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Corporate Financial Performance and Corporate Social Performance: An Update and Reinvestigation
Abstract
For some time, researchers have been investigating the relationship between a firm's corporate financial performance (CFP) and its corporate social performance (CSP). Although most studies indicate that CSP is a determinant of CFP, other aspects of this research have been inconsistent. Some studies are criticized for using unreliable CSP measures; others for missing control variables; and still others for assuming linearity without valid testing. This paper responds to these issues with an updated study of the CSP–CFP relationship, testing two approaches to measuring CSP, controlling for key variables identified in the literature, and testing for nonlinearity of certain independent variables. Chief among our findings is a positive CSP–CFP relationship, which supports proponents of stakeholder theory. We also determine that empirical models specifying two CSP component measures are stronger than those using a fully aggregated measure. Lastly, we find that control variables must be properly specified to avoid bias and that some of these measures are quadratically related to CFP. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.
... McWilliams and Siegel (2000) highlighted the importance of R&D expenditure advertising expenses in deciding firm-level profitability. Callan and Thomas (2009) pointed out that a potential non-linearity of these control variables may affect a firm's profitability. ...
... The control variable constructions are similar to those of Callan and Thomas (2009). To account for the effect of firm size, we include three firm characteristic variables: SALES is the total sales divided by total assets at time t; ASSET is the firm's logarithm of total book asset value at time t; EMP is the logarithm of firm's total number of employees. ...
... Second, these studies may not properly control for the firm-fixed effect in their analysis. The use of fixed-effect model may drive an opposite result, as shown in the last two columns of Table 4. Table 5 examines the CSR-performance relationship again by considering the potential role of non-linearity, as in Callan and Thomas (2009). In Table 5, we include the quadratic terms of a firm's sales and asset size measures, in addition to the firm characteristic variables used in Table 4. ...
We examine how corporate social responsibility affects financial performance in the Korean market by examining a new set of data, the ESG score. Using panel regression models, we show that the ESG score is negatively related with a widely used measures of financial performance, ROA and Tobin’s Q, unlike extant studies arguing for the positive relationships. Among the three pillars of ESG performance, the social and governance scores robustly show negative relationships with ROA but the environmental score does not. The consideration of unique Korean governance structure, chaebol, does not change our findings. Our findings generally support the traditional view of corporations but argue against the stakeholder theory.
... From the perspective of CSR, the companies involved had the opportunity to develop AC projects that could engage their main internal stakeholders. Indeed, besides having a positive effect on shareholder value (Nguyen et al., 2020) and economic performance (Callan and Thomas, 2009;Saeidi et al., 2015), CSR initiatives can have an important effect on employees' organisational commitment (Glavas and Kelley, 2014) and job satisfaction (Valentine and Fleischman, 2008). Moreover, CSR can lead to increased advantages when oriented towards social enhancement (Farooq et al., 2017) and, in particular, towards internal social enhancement (Jo and Harjoto, 2011). ...
... Several studies have also attempted to assess whether CSR has an impact on financial performance. While some academics have provided evidence of a positive association between CSR and financial performance (Callan and Thomas, 2009;Nollet et al., 2016), others did not reach the same conclusion (Nelling and Webb, 2009), resulting in mixed evidence. Recently, increased attention has also been given to the indirect benefits of CSR for financial performance. ...
Purpose
This study aims to bridge a gap in literature by exploring the impact of art and culture projects on primary internal stakeholders (i.e. employees), focusing on the micro-foundations of corporate social responsibility (CSR).
Design/methodology/approach
The analysis uses a qualitative approach, using a single-case study and semi-structured interviews. The single-case study focuses on art and culture projects developed by companies participating in the public contest promoted by Parma City of Culture 2020. The analysis relies on the information gathered from interviews with the employees who were involved in the projects of seven of the winning companies.
Findings
The results suggest that employees positively assess their participation in CSR activities based on art and culture projects. Specifically, through their direct involvement in the competition employees manage to experience meaningfulness and they attribute intrinsic motives to these types of activities.
Originality/value
This study analyses the effectiveness of a publicly endorsed CSR initiative oriented towards internal social enhancement based on art and culture projects, leveraging the unique case of Parma City of Culture 2020. The findings might be beneficial to both companies and regulators aiming to achieve internal social enhancement. This study contributes to existing literature on the social dimension of CSR by emphasising the key role of art and culture projects in the organisational context and by opening new avenues for future research.
... The studies (Callan andThomas 2009, Waddock andGraves 1997) of the brighter side of the CSR disclosure suggest that the firms' activities towards the betterment of stakeholders enhance financial performance and limit the costs such as transaction, selection and capital (Song et al. 2017). The relationship between performance and CSR disclosure is stronger with long term performance measure (Tobin Q), and the firms those have higher levels of CSR disclosure tend to have higher market value (Liu and Zhang 2017) because of overwhelm response from stakeholders which not only improves the image of the company but also enhances client loyalty (Aguilera et al. 2007). ...
... It is a fact that external investors are more likely to have an interest in firm having least agency problem. Overall, the strong positive significant relation to long term performance measure as compared to short term performance measures are coherent with the findings of studies such as (Reverte 2009, Waddock and Graves 1997, and Thomas 2009. ...
This study focuses only on internal social and environmental aspects of corporate social responsibility as per general orders 2009 to define the CSR of a firm. Using the hand collected data of non-financial listed companies of Pakistan Stock Exchange from their annual reports from 2010 to 2015; this study finds that CSR is significantly positive impact on firm performance across all three proxies, while the relationship is stronger for Tobin Q as compared to return on assets and return on sales. It means that the firms those have higher levels of CSR disclosure tend to have higher market value because of overwhelm response from stakeholders, which not only improves the image of the company but also enhances client loyalty. Moreover, this study finds no significant difference in the findings of internal social and environmental disclosure, but the significant positive impact of internal social disclosure and environmental disclosure on firm performance suggests that Pakistani firms keep in mind agency as well as legitimacy theoretical prospects at the time of designing their CSR strategies.
... As mentioned before, the relationship between CSR and CFP has been discussed a lot. As Callan and Thomas (2009) reported, CSR has drawn more and more attention in recent years, because more and more companies have recognized the potential benefits, especially, the financial benefits, brought by CSR. It seems that the motivations behind CSR and the implications of CSR on companies' profitability are in the hot area of related research. ...
... It seems that there always have been heated debates in the related research which studies on their relationship. One of the original debates are the causal relationship of the linkage between CSR and CFP (Callan & Thomas, 2009). From the previous research, most of them consider CSR is the cause while CFP is the effect. ...
... Accounting indicators such as return on assets (ROA) ( Table 1 financial statements, which are supposed to explain the historical outcome of companies' past performance (Freedman & Jaggi, 1982;McGuire & al., 1988;Preston & O'Bannon, 1997;Zahra, 2008;Nelling & Webb, 2009;Mishra & Suar, 2010;Tebini, 2013;Ta & Bui, 2018), offer little indication of future performance. And stock market or market indicators such as Price Earning Ratios (PER), Market Value-Added (MVA), Market to book value (MBV), Tobin's Q, which offer a better and clearer indication of the future performance of companies (Charreaux 1998;Banker et al., 2000;Castro-Garcia, 2010;Callan and Thomas, 2009;Rodriguez-Fernandez, 2015) and refer to investors' assessments and expectations of company performance. From this, we can deduce that stock market performance admits of measuring the market value of the company while its accounting counterpart allows us to measure its efficiency. ...
... The results of these studies support a positive link between CSR and EFP (Callan & Thomas, 2009;Garcia-Castro & al., 2010;Sun, 2012;Lin & al., 2015;Rodriguez-Fernandez, 2015;Kablan, 2017;Bani-Khaled, 2021) and therefore support hypothesis 1 of "Social Impact". As they support a negative link (Lee & Park, 2010) and therefore support hypothesis 3 "trade-off". ...
... This ESG-firm score is based on the information score of the three pillars (environmental, social and governance) and the internal weighting assigned by the non-parametric PLS-SEM method. In contrast to previous literature, we avoid subjective assignments in the ESG index estimation in accordance with previous literature (Callan and Thomas, 2009;Gyönyörová et al., 2021) that considered these weights inadequate. Finally, the importance, in economic and production terms, of both subsectors within the energy industry serves as justification for this study (International Energy Agency, 2021;Lu and Lai, 2019). ...
... Namely, in our case, the environmental, social and governance dimensions added as an exact linear combination leads to the formation of the design construct that we call the ESG index. In that way, we avoid subjective assignments in calculating the ESG index in accordance with previous literature (Callan and Thomas, 2009;Gyönyörová et al., 2021) that considered these weights inadequate. Therefore, we did not use the weighted ESG score provided by the data provider Eikon, but we built our own ESG index. ...
The oil and gas sector is under pressure because of its impact on sustainability. Company’s stakeholders are aware of the ethical behavior of those firms related to hazardous activities. Literature has analyzed the relationship between corporate social responsibility and different measures of efficiency (e.g., financial performance or market value) without a conclusive result.
This research establishes an ESG index (environmental, social and governance) that allows a comprehensive measure of corporate social responsibility and its effects on corporate financial strategy. The study analyzes how the ESG index influences the value of oil and gas companies as well as their financial performance and financial risk. To do this, the PLS-SEM was applied to a sample of 219 oil and gas companies in different countries. Results show that the environmental and governance dimensions are the backbone of the ESG index that positively impact on all three.
... Depending on the empirical data employed, scientific empirical publications of studies analyzing the relationship between corporate financial performance and ESG rating can be categorized. The first category of studies analyzes financial performance using historical accounting data and key financial indicators, including returns, sales turnover, debt ratios, and other firm-or industry-specific data [26,27]. The second group of articles investigates market information in relation to ESG data, such as stock return and price [21][22][23][24][25][26][27][28][29][30][31][32][33][34][35]. ...
... The first category of studies analyzes financial performance using historical accounting data and key financial indicators, including returns, sales turnover, debt ratios, and other firm-or industry-specific data [26,27]. The second group of articles investigates market information in relation to ESG data, such as stock return and price [21][22][23][24][25][26][27][28][29][30][31][32][33][34][35]. The third set of studies examines the incorporation of accounting and market data into a single model [12][13][14][15][16][17][36][37][38][39][40][41][42][43][44][45]. ...
This article examines the environmental, social, and governance (ESG) performance of firms, with a focus on the environmental pillar of the ESG concept. It is believed that the price of equities as well as sector-specific characteristics may be affected by ESG data. It also contributes to the argument that environmental performance and governance quality are related. The purpose of this paper is to statistically validate the separated environmental data from the ESG concept and investigate its impact on the equity price in the EU and the United States. Using simple linear regressions and a fixed effect panel data model, the association between environmental score and governance score, as well as equity price and environmental score, was estimated. This study examines the 500 largest US corporations comprising the S&P 500 index (S&P) and the 600 largest EU companies comprising the STOXX Europe 600 index (STOXX) (SXXP). This article analyzes ESG statistics for the period 2015–2020. The results indicate that a higher government score has a favorable effect on environmental pledges and that changes in stock price depend in part on environmental data. The novel contribution of this paper is that the results suggest a sector-specific contribution to the model, and it would be fascinating to analyze sector disparities and their ESG-related policies in greater detail.
Doi: 10.28991/ESJ-2023-07-02-08
Full Text: PDF
... Company o cials have a severe effect on placing the route and range of corporate social performance because of their influential function inside companies (Boulouta, 2013;Wong, 2011). Valuable to this manner is vigorously mixing the pursuits of clients, providers, groups, stakeholders, personnel, and other shareholder clusters (Callan & Thomas, 2009) and recognizing whereby shareholders are applicable and essential, what elucidations to increase, and what approaches to enforce (Saha & Cerchione, 2020). As the most influential members inside businesses (Turgut, 2013), chief executive o cers are the number one selection-makers directing corporate techniques and administrative regulations (B. ...
... Through comparison, whilst chief executive o cers were in their situation for the long-term, they emerged as little subtle to adjustments in shareholder needs Mcguire et al. (2019) and were less possibly to alter firms' strategies (Melo, 2014). Chief executive o cers with lengthy tenancy protect themselves from the latest records Callan & Thomas (2009); and their perspectives grow to be institutionalized Neubaum & Zahra (2006), which decreases chief executive o cers' vigilance to modi cations within the external commercial enterprise environment (Zhang, 2018). But, rst, in their tenancy, chief executive o cers are detained under inspection by insider and outsider shareholders (Slater & Dixon-fowler, 2009). ...
Exchange in strategic leadership has necessary insinuations in place of corporate social performance and acceptability. Such as, new chief executive officers ensure a robust inducement to join massive investors to shape their acceptance as accurate with and reputation inside the firm. We look at the Salience Theory of Stakeholder to look at a state line circumstance, the financial distress presence, which could create a new chief executive officer's potential to perform this task. We amalgamated the records with the South Asia record to achieve basic statistics up to the firm-level. This stage furnished 9,647 observations for 759 organizations. We discuss the differential impacts among externally recruited chief executive officers (outsiders) and internally promoted chief executive officers (insiders) beneath the financial distress’ situation. We discuss that after organizations revel in financial distress; chief executive officers (outsiders) may rapidly transfer their interest and place in order hobbies of the shareholders on investors than chief executive officers (insiders). Our observation supports the strategic leadership and corporate social performance literature via offering the latest visions mad about how the turnover of corporate management and the context of firms could mutually form innovative decision-making of chief executive officers in the engagement of corporate social performance.
... Some researchers (e.g. Callan & Thomas, 2009;Xiong et al., 2016) questioned the existing longitudinal data approaches, which have tested the relationship for a total period and generalized the results. They argue that this relationship is time dynamic in nature, and results vary according to country and industry level focus, which many studies have ignored. ...
... In contrast, ROA is an accounting-based measure calculated on past data to assess profitability. Researchers used control variables such as firm size to make the results more relevant and reduce spuriousness in results (Callan & Thomas, 2009;Lu et al., 2014). Overall ESG score and individual ESG score elements have been considered in this study to examine the relationship with firm value as a dependent variable and firm size as a control variable in the study (Grewatsch & Kleindienst, 2017). ...
Purpose
The study aims to identify the impact of board characteristics (BC) on a firm's environmental performance, and provides future research directions in the area of BC impact on environmental disclosures (ED) in case of India's environmentally sensitive and non-sensitive industries (SI and NSI).
Design/methodology/approach
The authors collect firm-level data from Prowess and Bloomberg, which cover 1,158 firm-year observations from National Stock Exchange of India (NSE) 500 listed companies from 2015 to 2020, and use a dynamic panel regression analysis to get deeper insights on the relationship of ED and BC.
Findings
The study found that lagged environment disclosure score is positively and significantly associated with current environmental disclosure scores. The presence of sustainability committee, board size and frequency of meetings has a positive and significant association with ED for sensitive as well as non-sensitive industry groups. Factors such as board Independence, board gender diversity and CEO duality have no significant impact on ED of both sensitive and non-sensitive industry groups.
Originality/value
Based on agency theory and stakeholder theory authors study for the first time in the context of India the effect of BC on ED using a large sample and covering an extensive period of six years. This study contributes by offering deep insights about the impact in case of “environmentally sensitive, non-sensitive and also all industries case”. The findings of this study are valuable for corporate managers and regulators who are interested in improving ED practices through a better-governed corporate mechanism.
... The current literature suggests that corporate social responsibility (CSR) and corporate financial performance (CFP) are interrelated. Most studies (Weber, Scholz and Michalik, 2008; Callan and Thomas, 2009;Cho, 2016) emphasize the positive impact of CSR on financial performance. For example, Bagh et al. (2017) suggest that when commercial banks in Pakistan increase the amount of investment in CSR, the bank performance increases significantly. ...
Previous studies on the relationship between corporate social responsibility (CSR)and corporate financial performance (CFP)have not been conclusive. This paper reviews the literature on the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP). Furthermore, it examines the factors that moderate the relationship between the two, including corporate reputation, customer satisfaction, ethical leadership, ownership concentration, institutional environment and market competition, based on legitimacy theory and stakeholder theory. The results show that the relationship between CSR and corporate performance is affected by corporate reputation, customer satisfaction, ethical leadership, ownership concentration, institutional environment and market competition. This paper may have implications for corporate management and policy makers.
... Finally, H3 proposes a relationship between the role of commitment to customers and the results of the organization through the use of the CSR strategy. This hypothesis has been proven, and there is evidence from previous international studies that supports this relationship (Callan and Thomas, 2009;Chen et al., 2018) and there are even studies at the Latin American level (Boaventura et al., 2012). In this sense, Mexican organizations must promote strategies that support social responsibility to achieve better levels of financial and non-financial performance within their organizations. ...
Purpose: This study investigates, from a corporate social responsibility (CSR) perspective, the relationships that exist between selected interested publics and the results of the organization from the point of view of its administrator. Design/Methodology/approach: For this purpose, a survey was conducted and analysed using partial structural equations. This study was conducted in four states in the central region of Mexico. The variables under study were: environmental, social, employee and investor’s commitment as perceived by managers and organizational results. First, the validity of the construct was verified, and subsequently, the relationships between the variables for which the results were satisfactory were analysed. Findings: The relationships between environmental, social, employee, and customer commitments were verified. Finally, the relationship between the client's commitment and the results perceived by the administrator is verified. It is concluded that more efforts are being made in this line of research to identify the progress of Mexican organizations’ CSR strategies. Suggested research for future work is also presented, considering new trends in the approach presented. Originality/value: The results confirm the of the manager/director’s commitment is essential to CSR and their results. In the Mexican case, there are few studies related to this important topic. This research could be also helpful for Latin-American business.
... In these studies, the direction of the relationship, its shape, and its change over time, and the changing causality in the form of U or inverted U have been discussed in many aspects, such as the relationship between them. When the essence of these studies is considered in general, it has been revealed in all these studies that organizations and companies that are considered sustainable have higher financial performance and that this financial performance is not short-term (Callan & Thomas, 2009;Shamil et al., 2012;Ameer & Othman, 2012). ...
The aim of this study is to evaluate the Islamic banking sector with the help of financial performance criteria and to reveal whether the sector is sustainable or not. The sustainability analysis uses the latest unit root tests that take into account Fourier expansions. The study uses unit root tests, which are generally used to analyze the sustainability of public debt, with updated versions that differ from the literature and with the help of financial performance indicators of the banking sector for sustainability analysis. The study uses the data of the Islamic banking sector operating in the member countries of the Gulf Cooperation Council (GCC) for the 4th quarter of 2013 and the 2nd quarter of 2022. The quarterly data of "ROA, ROE and Net Profit Margin" are considered as financial performance indicators for sustainability analysis. Although the results of the empirical analysis show different results for each of the financial indicators of Islamic banking in the analyzed countries, in general it shows that the Islamic banking sector operating in all GCC countries except the UAE is sustainable in terms of the financial indicators used in at least one category. These results show that the development of Islamic banking is real and promising for the future. Therefore, the development of projects that contribute to the development of the Islamic financial sector and the support of this sector is an important responsibility for the relevant parties. It is expected that these results will provide important signals to the policymakers of the respective countries and contribute to the healthy development of the Islamic banking sector.
... The resource-based view focuses on how a company may utilize its resources to achieve its competitive advantage (Kraaijenbrink et al., 2010). The involvement in CSRR, CSRA, and GRI adoption requires companies to incur a greater cost (Haji et al., 2023), which could cause them to concede their competitive advantage and affect their financial performance (Callan and Thomas, 2009). Based on the aforementioned facts, a differentiation strategy necessitates companies to heavily invest in R&D to maintain their competitive advantage; therefore, we expect that for companies with a differentiation strategy, CSR reports do not appear to be their priority, and hence our second hypothesis will be stated as follows. ...
... Second, this study might help managers and decision-makers view digitalization and SCR as fruitful investments that generate SP, instead of focusing merely on their costs and expenditures. In addition, achieving SP might have positive ramifications for financial performance (Callan and Thomas, 2009). Thus, our study underlines the potential that digitalization, SCR, and SP might hold for firms. ...
This research investigates the influence of digitalization on supply chain resilience (SCR) as well as the effects of
SCR on social performance (SP). The paper also investigates the moderating role of COVID-19 disruption in-
tensity. Stakeholder dynamic capabilities view (SDCV) theory is the theoretical background that anchors this
article. The empirical investigation adopted a quantitatively based survey and a partial least squares structural
equation modeling data analysis approach. The findings indicate that digitalization can influence SCR positively
and significantly, and SCR can significantly affect SP. The findings reveal a surprising result concerning
disruption intensity and digitalization. Instead of corroborating the influence of disruption intensity on digita-
lization deployment and SCR, the findings indicate that the moderating effect of disruption intensity is only
significant for the relationship between SCR and SP. The results attest to the influence of digitalization on SCR
and SP, offering further research avenues and implications for practice.
... Arbitrary, discretionary weighting postulates that the relative importance of features to the holistic construct is known by the rater, which is obviously not true (Callan and Thomas, 2009). For example, ESG ratings may overestimate the meaning of programs and policies for reducing a business' impact on society relative to substantial outcomes (Delmas and Burbano, 2011). ...
Purpose
The purpose of this study is to develop a method to assess social performance. Traditionally, environment, social and governance (ESG) rating providers use subjectively weighted arithmetic averages to combine a set of social performance (SP) indicators into one single rating. To overcome this problem, this study investigates the preconditions for a new methodology for rating the SP component of the ESG by applying machine learning (ML) and artificial intelligence (AI) anchored to social controversies.
Design/methodology/approach
This study proposes the use of a data-driven rating methodology that derives the relative importance of SP features from their contribution to the prediction of social controversies. The authors use the proposed methodology to solve the weighting problem with overall ESG ratings and further investigate whether prediction is possible.
Findings
The authors find that ML models are able to predict controversies with high predictive performance and validity. The findings indicate that the weighting problem with the ESG ratings can be addressed with a data-driven approach. The decisive prerequisite, however, for the proposed rating methodology is that social controversies are predicted by a broad set of SP indicators. The results also suggest that predictively valid ratings can be developed with this ML-based AI method.
Practical implications
This study offers practical solutions to ESG rating problems that have implications for investors, ESG raters and socially responsible investments.
Social implications
The proposed ML-based AI method can help to achieve better ESG ratings, which will in turn help to improve SP, which has implications for organizations and societies through sustainable development.
Originality/value
To the best of the authors’ knowledge, this research is one of the first studies that offers a unique method to address the ESG rating problem and improve sustainability by focusing on SP indicators.
... Building a focus on social relations can benefit a company by retaining human resources, improving customer retention, enhancing productivity through environmental management, building better local community relationships, and attracting socially and ethically-minded investors [24][25]. Similarly, Callan and Thomas [31] documented the positive relationship between corporate social practice and corporate financial performance. Busch and Friede [32] demonstrated a highly significant and positive social and financial performance relationship. ...
In today's competitive economic landscape, companies around the world face mounting pressure to innovate and incorporate cutting-edge technology, particularly Industry 4.0 (IR4), into their operations. As a result, investing in the development and adoption of advanced IR4 technology has become increasingly crucial for businesses looking to remain competitive. Additionally, there is growing demand for companies to prioritize their responsibilities to society, including improving their workforce, upholding human rights, supporting local communities, and ensuring product safety and reliability. In light of these factors, it is important to investigate the relationship between a company's commitment to Industry 4.0 (IR 4.0) and societal well-being with the overall firm performance. This study examines a sample of 309 firm-year observations from publicly listed companies in Malaysia between 2010 and 2018, utilizing data from the Refinitiv database and employing multiple regression analysis. The results of the study demonstrate a positive association between a company's commitment to IR 4.0 and societal well-being with its overall firm performance. Further analysis also shows that individual components of social scores, such as workforce, human rights, community, and product responsibility, have a positive impact on firm performance. The findings of this study offer valuable insights to investors and policymakers, suggesting that a company's commitment to adopting digital technology and promoting societal well-being can lead to improved performance.
... SP measures the firm's performance using metrics related to jobs creation, ensuring adequate working conditions, employees' development and empowerment, safety and health (Short et al., 2016). In several firms there is an increasing awareness of the value of such social metrics because they contribute to influence financial performance as well (Callan & Thomas, 2009). SHP has both internal and external effects on firms' reputation, social performance (SP) and communities (Devi et al., 2021). ...
his research studies the impact of normative pressure (NP) on safety and health practices (SHP) and the influence of the latter on social performance (SP) and supply chain resilience (SCR) under the moderating role of adoption timing of SHP following COVID-19 outbreak. The theoretical background of this research is anchored in a social-ecological perspective of SCR and draws on the novel combination of stakeholders’ resources-based view (SRBV) and institutional pressure theories. The findings of the empirical study using structural equation modeling analysis indicate that NP influences positively and significantly SHP. Also, a positive and significant impact of SHP on both of SCR and SP is revealed. This study provides several insights by highlighting how firms adopting social sustainability practices such as SHP can build stronger resilience to various threats of disruptive events while improving their SP. Such positive outcomes can be achieved by implementing safety protocols, ensuring health monitoring and communication, and establishing contingency plans based on stakeholders’ requirements in a timely manner.
... Moreover, high impact, medium impact, and low impact are dummy variables that have the value 1 when they belong to high, medium, and low effects on the environment, and others are 0. All variables were winsorized with 0.1 value to trim outliers. We use the pooled ordinary least square (OLS) method for panel data regression using Stata 15 for the analysis to estimate Models 1 and 2, testing the relationship between SR and financial performance [59]. As the results of the relationships between variables are mixed in the literature based on both accounting measures (ROA model) and market measures (Tobins' Q model). ...
The relationship between Sustainability Reporting and corporate financial performance is overlapping and multifaceted and it has been an interesting issue for both academics and professionals since the beginning of the millennium. Studies have found divergent results on this relation and the industrial differences are omitted in many papers. Moreover, studies considering developing countries are scarce. The purpose of this study is to shed light on the relationship between sustainability reporting and firm performance in a developing country context. The impact of sustainability reporting is investigated using pooled ordinary least square (OLS) method for panel data regression through two models based on Tobin’s Q and ROA. A total of 920 observations for 46 companies with 3 different impact levels based on their environmental effect and 5-year quarterly panel data between 2016–2020. The research used data from Borsa Istanbul (Istanbul Stock Exchange) and also independent variables such as leverage, risk, size, current ratio, growth, sustainability reporting, and the environmental impact level of companies. The results showed that sustainability reporting has a significant positive impact on financial performance according to the ROA model, and a significant negative correlation between risk and financial performance according to both ROA and Tobin’s Q models. Considering the environmental impact of companies, the results also reveal a positive relationship between high impact companies’ sustainability reporting and short-term financial performance as ROA is an accounting-oriented measure that reveals the company’s short-term financial performance. Further research should investigate the impact of sustainability reporting in different markets based on the impact level of companies and the development degree of countries.
... CSR may not reward the companies in the short run, however, in the long run, the higher reputation results in lower cost of capital, and ultimately higher valuation. Higher CSR spending by a company has a positive impact on its CSR reputation, which positively impacts the investor confidence in a company, and thus its market based financial performance (Kansal et al, 2014;Govindarajan and Amilan, 2013;Akpinar et al, 2008;Mittal et al, 2008) and accounting based financial performance (Pan et al, 2014;Govindarajan and Amilan, 2013;Rajput et al, 2012;Callan and Thomas, 2009). Institutional Investors recognize a company's social responsibility (Dyck et al, 2015) as, investment in CSR positively impacts the corporate reputation (Kansal et al, 2014). ...
... Tobin's Q is used as an indicator of the degree of information asymmetry. We expect a positive correlation between TOBINQ and carbon disclosure (Anderson & Frankle, 1980;Callan & Thomas, 2009;Healy & Palepu, 2001). ...
Based on an international sample, this study examines the association between corporate carbon assurance and carbon disclosure. We find that companies that adopt carbon assurance tend to have better carbon disclosure quality than their unassured peers. Cross‐sectional analyses demonstrate that the positive relationship is stronger in stakeholder‐oriented countries. We also document that carbon assurance plays a substitutive role for country‐level carbon regulation and social trust. Further analyses suggest that carbon assurance has differential impacts on specific types of carbon disclosure and the quality of carbon disclosure increases with the percentage of reported emissions assured and the level of carbon assurance.
... CSR would limit information asymmetry (Bouslah et al. 2013) and extra-financial risk (Archambeault, Dezoort and Hermanson 2008). Callan and Thomas (2009) argue that portfolios comprising sustainable stocks outperform their benchmarks. These results would be driven by an improvement in reputation (Salama et al. 2011). ...
In this paper, we examine the relation between corporate social responsibility and corporate financial performance in a bullish market. Previous studies have heterogeneous results, mainly due to differences in the samples and statistical approaches used. To resolve these issues, we use an innovative approach through explainable artificial intelligence (XAI). To reflect the recent expansions of CSR practices, we propose a longitudinal analysis of the US market from 2014–2019. We find that in a bullish market, CSR is negatively related to financial market performance. Through the use of XAI, we show that CSR exclusively improves the financial performance of the most sustainable companies. We also highlight the existence of thresholds that modify the relation between the level of CSR and our financial variables.
... (2015) have analysed the relationship between disclosures of corporate social performance and financial performance and revealed that some social performance indicators display a significant and positive correlation with ROE. Despite many authors (Callan & Thomas, 2009;Orlitzky et al., 2003;Waddock & Graves,1997;Adhima 2012) supporting the idea, that there is a positive relationship between the company's sustainability and financial performance, there are another groups of authors (Adeniyi & Fadipe, 2017;Makori & Jagongo, 2013;Margolis & Walsh, 2003) neutral or neglecting the positive relation between company's sustainability and financial performance. ...
... ; Callan etThomas, 2009 ;Waddock et Graves, 1997 ;Ahmed, Nanda, et Schnusenberg, 2010). La deuxième croyance est l'inverse, à savoir que les performances financières des entreprises rendent possible la responsabilité sociale des entreprises. ...
Cette étude explore l'impact de la RSE sur la performance globale des entreprises (PGE). Pour atteindre son objectif, la thèse mobilise la théorie des parties prenantes, la théorie sociologique et morale et la théorie du leadership et adopte une approche interdisciplinaire holistique en se concentrant sur l'ampleur, la portée et le contexte de l'adoption de la RSE. En outre, la recherche est basée sur une approche mixte et son analyse s'appuie sur 31 réponses d'entreprises marocaines cotées à la Bourse de Casablanca, à l'aide d'un questionnaire pour l’analyse quantitative et de 33 entretiens semi-structurés pour l’analyse qualitative. Les résultats révèlent que les pratiques de RSE ont un impact positif sur la performance globale des entreprises. Les motivations principales des entreprises qui adoptent de telles pratiques restent la rentabilité, la compétitivité et la légitimité, la prise en compte de l'environnement, le développement durable et le développement économique et social. Tous ses aspects sont ressentis comme une source de compétitivité, d'innovation et d'opportunités de différenciation. L'étude montre également que ces concepts ont une corrélation positive avec la performance globale des entreprises et que leur inclusion dans les stratégies des entreprises étudiées gagne en popularité. Toutefois, l'accent mis sur la communication et le marketing pour mettre en évidence les pratiques de RSE peut être interprété comme une tentative de ces entreprises de convaincre, ou même d'induire en erreur, les parties prenantes afin de gagner leur confiance. La légitimité de cette tentative repose sur le respect des meilleures pratiques sociales (en termes de recrutement, de formation et de conditions de travail, réduction de la pauvreté, etc.) et environnementales (respect de l'environnement, préservation de la biodiversité, réduction des risques d'intoxication, etc.) ce qui en retour devrait accroître la performance globale et la légitimité de l'organisation.
Globally, the essentials of adhering to ESG (Environmental, Social, and Governance) frameworks has grown manifold across sectors and regions due to their multifaceted impact on businesses, investors, and society at large. In recent times the alignment between ESG and Corporate Financial performance (CFP) is gaining significant interest. The influence of the relationship between ESG factors and CFP differs depending on the specific characteristics of nations and their institutional frameworks. The primary objective of this study is to examine the reciprocal causality and autoregression (AR) impacts between ESG performance and the financial performance of BRICS firms through the analysis of data utilizing a five-wave cross-lagged panel structural equation modelling approach. The overall and individual ESG scores of BRICS listed companies from the Refinitiv Eikon database between 2018 and 2022 has been used. The results of research are beneficial for a variety of stakeholders including investors and policymakers.
Purpose
With corporate social responsibility (CSR) becoming mandatory, several firms in India have been compelled into spending resources on CSR while their business strategy and processes were unprepared to take up CSR activities, effectively. In this light, the CSR relationship with other business functions would be altered. Using Thomson Reuters data from 2010 to 2018 (pre-mandate to post-mandate) this study aims to re-examine the relationship between CSR and financial performance.
Design/methodology/approach
The current study is rooted in the bandwagon-bias effect theory and uses a long-term data (2010–2018) of Indian firms. It uses Refinitiv Thomson Reuters ESG rating to measure CSR and accounting measures for financial performance (FP) to make a pre-post analysis of the impact that mandatory CSR regime has had on firms performance. The study uses the weighted panel regression method.
Findings
The relationship between CSR and FP is different when CSR was voluntary than when it has been mandated by Law. CSR has a positive effect over the FP during the voluntary phase but this positive relationship weakens during the mandatory phase. The waning effect of CSR over FP substantiates the presence of bandwagon bias effect which can be explained by the crowding-in of several companies engaged in CSR activities because of the mandatory CSR law.
Research limitations/implicationsv
Few countries have made CSR mandatory therefore CSR literature is limited. But mandating CSR is a growing phenomenon so this study augments to the body of knowledge. Until now literature generally converged on a positive relationship between CSR performance and FP but the current study shows altering directions to this relationship in a changing CSR environment. The use of the bandwagon-bias theory contributes to the theoretical approaches. Theoretically, the findings add to the body CSR literature and offer impetus to the evolving domain of impact measurement and reporting.
Practical implications
Results of the study offer a clear indication to managers that they need to re-strategise their CSR activities during the mandatory CSR environment if they wish to draw instrumental benefits of a positive impact on the FP of their firms. CSR expenditure is now a leveller so managers may either exceed the mandatory 2% expenditure as some firms did during the voluntary CSR phase or else design their CSR implementation plans to bring about a more impactful positive change. Communicating the impact of CSR to influential and powerful stakeholders beyond the mandatory reporting to the government is yet another way through which managers can draw benefits of CSR activities. Additionally to draw positive results from CSR activities firms may consider adopting international reporting and benchmarking standards such as the GRI and ISO 26000. Finally, the results of the study can be used by policymakers to make a note that the CSR law is causing a weakening of the financial benefits and therefore.
Social implications
The results of the study can be used by policymakers also need to make a note that the CSR law is causing a weakening of the financial benefits and therefore firms are adopting shortcuts, by donating the required amount of funds. But donation of funds defeats the real purpose of mandatory CSR which is social impact, therefore the regulators may want to make the necessary changes unplug the gaps in the CSR law to ensure better adherence to the law in spirit and a real impact on the ground activities.
Originality/value
While CSR–FP relationship has been extensively explored but limited studies have explored this relationship in a mandatory CSR environment and no other work presents a comparative view of the CSR–FP relationship, namely, before and after the mandatory CSR policy. The current study is one of the limited few studying the impact of mandatory CSR policy on FP, and the only one that uses the bandwagon-bias effect to explain the phenomenon of weakening impact of CSR on FP of firms. Bandwagon-bias effect has been used in studying consumer behaviour, where group effect impacts behaviour of individuals and with mandatory CSR policy, firms following the other firms leading to crowding in. Using the bandwagon-bias effect has found limited attention from the CSR scholars, the current study uses this theoretical basis and therefore augments the CSR literature.
Purpose
This study examines the evidence of the impact of climate change on the financial performance of basic materials companies in Vietnam.
Design/methodology/approach
The research sample includes eighty-two basic materials companies listed on the Vietnamese stock market from 2003 to 2022. This study used one-way and two-way fixed-effects feasible generalized least squares (FGLS) estimation methods.
Findings
Climate change, measured through variables including changes in temperature, average rainfall, greenhouse gas emissions and rising sea levels, has a negative impact on the financial performance of companies in this industry. The study also found that, with rising temperatures, the financial performance of steel manufacturing companies decreased less than that of coal mining and forestry companies, but increasing greenhouse gases and rising sea levels reduced the financial performance of steel companies. We did not find evidence of any difference in the impact of climate change on the financial performance of basic materials companies before and after the UN Climate Change Conference (COP 21). This is a new finding, which is consistent with empirical studies in Vietnam and different from previous studies in that it provides new evidence on the impact of climate change on the financial performance of basic materials companies in the Vietnamese market and cross-checks the impact of climate change by sector and over time.
Originality/value
To the best of our knowledge, this is one of the first articles on climate change and the financial performance of basic materials companies.
Kurumsal sürdürülebilirlik sosyal, ekonomik ve çevresel boyutları olan ve aynı zamanda kurumların kârlılık ve etkinliklerini de dikkate alan bir yaklaşımdır. Yatırımcılar yatırım kararı verirken işletmenin kârlılığının yanı sıra sosyal ve çevresel alana yönelik duyarlılıklarını da izlemektedir. Küreselleşmenin yaygınlaşmasıyla artan rekabet işletmelerin yaşam sürelerinde de etkili olabilmektedir. Bu açıdan kurumsal sürdürülebilirlik firmaların amaç ve hedeflerinde de değişikliklere sebep olmaktadır. Bu değişen anlayışla birlikte işletmelerin maksimum kâr hedefinin yanında çevresel ve sosyal alanlarda etkinliğin sağlanması elzem hale gelmiştir. Bu bağlamda, çalışmanın amacı kurumsal sürdürülebilirliğin işletme performansı üzerindeki etkisini tespit etmektir. BİST 30 endeksinde yer alan işletmelerin aynı zamanda sürdürülebilir endeksinde yer almasının işletme performansı üzerindeki etkisinin incelenmesi çalışmanın odak noktasını oluşturmaktadır. Bu çalışma ile sürdürülebilirlik faaliyetlerinin işletme performansı üzerinde etkisinin araştırılması ya da ortaya çıkan bu etkinin performansı arttırıcı veya azaltıcı etkilerinin belirlenmesi işletmelerin sürdürülebilirlikle ilgili faaliyetlerini gözden geçirmelerinde yardımcı nitelikte olacaktır. Türk ekonomisinin 2010Q2-2020Q4 dönem aralığının incelendiği çalışmaya toplam 13 işletme dahil edilmiştir. Panel veri analiz yöntemi kullanılarak yapılan çalışmanın ampirik sonuçlarına göre, rassal etkili panel veri modelinde sürdürülebilirliğin firma performansı üzerinde anlamlı bir etkisi bulunamamıştır. Sürdürülebilirliğin anlamlı etkisinin bulunmadığı model sürdürülebilirliğin işletme performansı üzerinde etkinin yönü hakkında bir fikir vermemektedir. Ancak ortaya çıkan bu sonuç sürdürülebilirliğe yönelik önem ve ilginin yeterli düzeyde olmadığını destekler niteliktedir.
This study examined the disclosure of social footprint on firms' value in Nigeria. In other to achieve the targeted objective, perceptual data on social footprint and firms' value were collected from seven (7) oil and gas firms listed in the Nigerian Exchange Group(NEG) from 2012 to 2021. The 7 companies selected formed a sample representation of the population and also created 70 observations as panel data. The sampling technique used for this study was non-probability sampling since the study data was secondary data, and also purposive and quantitative. Social footprint which is the independent variable was proxy as Community disclosure (COMD), employee relation disclosure (EMPD), and customer complaint disclosure (CCCD), while firm value (the dependent variable), was measured using Tobin Q (TOBQ). Findings indicate that community disclosure significantly improves the firm value of listed oil and gas firms in Nigeria. Therefore, this result implies that positive variations in the firm value of listed companies in Nigeria are accounted for by community-related information disclosed by such firms. More so, the result of Hypothesis Two tested shows that employee relation disclosure insignificantly decreases the firm value of listed oil and gas firms in Nigeria. Therefore, employee relation disclosure does not decrease the value of listed firms in Nigeria. This also supports the view that a good association with employees can result in better productivity, thereby reducing lawsuits and related expenses that will ultimately lead to higher profit. Furthermore, the result obtained from hypothesis three shows that customer complaints disclosure significantly improves the firm value of listed oil and gas firms in Nigeria. This implies that positive variations in firms' value of listed companies in Nigeria are also accounted for by customer complaints disclosures. Overall, these findings suggest that responsible business practices toward primary stakeholders can be profitable and beneficial to firms in Nigeria.
This study examined the disclosure of social footprint on firms' value in Nigeria. In other to achieve the targeted objective, perceptual data on social footprint and firms' value were collected from seven (7) oil and gas firms listed in the Nigerian Exchange Group(NEG) from 2012 to 2021. The 7 companies selected formed a sample representation of the population and also created 70 observations as panel data. The sampling technique used for this study was non-probability sampling since the study data was secondary data, and also purposive and quantitative. Social footprint which is the independent variable was proxy as Community disclosure (COMD), employee relation disclosure (EMPD), and customer complaint disclosure (CCCD), while firm value (the dependent variable), was measured using Tobin Q (TOBQ). Findings indicate that community disclosure significantly improves the firm value of listed oil and gas firms in Nigeria. Therefore, this result implies that positive variations in the firm value of listed companies in Nigeria are accounted for by community-related information disclosed by such firms. More so, the result of Hypothesis Two tested shows that employee relation disclosure insignificantly decreases the firm value of listed oil and gas firms in Nigeria. Therefore, employee relation disclosure does not decrease the value of listed firms in Nigeria. This also supports the view that a good association with employees can result in better productivity, thereby reducing lawsuits and related expenses that will ultimately lead to higher profit. Furthermore, the result obtained from hypothesis three shows that customer complaints disclosure significantly improves the firm value of listed oil and gas firms in Nigeria. This implies that positive variations in firms' value of listed companies in Nigeria are also accounted for by customer complaints disclosures. Overall, these findings suggest that responsible business practices toward primary stakeholders can be profitable and beneficial to firms in Nigeria.
The last few decades have witnessed serious sustainability challenges such as economic uncertainty, depletion ozone layer, increase in pollution, urban decay, overpopulation, degradation, and shortage of natural resources, etc. The increasing pace of change and rising competition has posed unknown challenges and unparalleled pressure on the corporates not only to prosper, but also to sustain in future. With customers, investors, and other stakeholders becoming increasing aware and critical about sustainable practices, the companies are forced to think past short term monetary gains. As there exists an interdependence, integration, and co-creation among the three basic tenets of sustainability-people, planet, and profits. There is a global call on companies to pursue socially responsible conduct and adopt innovative practices which create value for people, planet, as well as economy.
يهدف هذا البحث: إلى بيان تأثير الافصاح عن رأس المال الفكري في الأداء المالي في المصارف العراقية. تناول البحث عينة من المصارف العراقية المدرجة في سوق العراق للأوراق المالية، مكونه من (15) مصرفاً للفترة (2010-2019)، وتم قياس الافصاح عن رأس المال الفكري من خلال تحليل المحتوى، في حين تم قياس الأداء المالي من خلال القيمة الاقتصادية المضافة ومن خلال العائد على الموجودات وتم استخدام معامل الارتباط والانحدار في التحليل الاحصائي. توصل البحث إلى أن هناك علاقة ارتباط ايجابية (طردية) ذات دلالة معنوية بين الإفصاح عن رأس الفكري (بمكوناته الثلاث) مع الأداء المالي حسب مقياس العائد على الموجودات، وهذا يدل على أنه كلما زاد التوجه نحو الإفصاح عن رأس المال الفكري في المصارف عينة الدراسة، فإن ذلك سيرافقه ارتفاع في مستوى العائد المتحقق على الموجودات. كما توصلت البحث إلى أن هناك علاقة تأثير ذو دلالة معنوية للإفصاح عن راس الفكري في الأداء المالي حسب مقياس القيمة الاقتصادية المضافة.
Society has gradually realized that companies’ actions have consequences. Companies can fulfill their accountability to society by disclosing information beyond their financial data, providing better decision making for stakeholders. Therefore, this study aims to investigate the impact of corporate social responsibility (CSR) on earnings persistence (EP) for the moderator roles of operational efficiency and financing cost for the companies listed on the Tehran Stock Exchange. For this purpose, the statistical population consists of 714 firm-year observations from 2014 to 2020 (7 years). A multivariate regression method was used based on the panel data analysis method to test the research hypotheses. The results indicate that corporate social responsibility for earnings persistence has a positive and significant relationship with the moderator role of operational efficiency, but is unrelated to the moderator role of financing cost. The majority of the prior research in this field has focused on developing countries. An international perspective is critical, and this study helps draw a more contextualized picture of sustainability than before.
Purpose
The past years have seen more studies exploring corporate sustainability performance (CSP) and firm performance nexus, but there has been a lack of analysis using bibliometric studies. This study aims to provide a structure for the CSP-firm performance relationship to gain valuable insights for further research.
Design/methodology/approach
Bibliometric analysis was carried on 462 articles from the Scopus database spanning 1987–2022 using VOSviewer and R software Bibliometrix.
Findings
The study overviews the most notable articles, authors, journals, countries and institutions. Four main clusters are identified to determine research themes using bibliographic coupling (documents). Additionally, co-occurrence analysis (keywords) reveals three themes indicating current and future research trends.
Originality/value
The study presents an overview of the evolution of research on CSP-firm performance nexus. This work consolidates bibliometric analysis and systematic literature review on CSP and firm performance, covering all significant work on the topic and presenting the field's knowledge map and future research directions.
Purpose
Considering that corporate social responsibility (CSR) addresses a wide range of claims from multiple stakeholders, companies must determine their CSR scope. This paper aims to examine what factors influence a firm’s decision in its scope of CSR. In exploring what factors influence CSR scope, the authors examine the relationship between a firm’s prosocial orientation and CSR and further examine its boundary conditions by the existence of CSR department.
Design/methodology/approach
This study uses a data set – the Social Value Survey – administered by the Center for Social Value Enhancement Studies based in the context of Korean firms. Based on 86 firm responses, statistical models were performed to test hypotheses.
Findings
The findings show that a firm’s prosocial orientation is positively associated with CSR scope. Further, this study shows that there is a negative moderating effect of the CSR department for the relationship between the prosocial orientation and CSR scope.
Originality/value
This study attempts to contribute to the extensive line of work on the antecedents of CSR by exploring the simultaneous existence of various drivers of CSR and the interplay between the drivers. And this study enhances the understanding on what factors influence the decision of CSR scope within a complex system of diverse stakeholder relationships. Additionally, this study has potentially shed light on the role of CSR departments to determine CSR scope.
The discussion of “whether it pays to be green” is ongoing. This review does not intend to solve the debate, rather it soothes it by contributing to the concept of “when it pays to be green.” By focusing on the shortcomings of existing literature reviews on the topic of corporate sustainability and financial performance (CSFP) in this hybrid review, issues were identified that had been overlooked earlier. In general, CSFP holds a positive relationship but in a time lag. Nonconclusive results about the relationship within CSFP are due to self-selection bias, endogeneity issues, and the use of multiple datasets and industry categories. Surprisingly, we also discovered that the impact of sustainability on financial performance is elusive in capitalist countries considered to be economically rational. Institutional and legitimacy requirements are a good starting point for shaping corporate behaviors in the short term; however, they might not be equally appropriate in the long term in cases when corporations shift operations to pollution havens. A multifaceted, synergistic interaction between governmental institutions, corporations, and other stakeholders is required—without imposing authority—to ensure durable sustainable development.
The relationship between board attributes and corporate social responsibility (CSR) has gained considerable attention from academicians and researchers in the past few decades. This systematic literature review paper aims to analyse empirical evidence on the impact of board characteristics on CSR. A content analysis of 159 articles extracted systematically from the Scopus and WOS databases revealed a significant upsurge in the area in the last decade mainly in the past three years. It was found that a large majority of the existing works were single-country studies mainly from the developed nations; though cross-country works and research from developing countries have gained momentum in recent years. The study highlighted important trends in publication in the area, the most researched as well as less analysed board attributes, various measures of CSR variables, the type of sample organisations considered, and commonly used research techniques. The study makes a useful contribution to the extant literature by providing insight into the existing works and indicating knowledge gaps and future research perspectives. The findings of the study would also be useful for the policy makers and regulators in further strengthening the corporate governance codes and regulations, so as to help organisations in improving their social performance.
English:
This research focuses on the corporate social responsibility strategies of listed Moroccan companies and their impact on financial performance.
Following the collection of various documents disseminated by these companies between 2014 and 2016 and the conduction of semi-directive interviews with certain listed operators, a quantitative textual content analysis was carried out. The aim of this stage was to gain insight into the intensity of societal commitment through analysis of the CSR strategies of these major listed groups. The main finding of this study is the weakness of these companies' sustainable and responsible commitments. What's more, they do not attach the same importance to all aspects of CSR. Indeed, the companies studied are much more interested in the human dimension and societal commitment, to the detriment of the other CSR axes, notably the environment, business behavior and corporate governance & transparency. Nevertheless, industrial companies pay particular attention to environmental requirements.
In addition, after completing a survey of these same operators, in order to confirm the initial results but also to assign social scores to the companies, econometric and structural equation modelling was carried out. The aim of this stage is to verify the impact of CSR on financial performance. In other words, to define the direction of causality and the sign of the correlation between the social and financial performance of the companies studied. Following a review of theoretical and empirical literature, one of the possible effects of CSR and CFP is corroborated by the results obtained. Indeed, the results of the various models indicate that CSR has a positive effect on a company's financial performance, which corroborates the social impact hypothesis (stakeholder theory).
In summary, this research highlights the intensity and nature of the sustainable and responsible commitments of listed Moroccan companies, while verifying the impact these have on financial performance.
Keywords: Corporate Social Responsibility (CSR), Sustainable development, Responsible strategies, Social performance, Financial performance, Listed Moroccan companies.
Français:
Ce travail de recherche s’intéresse aux stratégies de responsabilité sociétale des entreprises marocaines cotées ainsi qu’à leur impact sur la performance financière.
Suite à la collecte des différents documents diffusés par ces entreprises entre 2014 et 2016 et à la conduction d’entretiens semi-directifs auprès de certains opérateurs cotés, une analyse de contenu textuelle, de type quantitatif, a été réalisée. L’objectif de cette étape est de connaitre l’intensité de l’engagement sociétal à travers l’analyse des stratégies RSE de ces grands groupes cotés. Ainsi, le principal constat qui se dégage de cette étude est la faiblesse des engagements durables et responsables de la part de ces entreprises. De plus, celles-ci n’accordent pas la même importance à toutes les dimensions de la RSE. En effet, les entreprises étudiées s’intéressent beaucoup plus à la dimension humaine et à l’engagement sociétal au détriment des autres axes de la RSE, notamment l’environnement, le comportement en affaires et la gouvernance & transparence d’entreprise. Néanmoins, les entreprises industrielles accordent une attention particulière aux exigences environnementales.
En outre, à l’issue d’une enquête réalisée auprès de ces mêmes opérateurs dans le but de conforter les premiers résultats mais aussi pour attribuer des scores sociaux aux entreprises, des modélisations économétriques et par équations structurelles ont été effectuées. L’objectif de cette étape est de vérifier l’impact entre la RSE et la performance financière. Autrement dit, il s’agit de définir le sens de causalité et le signe de la corrélation entre la performance sociale et la performance financière des entreprises étudiées. Elaborée suite à une revue de littérature théorique et empirique, une des possibilités d’influence entre la RSE et la PFE se trouve corroborée au regard des résultats obtenus. En effet, les résultats des différentes modélisations indiquent que la RSE exerce un effet positif sur la performance financière de l’entreprise ce qui corrobore l’hypothèse de l’impact social (théorie des parties prenantes).
En résumé, ce travail de recherche met en évidence l’intensité et la nature des engagements durables et responsables des entreprises marocaines cotées tout en vérifiant l’impact que ceux-ci exercent sur la performance financière.
Mots clés : Responsabilité sociale des entreprises (RSE), Développement durable, Stratégies responsables, Performance sociale, Performance financière, Entreprises marocaines cotées.
Purpose
Many emerging economy firms are under foreign owners' pressure to embrace the challenges of addressing corporate social responsibility (CSR) and consider adopting sustainability initiatives. However, it is not clear how foreign ownership plays a role to enable or inhibit these emerging economy firms from translating sustainability initiatives into improved financial performance. Utilizing neo-institutional theory, the authors argue that emerging economy firms that voluntarily report sustainability gain legitimacy in the eyes of shareholders and improve stock market performance. However, emerging economy firms may not have the resources to reconcile the internal stakeholders' various legitimacy requirements to promote sustainability practices, resulting in a negative association with accounting performance. Foreign ownership attenuates the relationship between sustainability reporting and firm performance due to the different legitimacy requirements in foreign markets.
Design/methodology/approach
To test the study’s hypotheses, the authors collected and analyzed a large sample of publicly listed firms between 2010 and 2016 in Taiwan where the types of foreign ownership include foreign trust funds, foreign financial institutions and other foreign legal entities. Regression analyses were conducted to investigate whether the firms that report their sustainable practices have better financial performance, including stock market performance and accounting performance. Additionally, a three-step procedure was employed to address the endogeneity issue with a binary explanatory variable.
Findings
The positive stock market reaction to the emerging economy firms' voluntary sustainability reporting supports legitimacy gained among investors. By contrast, sustainability reporting has a negative association with accounting performance due to the difficulty of reconciling different legitimacy requirements among various stakeholders in emerging economies. Further, foreign ownership, particularly the trust fund, exhibits a negative moderating effect on the relationship between sustainability reporting in aligning corporate practices with sustainable development goals (SDGs) and the company's stock market performance.
Originality/value
By examining the less tested contingent role played by foreign ownership in the emerging economy firms' sustainability reporting, the authors provide insights into the influence exerted by different types of foreign ownership on firms' financial performances beyond previous studies that focus on family ownership, state ownership, or managerial ownership in emerging economies. The findings shed light on corporate sustainability strategy and foreign direct investment policies for an emerging economy.
The failure of banks to safeguard customers’ funds has become a substantial issue that has affected public impressions on social media. One of the strategies to ensure the company's reputation is performing impression management. This study aims to assess the financial performance impact of using impression management on banking's Twitter. This study collected 6712 tweets from banks listed on the Indonesia Stock Exchange in 2019. The regression shows no influence on financial performance when banks post a lot of their achievements and accomplishments. However, being a friendly bank can have a favourable impact on financial performance. Empirically, this study contributes to explaining the influence of impression management categories on social media on financial performance, implying that firms should make the most of their social media communications to manage public impressions.
Integrating the behavioral theory of the firm into the discussion on why firms behave in socially responsible ways, the study here develops and empirically tests hypotheses articulating when and how past corporate financial performance (CFP) might lead to more or less engagement in corporate social responsibility (CSR). Rather than treating historical and social aspirations as comparable performance benchmarks that yield similar behavioral responses, as most prior studies do, these two modes of performance comparison may induce signals that executives interpret differently, and therefore may lead to conflicting firm responses towards CSR initiatives. Using panel data pertaining to a large sample of U.S. firms, the study finds that historical and social performance comparisons have differential effects on CSR engagement. The findings describe how different interpretations of achievement influence firm’s engagement in secondary activities concerning environmental and social issues—a topic that has received very little attention in prior empirical research.
We develop a new methodology for computing environmental, social, and governance (ESG) ratings using a mode of artificial intelligence (AI) called machine learning (ML) to make ESG more transparent. The ML algorithms anchor our rating methodology in controversies related to non-compliance with corporate social responsibility (CSR). This methodology is consistent with the information needs of institutional investors and is the first ESG methodology with predictive validity. Our best model predicts what companies are likely to experience controversies. It has a precision of 70–84 per cent and high predictive performance on several measures. It also provides evidence of what indicators contribute the most to the predicted likelihood of experiencing an ESG controversy. Furthermore, while the common approach of rating companies is to aggregate indicators using the arithmetic average, which is a simple explanatory model designed to describe an average company, the proposed rating methodology uses state-of-the-art AI technology to aggregate ESG indicators into holistic ratings for the predictive modelling of individual company performance. Predictive modelling using ML enables our models to aggregate the information contained in ESG indicators with far less information loss than with the predominant aggregation method.
This chapter analyses the potential impact of Artificial Intelligence on the opportunities to measure ESG, and the climate in which regulations of ESG disclosures are being set. To date, while many ratings agencies provide estimates of overall corporate ESG scores, the scoring systems lack accuracy. Several problems with the current ESG rating approach are identified and the prospect of using Artificial Intelligence to resolve them is discussed. In concluding the chapter, the use of Artificial Intelligence to predict deficient sustainability reporting practices caused by behavioral issues relating to incentives to improper sustainability reporting is identified.
O objetivo do estudo é verificar a influência da intangibilidade e da Responsabilidade Social Corporativa (RSC) na geração de valor adicionado em companhias abertas listadas na bolsa de valores Brasil, Bolsa, Balcão. A pesquisa caracteriza-se como descritiva, conduzida por coleta documental e com abordagem predominantemente quantitativa. Utilizou-se da regressão linear múltipla para analisar os dados de uma amostra composta por 193 companhias, relativos ao ano de 2018. Os resultados mostram que, individualmente, a intangibilidade das companhias investigadas influencia na maior geração de valor adicionado. Em relação ao papel moderador, o desempenho em RSC anula o efeito positivo da intangibilidade; mantém a influência negativa do crescimento de vendas e da governança corporativa, reduzindo a força; mantém a influência positiva do tamanho da empresa, reduzindo a força. Contudo, os resultados indicam inconsistência na influência da RSC sobre a geração de valor adicionado. Os resultados contrariam a premissa de que a RSC ao fortalecer a reputação corporativa pode melhorar o desempenho organizacional mensurado pelo valor adicionado.
Background: South Africa is currently the only country in the world where its largest stock exchange has adopted integrated reporting on an ‘apply and explain’ basis, through the implementation of the King Code for Corporate Governance (King IV). However, there exists significant uncertainty regarding the value of adopting integrated reporting.
Aim: The objective of this study is to establish whether organisations, perceived to produce higher-quality integrated reports, achieve better financial performance or if the value of integrated reporting lies in improving organisational legitimacy and managing stakeholders’ impressions.
Setting: The sample consists of the Ernst Young (EY) ranked companies listed on the Johannesburg Stock Exchange (JSE) from 2011 to 2020.
Method: The study examines whether the quality of integrated reporting is associated with various financial performance measures, namely liquidity, solvency, profitability, and market performance, using multinomial logistic regression.
Results: The multinomial logistic regression model is weak and indicates no direct relationship between integrated reporting quality and financial performance. An investigation into specific variables in the model indicates that top-performing companies, in terms of integrated reporting quality, tend to have significantly lower price-to-book value ratios and higher return on equity values. Companies with the best quality integrated reports also appear to be larger in terms of market capitalisation than those companies who prepare integrated reports of lesser quality.
Conclusion: The results of the study do not record a significant relationship between integrated reporting quality and financial performance. The results indicate that larger companies listed on the JSE produce better quality integrated reports. This may be an indication that companies produce integrated reports, not for their financial value-adding benefits but to maintain organisational legitimacy and to manage the impressions of stakeholders.
In this study, we hypothesize that institutions invest more heavily in companies with strong corporate social performance. Analysis indicated a significant, positive relationship between social performance and the number of institutions holding the shares of a company and a positive but insignificant relationship between social performance and the percentage of shares held by institutions. We conclude that improving a company's corporate social performance invokes no penalty in institutional ownership.
Stakeholder theory has been a popular heuristic for describing the management environment for years, but it has not attained full theoretical status. Our aim in this article is to contribute to a theory of stakeholder identification and salience based on stakeholders possessing one or more of three relationship attributes: power, legitimacy, and urgency. By combining these attributes, we generate a typology of stakeholders, propositions concerning their salience to managers of the firm, and research and management implications.
This article extends earlier research concerning the relationship between corporate social performance and corporate financial performance, with particular emphasis on methodological inconsistencies. Research in this area is extended in three critical areas. First, it focuses on a particular industry, the chemical industry. Second, it uses multiple sources of data-two that are perceptual based (KLD Index and Fortune reputation survey), and two that are performance based (TRI database and corporate philanthropy) in order to triangulate toward assessing corporate social performance. Third, it uses the five most commonly applied accounting measures in the corporate social performance and corporate financial performance (CSP/CFP) literature to assess corporate financial performance. The results indicate that the a priori use of measures may actually predetermine the CSP/CFP relationship outcome. Surprisingly, Fortune and KLD indices very closely track one another, whereas TRI and corporate philanthropy differentiate between high and low social performers and do not correlate to the firm's financial performance.
We outline a supply and demand model of corporate social responsibility (CSR). Based on this framework, we hypothesize that a firm's level of CSR will depend on its size, level of diversification, research and development, advertising, government sales, consumer income, labor market conditions, and stage in the industry life cycle. From these hypotheses, we conclude that there is an "ideal" level of CSR, which managers can determine via cost-benefit analysis, and that there is a neutral relationship between CSR and financial performance.
Although researchers have applied different theoretical perspectives to illustrate the relationship between corporate environmental responsibility and profitability, to date theories are contested and empirical findings are inconclusive. Therefore, the aim of this research was to present empirical evidence regarding the influence of engaging in environmental responsibility on corporate market value, as the first study to be applied in the Egyptian context. The findings demonstrate that the market compensates those firms that care for their environment, as environmental responsibility exerted a positive and significant coefficient on the firm market value measured by Tobin's q ratio. This aligns stakeholder theory as well as resource-based theory arguments, and provides supporting evidence for those studies that have concluded that it pays to be environmentally responsive. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.
Evidence can be marshalled to support either the view that pollution abatement is a cost burden on firms and is detrimental to competitiveness, or that reducing emissions increases efficiency and saves money, giving firms a cost advantage. In an effort to resolve this seeming paradox, the relationship between emissions reduction and firm performance is examined empirically for a sample of S&P 500 firms using data drawn from the Investor Responsibility Research Center's Corporate Environmental Profile and Compustat. The results indicate that efforts to prevent pollution and reduce emissions drop to the ‘bottom line’ within one to two years of initiation and that those firms with the highest emission levels stand the most to gain.
Previous empirical work suggests that firms with high environmental performance tend to be profitable, but questions persist about the nature of the relationship. Does stronger environmental performance really lead to better financial performance, or is the observed relationship the outcome of some other underlying firm attribute? Does it pay to have cleanrunning facilities or to have facilities in relatively clean industries? To explore these questions, we analyze 652 U.S. manufacturing firms over the time period 1987–1996. Although we find evidence of an association between lower pollution and higher financial valuation, we find that a firm's fixed characteristics and strategic position might cause this association. Our findings suggest that “When does it pay to be green?” may be a more important question than “Does it pay to be green?”
Organizations that believe they should “give something back” to the society have embraced the concept of corporate social
responsibility (CSR). Although the theoretical underpinnings of CSR have been frequently debated, empirical studies often
involve only limited aspects, implying that theory may not be congruent with actual practices and may impede understanding
and further development of CSR. The authors investigate actual CSR practices related to five different stakeholder groups,
develop an instrument to measure those CSR practices, and apply it to a survey of 401 U.S. organizations. Four different clusters
of organizations emerge, depending on the CSR practice focus. The distinctive features of each cluster relate to organizational
demographics, perceived influence of stakeholders, managers’ perceptions of the influence of CSR on performance, and organizational
performance.
It is generally assumed that common stock investors are exclusively interested in earning the highest level of future cash-flow for a given amount of risk. This view suggests that investors select a well-diversified portfolio of securities to achieve this goal. Accordingly, it is often assumed that investors are unwilling to pay a premium for corporate behavior which can be described as socially-responsible.Recently, this view has been under increasing attack. According to the Social Investment Forum, at least 538 institutional investors now allocate funds using social screens or criteria. In addition, Alice Tepper Marlin, president of the New York-based Council on Economic Priorities has recently estimated that about $600 billion of invested funds are socially-screened (1992).
There is a long-standing debate on the impact of environmental performance on firm performance. Although previous studies have reported mixed results, many of these papers suffer from model misspecification and/or limited data. A conspicuous gap in the literature is the inability of authors to control for firm heterogeneity and dynamic effects. In this paper, we conduct static and dynamic panel data analysis of the impact of environmental performance on financial performance. Our evidence implies that environmental performance has a neutral impact on firm performance. This finding is consistent with theoretical work suggesting that firms invest in environmental initiatives until the point where the marginal cost of such investments equals the marginal benefit.
Previous studies that attempt to relate environmental to financial performance have often led to conflicting results due to small samples and subjective environmental performance criteria. We report on a study that relates the market value of firms in the S&P 500 to objective measures of their environmental performance. After controlling for variables traditionally thought to explain firm-level financial performance, we find that bad environmental performance is negatively correlated with the intangible asset value of firms. The average "intangible liability" for firms in our sample is 34 million increase in market value. The magnitude of these effects varies across industries, with larger losses accruing to the traditionally polluting industries. © 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technolog
Arguments can be made on both sides of the question of whether a stringent, global corporate environmental standard represents a competitive asset or liability for multinational enterprises (MNEs) investing in emerging and developing markets. This paper seeks to answer this question by analyzing the global environmental standards of a large sample of US-based MNEs in relation to their market performance. We find that firms adopting a single, stringent global environmental standard have higher market values, as measured by Tobin's q, than firms defaulting to less stringent, or poorly enforced host country standards. Thus, developing countries that use lax environmental regulations to attract foreign direct investment end up attracting poorer quality, and perhaps, less competitive firms. Our results also suggest that externalities are incorporated to a significant extent in firm valuation. We discuss plausible reasons for this observation.
We test the relationship between shareholder value, stakeholder management, and social issue participation. Building better relations with primary stakeholders like employees, customers, suppliers, and communities could lead to increased shareholder wealth by helping firms develop intangible, valuable assets which can be sources of competitive advantage. On the other hand, using corporate resources for social issues not related to primary stakeholders may not create value for shareholders. We test these propositions with data from S&P 500 firms and find evidence that stakeholder management leads to improved shareholder value, while social issue participation is negatively associated with shareholder value. Copyright © 2001 John Wiley & Sons, Ltd.
Researchers have reported a positive, negative, and neutral impact of corporate social responsibility (CSR) on financial performance. This inconsistency may be due to flawed empirical analysis. In this paper, we demonstrate a particular flaw in existing econometric studies of the relationship between social and financial performance. These studies estimate the effect of CSR by regressing firm performance on corporate social performance, and several control variables. This model is misspecified because it does not control for investment in R&D, which has been shown to be an important determinant of firm performance. This misspecification results in upwardly biased estimates of the financial impact of CSR. When the model is properly specified, we find that CSR has a neutral impact on financial performance. Copyright © 2000 John Wiley & Sons, Ltd.
We test the relationship between shareholder value, stakeholder management, and social issue participation. Building better relations with primary stakeholders like employees, customers, suppliers, and communities could lead to increased shareholder wealth by helping firms develop intangible, valuable assets which can be sources of competitive advantage. On the other hand, using corporate resources for social issues not related to primary stakeholders may not create value far shareholders. We test these propositions with data from S&P 500 firms and find evidence that stakeholder management leads to improved shareholder value, while social issue participation is negatively associated with shareholder value. Copyright (C) 2001 John Wiley & Sons, Ltd.
Stakeholder theory has been a popular heuristic for describing the management environment for years, but it has not attained full theoretical status. Our aim in this article is to contribute to a theory of stakeholder identification and salience based on stakeholders possessing one or more of three relationship attributes: power, legitimacy, and urgency. By combining these attributes, we generate a typology of stakeholders, propositions concerning their salience to managers of the firm, and research and management implications.
This paper provides an objective, empirically based approach for measuring corporate social performance (CSP) based on eight dimensions of social responsibility. The analytic hierarchy process, a multicriteria decision asking technique, was used to access the relative importance of the eight dimensions of CSP used in ethical investing.
A primary issue in the field of business and society over the past 25 years has been the relationship between corporate social performance and corporate financial performance. Recently, Griffin and Mahon (1997) presented a table categorizing studies that have investigated this relationship. Motivated by concerns with this table, as well as a desire to account for progress in research in this area, the authors reconstructed it. The authors present a portrait of this relationship that is (a) substantially different from that shown in the Griffin and Mahon table and (b) more consistent with the latest research on the topic.
This research note analyzes the relationship between indicators of corporate social and financial performance within a comprehensive theoretical framework. The results, based on data for 67 large U.S. corporations for 1982-1992, reveal no significant negative social-financial performance relationships and strong positive correlations in both contemporaneous and lead-lag formulations.
Companies are increasingly asked to provide innovative solutions to deep-seated problems of human misery, even as economic theory instructs managers to focus on maximizing their shareholders' wealth. In this paper, we assess how organization theory and empirical research have thus far responded to this tension over corporate involvement in wider social life. Organizational scholarship has typically sought to reconcile corporate social initiatives with seemingly inhospitable economic logic. Depicting the hold that economics has had on how the relationship between the firm and society is conceived, we examine the consequences for organizational research and theory by appraising both the 30-year quest for an empirical relationship between a corporation's social initiatives and its financial performance, as well as the development of stakeholder theory. We propose an alternative approach, embracing the tension between economic and broader social objectives as a starting point for systematic organizational inquiry. Adopting a pragmatic stance, we introduce a series of research questions whose answers will reveal the descriptive and normative dimensions of organizational responses to misery.
The wave of scandals that has inundated business since Enron has had far reaching consequences. Questions of ethics have taken on particular urgency as companies grapple with increased media scrutiny of governance matters, as well as of corporate social and environmental issues. This In Practice paper examines three principal responses from big business: (1) the infusion of ethical principles in corporate cultures, (2) the appointment of `Chief Ethics Officers', and (3) the adoption of strict ethical guidelines and codes of conduct. The Reputation Institute (RI) finds that corporate ethics has become an indelible feature of stakeholder engagement — not just as a set of principles but as a process affecting decision-making at all levels. Ethics are in fact so critical to long-term business sustainability that they will increasingly form the basis of serious executive leadership.Corporate Reputation Review (2004) 7, 284-288; doi:10.1057/palgrave.crr.1540226
Strategic managers are consistently faced with the decision of how to allocate scarce corporate resources in an environment that is placing more and more pressures on them. Recent scholarship in strategic management suggests that many of these pressures come directly from sources associated with social issues in management, rather than traditional arenas of strategic management. Using a greatly improved source of data on corporate social performance, this paper reports the results of a rigorous study of the empirical linkages between financial and social performance. Corporate social performance (CSP) is found to be positively associated with prior financial performance, supporting the theory that slack resource availability and CSP are positively related. CSP is also found to be positively associated with future financial performance, supporting the theory that good management and CSP are positively related.© 1997 by John Wiley & Sons, Ltd
Researchers have reported a positive, negative, and neutral impact of corporate social responsibility (CSR) on financial performance. This inconsistency may be due to flawed empirical analysis. In this paper, we demonstrate a particular flaw in existing econometric studies of the relationship between social and financial performance. These studies estimate the effect of CSR by regressing firm performance on corporate social performance, and several control variables. This model is misspecified because it does not control for investment in R&D, which has been shown to be an important determinant of firm performance. This misspecification results in upwardly biased estimates of the financial impact of CSR. When the model is properly specified, we find that CSR has a neutral impact on financial performance. Copyright © 2000 John Wiley & Sons, Ltd.
Despite numerous efforts to bring about a clear and unbiased definition of CSR, there is still some confusion as to how CSR should be defined. In this paper five dimensions of CSR are developed through a content analysis of existing CSR definitions. Frequency counts are used to analyse how often these dimensions are invoked. The analysis shows that the existing definitions are to a large degree congruent. Thus it is concluded that the confusion is not so much about how CSR is defined, as about how CSR is socially constructed in a specific context. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.
Carroll (1991) encouraged researchers in Social Issues Management (SIM) to continue to measure Corporate Social Performance (CSP) from a variety of different perspectives utilizing a variety of different measures. In addition, Wolfe and Aupperle (1991) (and others) have asserted that there is no, single best way to measure CSP and that multiple measures and perspectives help develop the field. However, Pfeffer (1993) suggest that a lack of consistent measurement has constrained organization studies (and by implication, the field of social issues management,) in its development as a field. It may be in the best interest of social issues management researchers to try to development a common body of measures and data. Recently, Kinder, Lydenberg and Domini & Co. (KLD — a social choice investment advisory firm) has made available their social performance database. The KLD data have potential to become a widely accepted set of CSP measures. The purpose of this paper is to present a construct validity study comparing the KLD data to other measures of CSP.
Stakeholder theory provides a framework for investigating the relationship between corporate social performance (CSP) and corporate financial performance. This relationship is investigated by examining how change in CSP is related to change in financial accounting measures. The findings provide some support for a tenet in stakeholder theory which asserts that the dominant stakeholder group, shareholders, financially benefit when management meets the demands of multiple stakeholders. Specifically, change in CSP was positively associated with growth in sales for the current and subsequent year. This indicates that there are short-term benefits from improving CSP. Return on sales was significantly positively related to change in CSP for the third financial period, indicating that long-term financial benefits may exist when CSP is improved.
When I hear businessmen speak eloquently about the “social responsibilities of business in a free-enterprise system”, I am
reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his
life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned “merely”
with profit but also with promoting desirable “social” ends; that business has a “social conscience” and takes seriously its
responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords
of the contemporary crop of reformers. In fact they are — or would be if they or anyone else took them seriously -preaching
pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have
been undermining the basis of a free society these past decades.
Conventional estimates of the relationship between corporate environmental performance (CEP) and corporate financial performance (CFP) are typically based on simple OLS regression. In this paper, I test whether this relationship holds using median regression analysis that is more robust to the presence of outliers and unobserved firm heterogeneity. Based on panel data for British companies, I find that the relationship between CEP and CFP is stronger when median regression are used.
This paper presents a parameter covariance matrix estimator which is consistent even when the disturbances of a linear regression model are heteroskedastic. This estimator does not depend on a formal model of the structure of the heteroskedasticity. By comparing the elements of the new estimator to those of the usual covariance estimator, one obtains a direct test for heteroskedasticity, since in the absence of heteroskedasticity, the two estimators will be approximately equal, but will generally diverge otherwise. The test has an appealing least squares interpretation.
In the classic bestseller, Capitalism and Freedom, Milton Friedman presents his view of the proper role of competitive capitalismâthe organization of economic activity through private enterprise operating in a free marketâas both a device for achieving economic freedom and a necessary condition for political freedom. Beginning with a discussion of principles of a liberal society, Friedman applies them to such constantly pressing problems as monetary policy, discrimination, education, income distribution, welfare, and poverty. "Milton Friedman is one of the nation's outstanding economists, distinguished for remarkable analytical powers and technical virtuosity. He is unfailingly enlightening, independent, courageous, penetrating, and above all, stimulating."-Henry Hazlitt, Newsweek "It is a rare professor who greatly alters the thinking of his professional colleagues. It's an even rarer one who helps transform the world. Friedman has done both."-Stephen Chapman, Chicago Tribune
Typescript. Thesis (Ph. D.)--New York University, Graduate School of Business Administration, 1996. Includes bibliographical references (leaves: 87-101)
This paper analyses investments by firms into areas of corporate social responsibility, focussing on the decision by firms whether or not to invest in compliance with voluntary environmental standards. Theoretical predictions of the compliance decision are tested using discrete time survival analysis on a large dataset of UK manufacturing firms. The rate of voluntary compliance is found to have increased since the introduction of the International Standards Organization (ISO) scheme. Further, voluntary compliance is found to be negatively associated with rates of return and industry share, and positively associated with capital intensity and industry export intensity. In contrast to theoretical predictions on corporate social responsibility, there is no evidence that investment in intangible assets, either at the firm or the industry level, is positively associated with the compliance decision. Copyright © 2001 John Wiley & Sons, Ltd.
This article proposes a unified theory of the relationship between corporate social performance (CSP) and corporate financial performance (CFP). The theory provides a framework for rationalizing the various and contradictory findings in past empirical research. The theory is based on the parallels between the business and CSR domains, and thus draws on models from economics. Copyright Springer Science+Business Media, Inc. 2006
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