menguc &
Ozanne (2005)
140 Environment
(self-report)
Survey based on 10
Valdez Principles of
environmental
management and
commitment to the
natural environment
Earnings Large Australian
manufacturing firms whose
CEO or equivalent executive
responded to survey (29%
response rate).
N/L 1999 .131 .131 No Industry,
Size
131 Meznar, Nigh
and Kwok
(1994)
39 Corporate
policies
Corporate divestiture
from South Africa
Stock returns U.S. corporations who publicly
announced withdrawal from
South Africa
1985-1989 day -30 to
+10
-.413 -.413 -.413 Yes Company
is its own
control
132 Mill (2006) N/A Screened
mutual funds
Range of ethical
screening criteria
Fund returns Family Charities Ethical Fund
in the UK after adopting social
screening versus 3
conventional control funds
3/1996-
3/2004
3/1996-
3/2004
.063 . 063 .063 No Size
133 Muoghalu,
Robison and
Glascock
(1990)
<=202 Environment
(objective)
Lawsuit or case
settlement involving toxic
or hazardous waste
materials
mismanagement
Stock returns Firms with environmental
cases announced in the Wall
Street Journal
1977-1986 day -5 to
+5
.077 .077 .077 Yes Company
is its own
control
52
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
134 Nakao, Amano,
Matsumura,
Genba, &
Nakano (2007)
278 Environmental
(self-report)
Nikkei Environmental
Management Survey,
including planning,
disclosure, education, and
management of waste and
energy
Tobin's q-1,
ROA
Large Japanese manufacturing
companies, excluding energy
and construction. Compares
top 30 vs. bottom 30 firms.
1999-2003 1999-2003 .068 .070 .065 .063 .072 No Industry,
Size
135 Nehrt (1996) 50 Environment
(objective)
Timing and intensity of
environmentally
beneficial investments in
paper manufacturing to
reduce chlorine content
Growth in net
income
Producers of chemical
bleached paper pulp in 8
countries, listed in Pulp and
Paper International's 1992
annual review of the largest
150 paper companies in the
world. The sample of 50 were
chemical paper pulp
manufacturers with at least
70% of their revenues in the
paper industry. 19 are from the
US.
1984-1991 1983-1991
.105 .105 .105 No Industry,
Size
136 Newgren et al.
(1985)
50 Self-report Survey of whether there
is a concerted effort to
identify and analyze the
social and political
environment
P/E ratio Largest corporations in five
industrial and five
nonindustrial classifications
1975 1975-80
.272 .272 .272 No Industry,
Size
137 O'Neill et al.
(1989)
<=157 Self-report Self-report measure using
forced-choice response to
rank priorities
ROA Companies from list of Fortune
magazine's most admired
companies. Note that multiple
directors may have responded
from the same firm, so the total
number of firms <=157.
N/L,
presume
1985
N/L,
presume
1985
-.043 -.038 -.047 No Risk, Size
138 Patten (1990) 54 Corporate
policies
Signing of the Sullivan
Principles for divestment
from South Africa
Stock returns 37 firms whose signing of
Sullivan principles about South
Africa was disclosed
1977 Day -4 to
+2
.053 .053 .053 Yes Company
is its own
control
139 Patten (1991) 156 Transparency Annual report disclosures
in 7 categories:
Environment, energy, fair
business practices, human
resources, community
involvement, products,
and other
ROA, ROE Sample drawn from 8 industry
classifications of Fortune 500
(petroleum refining, chemical,
forest and paper products,
electronics, industrial and farm
machinery, metal products,
computer, and rubber products)
1985 1980-5
.023 -.009 .056 .023 No Industry,
Size
140 Pava and
Krausz (1996)
106 Third-party
audit
Council for Economic
Priorities report
Market return,
P/E ratio,
market-to-book
value, ROA,
ROE, EPS
Firms rated by the CEP along
with matched control firms
1991
report
1985-8,
1989-91
.224 .357 . 081 No Industry,
Size
141 Peltzman
(1981)
<= 23 Revealed
misdeeds
Event is an initial
complaint by FTC of
false advertising
Stock returns Consumer goods firms with
major FTC cases concerning
false advertising
1962-1975 day -3 to
+1
.669 .669 .669 Yes Company
is its own
control
53
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
142 Posni koff
(1997)
40 Corporate
policies
Announcement of
disinvestment in South
Africa
Stock returns Companies who announced
disinvestment in South Africa
between 1980-1991, as
announced in the Wall Street
Journal and New York Times
1980-1991 day -1 to
+1
.541 .541 .541 Yes Company
is its own
control
143 Preston and
O'Bannon
(1997)
67 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment"
ROA Fortune annual survey,
included companies that have
been rated in every survey
1982-1992
1982-1992 1982-1992
.370 .407 .373 . 330 .370 No Size
144 Preston and
Sapienza (1990)
108 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment"
Stock returns 10 largest companies in
industries surveyed by Fortune.
Only companies surveyed in all
five years 1982 to 1986
included.
1982-1986 1977-1986
.190 .190 .190 No Size
145 Reichert,
Lockett and
Rao (1996)
83 Revealed
misdeeds
Announcement that
formal indictment has
been filed against firm for
major corporate crimes
Stock returns Firms reported on in Wall
Street Journal
1980-1990 day -10 to
+10
.064 .064 .064 Yes Company
is its own
control
146 Reimann (1975)
19 Self-report Self-report of value of
seven different
constituencies
Self-reported
survey of goal
achievement in
comparison to
other
organizations
along eight
dimensions
American manufacturers from
multiple industries, varying
from 200 to 4,000 employees
1970 1974
.570 .570 No Industry
147 Rennin gs,
Schroder and
Ziegler (2003)
153 Third-party
audit
Swiss bank's evaluations
of European corporations
on social and
environmental
performance. Evaluations
are both by industry
sector as a whole, and
individual firms relative
to their industries
Stock returns 300 European corporations
whose social and
environmental sustainability
has been evaluated by the
Swiss bank Sarasin & Cie.
Effect "not significant",
presumed zero.
data
released
2001
1/1996 -
8/2001
.000 .000 .000 No Industry,
Risk, Size
148 Rey & Nguyen
(2005)
N/A Screened
mutual funds
AMP Capital's
Sustainable Future
Australian Share Fund
inclusion, based on
stakeholder relationships
with employees,
customers, shareholders,
environment
Fund returns Australian publicly traded
companies
11/2001-
2004
1995-2004 .097 .097 .097 No Industry,
Risk, Size
149 Reyes and
Grieb (1998)
N/A Screened
mutual funds
Varies depending on the
fund
Fund returns Fifteen socially responsible
mutual funds from Wilson
Associates Capital Asset
Management System Database,
matched by investment type to
control funds
1986-1995 1986-1995
.034 .034 .034 No Industry,
Risk, Size
150 Roberts (1992) 80 Charitable
donations
Existence of a funded
foundation
ROE Large Fortune 500 companies
profiled by the CEP
1983-4 1981-84
.161 .161 .161 No Size
54
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
151 Roberts (1992) 80 Third-party
audit
Council on Economic
Priorities (CEP) ratings
ROE Large Fortune 500 companies
profiled by the CEP
1984-6 1981-84
.203 .203 .203 No Size
152 Rockness,
Schlachter and
Rockness
(1986)
21 Environment
(objective)
Government verifiable
self-reported
environmental data on
total cumulative tonnage
of waste disposed of at
on-premise sites and
number of EPA
Superfund sites at which
company has dumped
waste, both normalized
by company asset size
and number of plants.
ROS, ROA,
ROE, excess
market value
Chemical firms (if at least 40%
of sales were chemical) who
participated in a self-reported
congressional "Site Survey"
conducted in 1979
Firms listed Table 1
1979 1969, 1979 .174 .174 .227 .008 No Industry
153 Ruf,
Muralidhar,
Brown, Janney
and Paul (2001)
488 Third-party
audit
KLD ratings ROE, ROS KLD database 1990-1991 1990-1991 .043 -.015 .100 No
154 Russo and
Fouts (1997)
243 Environment
(objective)
Data on environmental
performance
ROA, growth in
sales
Large US firms rated by the
Franklin Research and
Development Corporation
(FRDC) on environmental
performance
1991, 1992
1991, 1992
.145 .145 .145 No Industry
155 Sauer (1997) N/A Screened
mutual funds
Domini 400 Social stock
index
Stock returns S&P 500 firms, and firms in
Domini 400 Social stock index
1986-1994 1986-1994
.086 .086 .086 No Risk, Size
156 Schroder (2003)
N/A Screened
mutual funds
Varies by fund Fund returns 46 major SRI investment funds
from 10 SRI indices in the
U.S., Germany and
Switzerland with at least 30
months history
1990 -
9/2002
1990 -
9/2002
-.515 -.515 -.515 No Risk, Size
157 Seifert, Morris,
& Bartkus
(2003)
82 Charitable
donations
Charitable giving data
from the Foundation
Center
Cash flow, ROA,
ROE, ROS,
market-to-book
ratio, stock
returns
US publicly held firms with
charity information available
from the Foundation Center,
with matched pair of high
($5M+) versus low donors
N/L Year -1, 0,
+1
.144 .280 .150 .125 .128 .172 No Industry,
Size
158 Seifert, Morris,
& Bartkus
(2004)
157 Charitable
donations
Corporate philanthropy in
yearly cash and total
yearly charity via
foundations
Stock returns Fortune 1000 firms with
consistent charity data in the
Taft Corporate Giving
Directory and Foundation
Center's Foundation Directory
in 1997 or 1998, excluding
financial services and utilities
1997-1998 1997-1998 .151 .151 .245 .055 No Industry
159 Shane and
Spicer (1983)
72 Environment
(objective)
CEP reports on
environmental
performance
distinguishing low vs.
high polluters
Stock returns Industrial companies studied
by the CEP
1970-1977 day 0 to +1
.213 .213 .213 Yes Company
is its own
control
160 Shank (2005) 11 Third-party
audit
Companies appear in at
least 1/3 of screened
mutual funds
Stock returns Large companies appearing in
screened mutual funds,
compared to the NYSE
2003 1993-2003 .261 .261 .261 No Size
55
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
161 Shank (2005) N/A Screened
mutual funds
Varies by fund Fund returns Five large-cap mutual funds
listed by the Social Investment
Forum with 10-year history,
compared to the NYSE
1993-2003 1993-2003 .067 No Size
162 Simerly (1994) 110 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment",
dichotomized into high
vs. low
EPS, share price,
market value,
ROE,
sales/equity,
ROI, sales rate
Fortune 500 firms within select
industries experiencing growth
in 86-88 and decline in 89-90
1988 1986-88
.233 .210 .255 .199 .315 No Industry,
Size
163 Simerly (1995) 84 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment",
dichotomized into high
vs. low
ROE Fortune 500 firms, 42 pairs
matched within industries for
high and low CSR
1988 1988-90
.265 .265 .265 No Industry,
Size
164 Spencer and
Taylor (1987)
120 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment"
ROA, ROS Fortune 500 firms in
manufacturing industries
1982 1978-1982
.149 .196 -.043 No Industry,
Size
165 Spicer (1978) 17 Environment
(objective)
Council on Economic
Priorities (CEP) ratings
of environmental
performance
ROE, P/E ratio Pulp and paper industry firms
reviewed by CEP
1970, 72 1968-73
.515 .515 .437 .586 No
166 Starik (1990) N/L Self-report Survey measure of
stakeholder
communication
management strategies
ROI, Revenue US investor-owned electrical
utility companies
1979-1988 1979-1988
.039 .039 .039 No Industry,
Risk, Size
167 Starik (1990) N/L Observer
perceptions
Survey measure of
stakeholder
communication
management strategies;
Reputation of utility as
rated by regulators,
consumer, utility industry
members, and other
respondents
ROI, Revenue US investor-owned electrical
utility companies
1979-1988 1979-1988
.095 .095 .095 No Industry,
Risk, Size
168 Statman (2000) N/A Screened
mutual funds
Inclusion in the Domini
Social Index
Stock returns Domini Social Index and S&P
500 firms, and socially
responsible equity mutual
funds (31 total) on
Morningstar's list as of
September 1998 matched to 62
conventional mutual funds by
asset size
5/90-9/98 5/90-9/98 .127 .127 .127 No Industry,
Risk, Size
56
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
169 Staw &
Szwajkowski
(1975)
500 Revealed
misdeeds
Violations of antitrust
laws and the Federal
Trade Commission Act
ROE, ROS Fortune 500 companies with
convictions or merit found to
trade litigation vs. others. CFP
aggregated for 5 years
preceding the trade complaint.
Positive relationship without
industry control variable.
1968-1972 1954-1971 -.004 -. 004 -.004 No Industry,
Size
170 Stevens (1984) 48 Environment
(objective)
CEP estimates of
required pollution
abatement costs
Stock returns Largest firms in four industries
among the five most polluting:
pulp and paper, pertroleum
refining, steel, electrical
utilities
CEP data
release
dates
1972-1977
-11 to 0
months
.490 .490 .490 Yes Industry,
Risk, Size
171 Sturdivant and
Ginter (1977)
28 Observer
perceptions
Company ratings of
social responsiveness
made by business
journalist Moskowitz
(1972)
EPS Large US firms rated by
Moskowitz (1973), which were
in industries in which there was
variance in Moskowitz ratings
1972-4 1964-74
.455 .455 .455 No Industry,
Size
172 Teoh, Welch
and Wazzan
(1999)
46 Corporate
policies
Divestiture from South
Africa
Stock returns Dow Jones News Retrieval
announcements of firms
divesting from South Africa
1983-1989 -1 to 1 days
-.002 -.002 -.002 Yes Company
is its own
control
173 Tichy, McGill,
St. Clair (1997)
10 Observer
perceptions
Fortune magazine ratings
of "responsibility to
community and
environment"
ROE Fortune annual survey
companies rated in top 3 of
firms at least once 1983-1996,
compared to S&P 500
1983-1996 1983-1996
.758 .758 .758 No Industry,
Size
174 Travers (1997) N/A Screened
mutual funds
Varies depending on the
fund
Fund returns Sample of international
socially responsible equity
funds matched with
unrestricted funds with the
same fund manager. Effect
"not significant", presumed
zero.
7/92-6/97 7/92-6/97
.000 .000 .000 No N/L
175 Turban and
Greening
(1996)
161 Observer
perceptions
Rating of corporate
reputation by
undergraduate
management students
ROA Large US firms rated both by
KLD and Fortune, excluding
those firms whose reputation
and attractiveness was not well
known to pilot test
undergraduate management
students and faculty
1993-94 N/L,
presume
concurrent
.250 .250 .250 No
176 Turban and
Greening
(1996)
161 Environment
(objective)
KLD ratings of
environmental
performance
ROA Large US firms rated both by
KLD and Fortune, excluding
those firms whose reputation
and attractiveness was not well
known to pilot test
undergraduate management
students and faculty
1993-94 N/L,
presume
concurrent
-.020 -.020 -.020 No
57
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
177 Turban and
Greening
(1996)
160 Third-party
audit
KLD ratings of
community relations,
employee relations,
product quality, and
treatment of women and
minorities
ROA Large US firms rated both by
KLD and Fortune, excluding
those firms whose reputation
and attractiveness was not well
known to pilot test
undergraduate management
students and faculty
1993-94 N/L,
presume
concurrent
.085 .085 .085 No
178 Van de Velde,
Vermeir, &
Corten (2005)
N/A Third-party
audit
CSP scores from the
European agency Vigeo
regarding treatment of
human resources, the
environment, customers
and suppliers, community
and society, and
corporate governance
Stock returns Companies rated on CSP by
Vigeo, compared to the
European market index MSCI
EMU. Effect "not significant",
presumed zero.
2000-2003 2000-2003 .000 .000 . 000 No Risk, Size
179 Vance (1975) 49 Observer
perceptions
Ratings by urban-affairs
and public-affairs
corporate staff members
and business students in
the National Affiliation
of Concerned Business
Students
Stock returns Large national corporations
(Fortune 100 equivalent)
1972 1974
-.460 -.460 -.460 No Size
180 Verschoor
(1998)
376 Transparency Indication in an Annual
Report of a commitment
to ethics or describes the
importance of an ethics
standard or code of
conduct
Business Week
ranking on
financial
performance,
based on
acounting
measures
S&P 500 1996 1996
.151 .151 .151 No
181 Waddoc k and
Graves (1997)
469 Third-party
audit
Kinder, Lydenberg &
Domini (KLD) ratings
ROA, ROE, ROS
S&P 500 1990 1989
.124 .100 .147 No Size
182 Waddoc k,
Graves and
Gorski (2000)
483 Third-party
audit
KLD screening of
socially responsible
companies
ROA, ROE S&P 500 companies high vs.
low in KLD screens
1996 1996
.017 .017 .017 No Size
183 Waddoc k,
Graves and
Gorski (2000)
483 Screened
mutual funds
S&P 500 firms that have
passed KLD screens vs.
S&P 500 firms that
haven't
Stock returns Companies meeting vs. not
meeting inclusion criteria for
KLD screening
1996 1987-1996
.053 .053 .053 No Size
184 Waldman,
Siegel and
Javidan (2004)
56 Third-party
audit
KLD ratings along 8
categories separated into
two factors of "social"
and "strategic" using
factor analysis (excluding
alcohol, tobacco,
gambling categories as
they were not available
the entire sample period)
ROE 95 U.S and 55 Canadian firms
randomly sampled from
publicly traded firms with
Sales above $1B and CEOs
with at least 2 years tenure,
with 28% response rate to a
survey on a different topic
1991-1992 1991-1992 .274 .225 .320 .274 No Industry,
Size
58
Attributes of 192 Effects from 167 Studies Included in Meta-Analyses of Association Between Corporate Social Performance and Corporate Financial Performance
Effect Size
Timing of CSP
measure Type of CFP
Study
# Study
N
Firms CSP Type CSP Measure CFP Measure
Sample of Companies and
Other Notes
Years
for CSP
Years
for CFP Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market
Event
Study
Control
Variables
185 Wartick (1988) 252 Corporate
policies
Membership in the Issues
Management Association
representing a concerted
effort to identify and
analyze the social and
political environment
Survey rating of
CFP: long-term
investment value,
soundness of
financial
position, and
wise use of
corporation
assets
Large US firms rated by
Fortune magazine
1986 1986
.023 .023 No Industry,
Size
186 Wokutch and
Spencer (1987)
74 Charitable
donations
Archival data on
charitable giving
ROA, ROS Large manufacturing firms
rated by Fortune, for which
charitable and financial
information available
1982-84 1978-82
.323 .323 .323 No Industry,
Size
187 Wokutch and
Spencer (1987)
39 Revealed
misdeeds
Archival data on anti-
trust corporate crimes
ROA, ROS Large manufacturing firms
rated by Fortune, for which
charitable and financial
information available
1980-3 1978-82
.227 .227 .227 No Industry,
Size
188 Wright and
Ferris (1997)
31 Corporate
policies
Firm divestment from
South Africa as reported
by the Investor
Responsibility Research
Center
Stock returns Firms on IRRC South Africa
divestment list. Firms dropped
from sample if they did not
have good Sullivan ratings
prior to divestment.
Firms listed Table 1
1984-1990 day -10 to
+10
.005 .005 .005 Yes Company
is its own
control
189 Wright, Ferris,
Hiller
and Kroll
(1995)
34 Third-party
audit
U.S. Department of
Labor presents annual
award to firm with high-
quality affirmative action
policy (around 6 firms
receive awards per year)
Stock returns Department of Labor news
releases reported by the Wall
Street Journal Index and Dow
Jones News Retrieval Service
1986-1992 day -10 to
+10
.259 .259 .259 Yes Company
is its own
control
190 Wright, Ferris,
Hiller
and Kroll
(1995)
35 Revealed
misdeeds
Major settlement
announcement by firm
found guilty of
discrimination against
underrepresented
minority employees
Stock returns Department of Labor news
releases reported by the Wall
Street Journal Index and Dow
Jones News Retrieval Service
1986-1992 day -10 to
+10
.189 .189 .189 Yes Company
is its own
control
191 Yamashita, Sen
and Roberts
(1999)
49 Environment
(objective)
Fortune ratings of firms
on 20 environmental
categories. Compares
firms cited as "10
Leaders" and "10 Most
Improved" vs. "10
Laggards"
Stock returns 130 of America's largest
manufacturing companies
whose environmental
performance ranking was
reported on by Fortune
Event day
7/12/93,
data cover
1987-1993
day -24 to
+24
-.113 -.113 -.113 Yes Company
is its own
control
192 Yamashita, Sen
and Roberts
(1999)
49 Environment
(objective)
1995 Council for
Economic Priorities
(CEP) rankings of
environmental
performance
Stock returns,
earnings
49 companies rated both by the
CEP "Better Investment
Guide" (1991) and the CEP
Screen Service (1995)
1995 1986-1995 -.023 .145 -.090 -.090 .145 No Size
59
TABLE 3
Summary of Results from Meta-Analyses of 167 Studies of the Association Between Corporate Social Performance
and Corporate Financial Performance
Effect Size
Timing of CSP Measure Type of CFP Significance Test Heterogeneity Test
CSP Type Overall
CFP -->
CSP Concurrent
CSP -->
CFP Accounting Market Companies Z p-value chi-square Df p-value
Mean Values
Overall .132 . 148 .115 .140 .180 .104 27,848 16.07 <.001 742.26 166 <.001
N (192) (35) (110) (66) (75) (125)
Charitable contributions .239 .332 . 198 .292 .281 .147 1,881 6.97 <.001 83.99 12 <.001
N (13) (4) (10) (2) (10) (5)
Corporate policies .019 .111 -.031 .011 . 040 .015 942 .96 .17 23.22 11 .02
N (13) (2) (5) ( 8) (2) (9)
Environmental performance .112 -.051 .145 .106 .102 .121 8,195 8.15 <.001 140. 16 44 <.001
N (45) (5) (20) (22) ( 19) (32)
Objective .095 -.081 .117 .104 .088 .118 7, 108 6.38 <.001 126.59 36 <.001
N ( 37) (4) (15) (20) (15) (28)
Self-reported .190 . 070 .225 .127 .153 .140 1, 087 5.60 <.001 13.58 7 .06
N (8) ( 1) (5) (2) (4) (4)
Observer perceptions .287 .328 .279 .157 .320 .190 2,000 9.44 <.001 161.02 23 <.001
N (25) (6) (19) (7) (16) (15)
Revealed misdeeds .223 -.004 .227 .239 . 113 .239 1,373 5.02 <.001 51.58 15 <.001
N (16) (1) (1) (14) (2) (14)
Screened mutual funds .024 .053 .021 - - .014 3,271 - - - - -
N (29) (1) (27) (0) (0) (26)
Self-reported performance .210 .200 . 171 .272 .171 .272 967 4.78 <.001 38.94 7 <.001
N (9) (3) (5) (1) (6) (1)
Third-party audit .080 .142 .041 .096 .114 .059 7,386 4.12 <.001 41.23 26 <.001
N (28) (8) (14) (9) (11) (17)
Transparency .078 .079 .029 .191 .102 .056 1,833 3.12 <.001 39.19 13 <.001
N (14) (5) (9) ( 3) (9) (6)
Median
Overall .082 . 164 .055 .112 .133 .053
Charitable contributions .161 .302 . 137 .284 .203 .055
Corporate policies .005 .111 .005 .002 .040 -.002
Environmental performance .094 .133 .159 .060 .130 .075
Objective .077 . 139 .105 .052 .105 .070
Self-reported .181 . 070 .233 .127 .152 .130
Observer perceptions .229 .316 .153 .265 .258 .135
Revealed misdeeds .192 -.004 .227 .192 . 111 .192
Screened mutual funds .021 .053 .010 - - .005
Self-reported performance .124 .120 . 039 .272 .122 .272
Third-party audit .042 .132 .000 .100 .089 .001
Transparency .024 -.009 .023 .129 .023 .024
Weighted Mean
Overall .101 . 120 .102 .085 .140 .086
Charitable contributions .220 .273 . 213 .215 .254 .071
Corporate policies .038 .080 .006 .026 .041 .049
Environmental performance .090 .099 .137 .066 .088 .083
Objective .078 . 124 .114 .064 .062 .081
Self-reported .169 . 071 .223 .091 .149 .104
Observer perceptions .296 .338 .267 .162 .332 .267
Revealed misdeeds .104 -.004 .237 .165 . 012 .165
Screened mutual funds - - - - - -
Self-reported performance .128 .119 . 075 .285 .141 .285
Third-party audit .037 .102 .015 .081 .083 .011
Transparency .099 .047 .100 .096 .079 .127
Note: Weighted means, significance and heterogeneity tests include only those studies reporting the number of companies sampled.
Insufficient numbers of screened mutual fund studies provided data regarding number of companies.
Values in parentheses are the number of effects on which the above coefficient is based. Total effects = 192.
60
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