Doing Well or Doing Good: The Relationship between Corporate Social Responsibility and Profit in Romanian Companies

Abstract

The traditional goal of a company is to earn profit to pay its shareholders, but, nowadays, for the business to be sustainable in the long term, a strategy of Corporate Social Responsibility (CSR) activities is needed to meet stakeholder demands, respect ethical principles and give an appropriate answer to organizational stakeholders. The objective of the paper is to identify how strong the correlation between CSR and profit is, and how companies behave in the periods they have losses, whether they continue to do CSR activities, they reduce the activities, or they give them up. Thus, CSR is attributed to the concept of “doing good” and profit to the expression of “doing well”, from which a “positive business” can be built. Our empirical research consists of a panel data econometric model using logistics regressions to highlight the correlation between profit and the decision to do CSR activities and feasible generalized least squares (FGLS) regressions to identify the correlations between the level of CSR activities and the dimension of profit, an expression of financial performance. The main results emphasize that the companies which implement CSR activities in a greater extent are more profitable in economic terms.

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sustainability
Article
Doing Well or Doing Good: The Relationship
between Corporate Social Responsibility and Profit in
Romanian Companies
Camelia-Daniela Hategan 1, *ID , Nicoleta Sirghi 2, Ruxandra-Ioana Curea-Pitorac 2ID and
Vasile-Petru Hategan 3
1Department of Accounting and Audit, Faculty of Economics and Business Administration,
West University of Timisoara, 16 Pestalozzi Street, 300115 Timisoara, Romania
2Department of Economics and Modeling, Faculty of Economics and Business Administration,
West University of Timisoara, 16 Pestalozzi Street, 300115 Timisoara, Romania;
nicoleta.sirghi@e-uvt.ro (N.S.); ruxandra.curea@e-uvt.ro (R.-I.C.-P.)
3Philosophy and Communication Studies Department, Faculty of Political Sciences, Philosophy and
Communication Studies, West University of Timisoara, 4 V. Parvan Blvd, 300223 Timisoara, Romania;
vasile.hategan@e-uvt.ro
*Correspondence: camelia.hategan@e-uvt.ro; Tel.: +40-256-592-553
Received: 5 March 2018; Accepted: 30 March 2018; Published: 1 April 2018


Abstract:
The traditional goal of a company is to earn profit to pay its shareholders, but, nowadays,
for the business to be sustainable in the long term, a strategy of Corporate Social Responsibility (CSR)
activities is needed to meet stakeholder demands, respect ethical principles and give an appropriate
answer to organizational stakeholders. The objective of the paper is to identify how strong the
correlation between CSR and profit is, and how companies behave in the periods they have losses,
whether they continue to do CSR activities, they reduce the activities, or they give them up. Thus, CSR
is attributed to the concept of “doing good” and profit to the expression of “doing well”, from which
a “positive business” can be built. Our empirical research consists of a panel data econometric
model using logistics regressions to highlight the correlation between profit and the decision to do
CSR activities and feasible generalized least squares (FGLS) regressions to identify the correlations
between the level of CSR activities and the dimension of profit, an expression of financial performance.
The main results emphasize that the companies which implement CSR activities in a greater extent
are more profitable in economic terms.
Keywords:
corporate social responsibility (CSR); profit; financial performance; stakeholder theory;
business ethics
1. Introduction
Sustainable companies anticipate the future needs of society [
1
] and adjust their business priorities
to new needs, making sure they have the resources to continue doing business [
2
–
4
]. Thus, in the
context of corporate social responsibility (CSR) awareness of companies and the growth of activities,
questions arise about whether there is an intention for CSR activities, what is the source of financing
for these activities and how they influence the performance and value of companies [
5
]. Investors
are becoming more interested in the social and environmental impact of companies and they want to
invest in companies with a good CSR performance [6–9].
CSR activities are diverse and include: community investments, philanthropy, marketing
campaigns with CSR elements, workplace health and safety activities, employee training courses,
company policies for the protection of human rights and the fight against corruption, transparency in
Sustainability 2018,10, 1041; doi:10.3390/su10041041 www.mdpi.com/journal/sustainability

Sustainability 2018,10, 1041 2 of 23
the reporting of CSR activities, and environmental protection activities (energy consumption, water,
emissions of waste, and amount of waste generated) [10–13].
Their measurement is sometimes difficult, so that users of information sometimes have to
estimate or equate the information reported by companies, each in its own way, to be brought to a
common denominator [
14
,
15
]. Activities such as donations are equated with community investment
and waste management costs are assimilated to environmental protection expenditures. Thus,
non-financial reporting plays an increasingly important role and aims to increase transparency
and performance
[16,17],
as well as to encourage companies to adopt a more sustainable business
strategy [18].
The objective of the paper is to identify how strong the correlation between CSR and profit is,
and how companies behave in the periods they have losses: do they continue to do CSR activities,
reduce the activities, or give them up? Thus, CSR is attributed to the concept of “doing good” and
profit to the expression of “doing well”, from which a “positive business” can be built [19].
Figure 1is a graphical representation of the objective of our article, profit and loss influenced
the CSR activities, and the fact that CSR leads to the Creating Shared Value (CSV) concept of Porter
and Kramer [9] which is a strategy regarding the positive relationship between company and society,
and CSV tends to replace CSR in the future.
Sustainability 2018, 10, x FOR PEER REVIEW 2 of 23
in the reporting of CSR activities, and environmental protection activities (energy consumption,
water, emissions of waste, and amount of waste generated) [10–13].
Their measurement is sometimes difficult, so that users of information sometimes have to
estimate or equate the information reported by companies, each in its own way, to be brought to a
common denominator [14,15]. Activities such as donations are equated with community investment
and waste management costs are assimilated to environmental protection expenditures. Thus,
non-financial reporting plays an increasingly important role and aims to increase transparency and
performance [16,17], as well as to encourage companies to adopt a more sustainable business
strategy [18].
The objective of the paper is to identify how strong the correlation between CSR and profit is,
and how companies behave in the periods they have losses: do they continue to do CSR activities,
reduce the activities, or give them up? Thus, CSR is attributed to the concept of “doing good” and
profit to the expression of “doing well”, from which a “positive business” can be built [19].
Figure 1 is a graphical representation of the objective of our article, profit and loss influenced
the CSR activities, and the fact that CSR leads to the Creating Shared Value (CSV) concept of Porter
and Kramer [9] which is a strategy regarding the positive relationship between company and
society, and CSV tends to replace CSR in the future.
Figure 1. Doing Well and Doing Good design.
To better understand the relationship between CSR activities and the financial performance of
the listed companies, we create a theoretical framework regarding the “doing well” and “doing
good” concepts, as their connotations are not yet finally settled among researchers. The empirical
research considers the information reported by companies in the annual financial statements a d the
directors’ reports, such as the sustainability reports of the companies that voluntarily published CSR
information.
This paper is organized as follows: Section 2 contains a short literature review regarding the
link between CSR and performance, while Section 3 presents the research hypotheses and describes
the research methodology. Section 4 presents the main findings of our study and Section 5 concludes
and gives some future research directions.
2. Literature Review
Corporate social responsibility topics have been analyzed by researchers around the world.
Fifka [20] studied whether there are different approaches to empirical research on determinants of
responsibility reporting starting from the geographic regions and found that there were different
approaches but resulted minor differences. Krisnawati [21] developed a chronology of theories
applicable to CSR, their evolution, the link between them and the current state of knowledge.
Freeman et al. [22] considered that the interests of the various stakeholder groups are common
and that the value creation process is best handled by managing stakeholder relations. Another
Figure 1. Doing Well and Doing Good design.
To better understand the relationship between CSR activities and the financial performance of
the listed companies, we create a theoretical framework regarding the “doing well” and “doing good”
concepts, as their connotations are not yet finally settled among researchers. The empirical research
considers the information reported by companies in the annual financial statements a d the directors’
reports, such as the sustainability reports of the companies that voluntarily published CSR information.
This paper is organized as follows: Section 2contains a short literature review regarding the link
between CSR and performance, while Section 3presents the research hypotheses and describes the
research methodology. Section 4presents the main findings of our study and Section 5concludes and
gives some future research directions.
2. Literature Review
Corporate social responsibility topics have been analyzed by researchers around the world.
Fifka [
20
] studied whether there are different approaches to empirical research on determinants of
responsibility reporting starting from the geographic regions and found that there were different
approaches but resulted minor differences. Krisnawati [
21
] developed a chronology of theories
applicable to CSR, their evolution, the link between them and the current state of knowledge.

Sustainability 2018,10, 1041 3 of 23
Freeman et al. [
22
] considered that the interests of the various stakeholder groups are common
and that the value creation process is best handled by managing stakeholder relations. Another
fundamental aspect of stakeholder theory is to identify stakeholders and how companies interact with
them, in other words, which stakeholders matter in decision-making processes, and whether they have
an advantage.
Donaldson and Preston [
23
] identified two stakeholder groups: one in which management has an
obligation or duty and one that affects or is affected by the entity. Their conclusion is that, although
management may need to take into account the interests of both groups, only the first group is
legitimate enough that management decisions act in its best interests.
Stakeholder theory is closely related to value creation for the entity and the stakeholder.
Dumitru et al.
[
24
] studied the relationship between stakeholder theory and value creation through
integrated reporting and found that communication is an important element for value creation, and that
there are discrepancies in the content of disclosure reports that address different stakeholder categories
(investors, customers, and employees).
For our study, the most relevant is the stakeholder theory [
25
] because it could be interpreted as an
essential condition for CSR. It combines the wellbeing of the stakeholders with ethical obligations, thus
also maximizing the wealth for the society. Another important aspect of this theory is the transparency
through the extending of non-financial reporting. It also offers guidance regarding the balance of
the stakeholder interests based on sustainability and the necessary management tools for business
operation [
26
]. An important category of stakeholders is employees and “CSR can have positive effects
on employees’ motivation, morale, commitment, and loyalty to the firm” [27].
In a broader way, CSR represents achieving success in an ethical manner with respect to people,
community and environment. If philosopher Aristotle referred to good deeds, later the utilitarians,
beginning with Bentham [
28
] and Mill [
29
], concentrated on this concept in accordance with its effects
and consequences, while Kant [30] had another vision, bringing the ethics of duty into consideration.
In this vision, the attitude of a company to do good has as its goal the long-term economic
outcome, where for Kant the intention of an action is important, not its effect, when its ethical and
moral value is considered. He referred to the concepts of “necessary or owed duty towards others”
and “meritorious duty to others” showing that “the natural end that all beings have is their own
happiness”.
The ethical elements applied to the CSR concept are manifested at the individual level by “being
a better person” and at the group level refers to the social behavior of the company and the people
within it, to “doing well” and “doing good” values.
From all these theoretical positions, results an increasing concern of correlating the company’s
well-being with the well-being of society and the environment in which it operates. In this group,
the environmental concerns and the integration of companies could be integrated, as well as the way
in which the rights and freedoms of the individual are respected as active members of the company’s
activities, which also attracts some concepts derived from the theory of law, such as the social contract,
universal and constitutional rights and labor law.
From the research done on key words “doing well”, “doing good” and CSR, it was found that
several researchers were concerned about defining these concepts in published articles. Most have
considered that “doing well” is associated with a profit-generating business [
31
], i.e., with being
profitable [
32
,
33
], while “doing good” with CSR. Kotler and Lee [
7
] mentioned in their book the
practical aspects of CSR and formulated six options for “doing good” and twenty-five best practices
for “doing the most good for the company and the cause”.
The two concepts are often used together to capture the attention and understand that it can create
a win–win situation [
19
]. Laszlo [
34
] is the promoter of the responsibility–profitability relationship
and asserted that CSR brings value to the company in the long term.

Sustainability 2018,10, 1041 4 of 23
The opposite concept of “doing well” is “doing poorly” [
35
] that is equivalent to financial losses
from companies, but which can be recovered later through CSR actions. In addition, the opposite
of “doing good” is “doing bad” [
36
]. These expressions have been assimilated to a new concept,
corporate social irresponsibility (CSI), that describes the effect of harmful activities in which a company
engages [37].
From the literature review, over the last twenty years, it was found that there are theoretic,
qualitative and quantitative papers that have studied the correlation between the two concepts “doing
well” and “doing good”. We selected the most relevant papers in the literature, from Web of Science
and other important databases.
From the theoretical point of view, Kittilaksanawong [
38
] analyzed the conceptual framework of
CSR to identify long-term social objectives in line with stakeholders’ expectations and proposed new
CSR strategies and pointed out that the practical implementation of CSR involves costs but should be
considered as long-term investment. Kreps and Monin [
31
] studied cases of inconsistency between
private and public moralization, identified some of the precursors of moral consciousness, analyzed the
expected positive or negative consequences and highlighted the reasons why corporative actors show
ambivalence in their public statements, exposing moral frameworks and appreciating psychological
complexity and multiple factors influencing moral decision.
Falk and Heblich [
39
] advocated the idea that CSR is a “win–win strategy”, showed the evolution
of CSR over time and argued for the planning process and the strategy of the CSR activities, as a
requirement to meet the stakeholders’ needs. Varadarajan and Kaul [
40
] proposed elements of
innovation of the relationship through “alleviating negative environmental impacts and social impacts
of value chain activities”.
Rojas et al. [
41
] highlighted that “the stakeholder approach may benefit from a number of
theoretical tools developed in the fields of organizational economics, business strategy and finance”.
Sneirson [
42
] analyzed the arguments behind the stakeholder theory and identified the following
common justification: subsidies (grants) received by corporations from the state, the size and economy
of corporations, the economic effect of their activities, the separation of shareholders from the control
activity, and managerial discretion.
Based on the analyzed studies, Aspelund et al. [
43
] found that the stakeholder theory was
frequently invoked and “the international firms engage in CSR activities in order to satisfy external
stakeholders, rather than a deeply held commitment to ‘do good’”. He supports more the idea of
firmly adhering to the company’s ethical code, without accepting influences from the host country,
which may sometimes interfere with the company’s behavior and decisions, as well as with the social
rigors of the location, especially those who have a transnational positioning and are trying to adapt to
local conditions and requirements.
The conclusion of most theoretic articles showed a positive relationship between “doing well”
and “doing good”, but this relationship could change under an inefficient market [
44
]. The opinion
expressed by Karnani [
44
] was contradicted by Rivoli and Waddock [
45
] who claimed that CSR is not
“an illusion, but an integral part of human progress”.
In the qualitative research, on the analyzed topic, the authors used as methods: the review of the
sustainability reports, experimental studies and case studies.
Sherman [
46
] analyzed the sustainability reports and provided an overview of the Triple Bottom
Line (TPL) concept and the way it changes how corporations report their CSR activities. He concluded
that there is a need for TBL reports to provide relevant, comparable, and externally verified information
about an organization to assess its relative economic, environmental and social performance.
Popowska and Ratkowska [
47
], based on the analysis of the sustainability reports of
13 multinational companies from products sector, proposed a definition and presented a method
of analyzing corporate global commitment to the CSR approach, provided insight into how companies
can create value for different stakeholder group and showed that businesses are aware of the needs
and expectations of different stakeholders and know how to fulfill them.

Sustainability 2018,10, 1041 5 of 23
In experimental studies, Chernev and Blair [
48
] demonstrated that social goodwill can change
the consumers’ perceptions of the products of companies that are involved in social activities and
are perceived to have better performances, so “doing good can really translate into a doing well”.
In another experimental study, Wilson, et al. [
49
] summarized the design principles for ensuring a
socially responsible product and their impact on the world as a whole by minimizing the negative
environmental impact.
Looser and Wehrmeyer [
50
] studied, through a qualitative analysis of a focus group of managers
from multinational companies and from small and medium companies (SMEs) from Switzerland,
the behavior regarding CSR, the differences in motives for CSR between large companies (LC) and
SMEs and “concluded that “doing good” matters more for some than “doing well”, but those who do
good do not necessarily care whether they do well by doing good”.
The studied qualitative research highlighted a strong relationship between CSR and performance
and the companies must be more socially responsible for a better reputation and to meet the need of
the stakeholders.
Table 1summarizes the quantitative research about “doing well” expressed by corporate financial
performance and “doing good” expressed by several indicators of CSR, together or separately,
within the main hypotheses formulated, the sample and the period of investigations, the methods,
the dependent variable (DV) and independent variables (IV), and also the results that were obtained.
The criterion that led to the inclusion of articles in Table 1is their objective to study the relationship
between financial performance and CSR, expressed in different ways and through various indicators.
From the literature analysis, articles that used the expressions “doing well” and “doing good” only as
metaphorical forms without meeting the mentioned criteria are excluded.

Sustainability 2018,10, 1041 6 of 23
Table 1. Quantitative research.
Authors Research Topic Sample Methods Variables Results
Sen and Bhattachar (2001) [
51
]
The scope of research was
when, how and why consumers
react to CSR, focusing on some
moderators of consumer CSR
responses, as well as on the
mechanisms underpinning
these responses.
2 studies where 277
students completed the
study and 345 students
completed the study in
exchange for $2 each
Three-stage least squares
regression
DV: Consumer–Company
congruence, company
evaluation, and product
purchase intention; IV: CSR
Record CSR Domain, CSR
Support and CSR-Company
Abilities Beliefs
Results found that consumers
were indeed more sensitive to
negative CSR information.
Companies may therefore be
penalized when they have done
wrong, so it may well.
Fisman et al. (2005) [52]
Creating a framework for CSR
analysis with two CSR
components is at least part of
the profit-driven decision; and
different CSR activities are
addressed to different
audiences.
650 companies listed on
the Standard & Poor’s 500
Index (S&P 500),
1991–2002
Regression analysis DV: Return on Assets (ROA);
IV: CSR Visible-index
The impact of CSR on profits is
stronger in competitive
industries, especially when
several other businesses take
action, CSR can be used as a
means of differentiation in
other competitive
environments.
Byus (2010) [32]
Testing the Dow Jones
Sustainability Index (DJSI)
assertion by analyzing the
corporate financial performance
(CFP) of the firms.
120 firms from USA,
members of DJSI index
and 120 non-DJSI,
1999–2007
Regression model
DV: CFP; IV: DJSI, revenue, size,
debt ratio
The study found a positive,
long-term relationship between
financial performance and
adoption of the DJSI criteria.
Hoepner and Yu (2010) [53]
Empirical study to analyze the
value of CSR in ten industries
in terms of corporate and
investors.
196 companies, from
16 countries, 2005–2009 Carhart model regression
DV: CSR (return of portfolio);
IV: CFP (size, intangible assets,
share price)
Resulted two sectors with
higher values, in which the
investors can exploit this
positive effect of CSR.
Forget (2011) [54]
Investigated the relationship
between firm performance and
CSR.
1577 observations on
461 large European
listed firms
OLS regression
DV: Financial performance:
ROA, returns on capital
employed (ROCE); DI: global
CSR measure (global Vigeo
rating) solvability ratio, debt-to
equity ratio
Finding the CSR dimensions
has a different importance,
the relationship with customers
and suppliers is crucial for
good business.
Cheung et al. (2012) [55]
Building a CSR Index to
measure the quality of
corporate social responsibility
practices
100 major Chinese listed
firms, 2004–2007.
Two-stage least squared
regression
DV: Tobin’s Q, market-to-book
value, CSR; IV: changing in
CSR, size, leverage
Chinese companies have made
progress in their practice of
corporate social responsibility.

Sustainability 2018,10, 1041 7 of 23
Table 1. Cont.
Authors Research Topic Sample Methods Variables Results
Roper and Parker (2012) [56]
Highlighting that fast-food
packaging (an action) results in
wastes (an effect), that has
harmful social, environmental
and economic costs to society.
1000 consumers, from UK
residents internet survey
Quasi-experimental
methodology
DV: CSR (litter effect); IV:
Attitude towards the brand;
Behavioral intention; Positive
and negative brand personality;
Brand reputation
The result was that the multiple
levels of brand evaluation are
adversely affected when the
brand packaging is seen as a
litter and quantifies its financial
impact.
Lee and Maxfield (2015) [17]
The impact of corporate
responsibility activities
reporting (CRA-R) on corporate
social performance (CSP)
and (CFP).
126 large companies from
U.S. 2007–2008 OLS regression analysis DV: CSP and CFP (Tobin’s Q);
IV:CRA-R
CSR and Global Reporting
Initiative (GRI) activities
positively influence corporate
environmental performance
and CFP.
Ing-Haw et al. (2016) [57]
Demonstrating that a
significant amount of CSR
expenditure is due to agency
problems and that it is
associated with significant
consequences for business
evaluation and social welfare.
502 firms included the
S&P 500, 2001–2002
Regression discontinuity
analysis
DV: level of the goodness score
capital asset pricing model;
adjusted return change in log
R&D; the change in KLD scores;
IV: Dividends
Demonstrates that the decline
in well-being is associated with
substantial increases in
company evaluation, the results
indicate a possible compromise
between improving governance
and social well-being.
Gabriel et al. (2017) [58]
Analyses how Mexican firms
perform in terms of
environmental, social, and
governance practices.
Panel data of 35 Mexican,
1457 North American and
111 Latin American firms,
2008–2015
Granger Causality
analysis
DV: ROA, Return on equity,
Labor productivity; IV:
Environmental Social and
Governance (ESG) score
The contribution of sustained
and inclusive growth brings
several financial and
productivity advantages to
firms.
Lee et al. (2017) [59]
Companies involved in the
corporate responsibility (CR)
are generally not better or
worse in (CFP) than companies
without such a commitment
because of a compromise
between benefit and cost at the
enterprise level and an
imbalance between demand
and supply on the market.
More than 12,000
observations from MSCI
ESG database, 1992–2005
OLS regression
DV: CFP (ROA, Raw Market
Returns, Sharpe Ratio, Tobin’s
Q, Mean-Gini Risk-Adjusted
Market); IV: CR Strength
Returns
The existence of neutrality
between CR and CFP at the
level of firms and industry,
implying that CR involvement
of an enterprise does not
penalize or improve CFP.
Lenz et al. (2017) [35]
Examines the central role of the
CSI for the valuable effects
of CSR.
17,345 observations
including 3041 firms from
KLD, Compustat;
1991–2009
Linear mixed model DV: TobinQ; IV: CSR (Sum of
strengths KLD)
The results indicate that the
positive effect of CSR is
strongly attenuated by the
presence of CSI.

Sustainability 2018,10, 1041 8 of 23
Table 1. Cont.
Authors Research Topic Sample Methods Variables Results
Liu et al. (2017) [60]
Examine relationship between
corporate environmental
responsibility (corporate
eco-friendly events) and
corporate philanthropy.
Sample of Chinese listed
firms 2008–2013
OLS regression and
multilevel regression
analysis
DV: corporate philanthropy;
IV: Environment variables
The results show that corporate
eco-friendly events are
positively associated with
corporate philanthropic
strategy to a significant degree.
Price and Sun (2017) [36]
Examining the impact of the
combination of a “doing good”
and “doing bad” to allow a
more robust review of an
enterprise regime for a better
positive strategy through social
performance. Examine the
effects of CSR and CSI and their
combined effects using a
moderate intensity
reduction matrix.
Panel data with
2581 observations from
562 firms from KLD,
Compustat and Centre for
Research and Security
Price 2000–2010
Regression models
DV: Market-value Idiosyncratic
Risk; IV: CSR (7 key
stakeholder attributes)
CISs have a longer duration
effect than the CSR initiative,
and firms with a low level of
CSR and a CIS work better than
companies that engage in high
levels of both.
Weng and Chen (2017) [61]
Influence of Chief Executive
Officer (CEO) reputation and
corporate reputation on the
financial performance of
companies.
Taiwan’s top 150 listed
companies 2003–2014
Regression with fixed
effects
DV: CEO reputation and
corporate reputation; DI: CFP
Conclusion is “choosing well”
is better than “doing good”.
Note: R&D, Research and development; KLD, Kinder, Lydenberg, Domini & Co.

Sustainability 2018,10, 1041 9 of 23
The relationship between CSR and profit has been the focus of research for nearly fifty years,
so Margolis et al. [
62
,
63
] made a chronology of empirical research in this field. The summary
presented in Table 1and the other empirical research [
64
,
65
] show that the relationship between
them has been studied in both directions, both as dependent variables and as independent variables.
In most cases, CSR was the independent variable, and the corporate financial performance (CFP)
as a dependent variable. The results of Margolis et al. studies showed a positive effect, but small.
The relationship was stronger for charitable contributions and weaker for corporate policies and
transparency. Their conclusion was that the link between CSR and CFP remains an open research topic.
Hamilton et al.
[
66
] investigated the relation between the returns of socially responsible portfolios and
conventional portfolios. They found no significant relationship: social responsibility factors have no
effects on expected stock return or companies’ cost of capital.
Of the papers presented in Table 1, some authors considered stakeholder theory in their research.
Fisman et al. [
52
] asked the question “Is there a conflict between maximizing shareholder value and
maximizing stakeholder or social value?” and concluded that CSR activity is compatible with the
framework of “doing well by doing good”. Lee et al. [
59
] found neutrality between CSR and financial
performance. They considered their results are in accordance with stakeholder theory, because the
investments in CSR, even if they are useful and effective, do not guarantee the improvement of
performance in the short term. Price and Sun [
36
] mentioned that the ability of managers to get
involved in CSR needs to be assessed by considering the costs and benefits of companies as they bring
detriment to stakeholders.
The analyzed articles show that there are different ways to explore the CSR–Performance
relationship. The most important aspects of the selected studies referred to the operationalization of
CSR and performance and also to the method chosen to investigate a possible relationship. In the
analyzed empirical studies, the sample used referred to large companies, listed in stock exchanges and
the listed period was at least two years.
Studies provided evidence for the suitability of Q Tobin and ROA indicators to measure the
financial performance. Indicators used to measure CSR vary from one study to another because of the
chosen sample and the research hypotheses defined by the authors, but also because of the complexity
of CSR activities, so the most common variable is an index of CSR from well-known databases or
created by authors.
We agree with the use of Q Tobin and ROA as indicators of financial performance, but with
the condition that the company register profit, otherwise these indicators become less significant.
We also consider that the most appropriate indicators of CSR measurement are indices tested in many
sustainability reports (Global Reporting Initiative (GRI), KLD, and ESG) over a long period of time,
because an index created by authors can be less accurate but it can be used in situations in which the
standard index is not applied. CSR indicators can also be expressed by the value of spending on CSR
actions, one of the most used indicators being corporate philanthropy [60] or corporate giving.
In the reviewed articles, authors showed the conceptual features of “doing well” and “doing
good” and the relationship between them. In Table 1aims at highlighting their contribution to research
on CSR topics.
The aforementioned economic literature helped us in the empirical research to decide the nature
of the collected data, the indicators considered to formulate the research hypotheses and to interpret
the results obtained.
3. Materials and Methods
3.1. Sample
CSR activities of listed companies are officially assessed by independent institutions. Thus, the key
assessments are based on the United Nations Sustainable Development Goals, EU 2014/95/EU, Global
Reporting Initiative and the Dow Jones Sustainability Index. Companies listed on the Bucharest

Sustainability 2018,10, 1041 10 of 23
Stock Exchange (BSE) have not been included in the above-mentioned ratings. However, a private
CSR agency [
67
] conducted the Romania CSR Index 2017 study, which evaluated 100 of the largest
companies in Romania, using a set of 43 indicators. The survey found that companies’ level of interest
in CSR is increasing and many companies continue to focus on community involvement, as well as
investments in facilities that help to increase energy efficiency or use renewable energy.
The companies listed on the stock exchange represent an important segment in any economy,
and the way in which companies manage their business, reflected in the obtained results, represents
an important factor in establishing the transaction cost and the number of transactions. From the
research on the relationship between profit and CSR, in the case of companies listed on BSE, it resulted
a significant influence of the environmental information on the global performance of the Romanian
listed companies [
68
] and also the impact of CSR on company values [
69
]. Feleaga et al. [
70
] studied
the importance of CSR and corporate governance and identified some differences between countries.
Lungu et al. [
71
] realized an archival analysis related to the Romanian researchers’ concerns about
CSR and found that they have studied the impact of CSR on stakeholders and financial performance
and found positive [
72
] and negative correlations [
73
]. In addition, Dumitru et al. [
74
] carried out a
comparative analysis of the state of the reporting practices of non-financial information between the
companies in Romania and Poland before applying the European Directive 2014/95/EU and found
that “Poland experienced a higher extent of voluntary reporting, but Romania faced prior regulatory
demands for non-financial reporting”.
To emphasize the relationship between corporate social responsibility and profit. This study
considered the companies listed at BSE, excluding all financial institutions (due to their field of activity),
those that are suspended or lack data, and those that are not listed throughout the studied period
(2011–2016). Thus, 53 companies were used in the model.
3.2. Measures
The indicators that express profitability are based on accounting data and information provided
by the financial market (Figure 2). For each of them, financial data regarding the values of profit,
turnover, total impairment, total assets, total liabilities, number of shares and their market price at
31 December were manually collected from the Bucharest Stock Exchange and each company’s website.
Sustainability 2018, 10, x FOR PEER REVIEW 10 of 23
largest companies in Romania, using a set of 43 indicators. The survey found that companies’ level of
interest in CSR is increasing and many companies continue to focus on community involvement, as
well as investments in facilities that help to increase energy efficiency or use renewable energy.
The companies listed on the stock exchange represent an important segment in any economy,
and the way in which companies manage their business, reflected in the obtained results, represents
an important factor in establishing the transaction cost and the number of transactions. From the
research on the relationship between profit and CSR, in the case of companies listed on BSE, it
resulted a significant influence of the environmental information on the global performance of the
Romanian listed companies [68] and also the impact of CSR on company values [69]. Feleaga et al .
[70] studied the importance of CSR and corporate governance and identified some differences
between countries.
Lungu et al. [71] realized an archival analysis related to the Romanian researchers’ concerns
about CSR and found that they have studied the impact of CSR on stakeholders and financial
performance and found positive [72] and negative correlations [73]. In addition, Dumitru et al. [74]
carried out a comparative analysis of the state of the reporting practices of non-financial information
between the companies in Romania and Poland before applying the European Directive 2014/95/EU
and found that “Poland experienced a higher extent of voluntary reporting, but Romania faced prior
regulatory demands for non-financial reporting”.
To emphasize the relationship between corporate social responsibility and profit. This study
considered the companies listed at BSE, excluding all financial institutions (due to their field of
activity), those that are suspended or lack data, and those that are not listed throughout the studied
period (2011–2016). Thus, 53 companies were used in the model.
3.2. Measures
The indicators that express profitability are based on accounting data and information provided
by the financial market (Figure 2). For each of them, financial data regarding the values of profit,
turnover, total impairment, total assets, total liabilities, number of shares and their market price at 31
December were manually collected from the Bucharest Stock Exchange and each company’s website.
From all of the CSR indicators identified in the literature review, we found in the reports of
listed companies, information on four activities (Figure 2), namely corporate giving, health and
safety costs at the workplace [11,58,75], employee training courses expenses [27,58,75] and waste
management expenses [56,67,68], but without complete information on the amounts spent. The only
category of expenses for which we found the amounts spent was corporate giving, which was
measured as percent of turnover [59,76,77].
Figure 2. Doing Well and Doing Good indicators.
Our dependent variables, CSR and profit, both as dummy variables, were also independent
variables in some models to test the reciprocity of the correlation, to highlight which one has a
bigger influence over the other. A dummy variable was chosen to express the profit because we
could not calculate the profitability indicators ratios because some companies registered losses. CSR
is a multidimensional construct [78] but we chose corporate giving to measure it because it was the
only information available in the annual reports of the analyzed companies.
The following indicators are control variables included in the analysis, to control the reliability
of the model and reduce the risk of biases. The size of the profit depends on the turnover [79] and by
Figure 2. Doing Well and Doing Good indicators.
From all of the CSR indicators identified in the literature review, we found in the reports of listed
companies, information on four activities (Figure 2), namely corporate giving, health and safety costs
at the workplace [
11
,
58
,
75
], employee training courses expenses [
27
,
58
,
75
] and waste management
expenses [
56
,
67
,
68
], but without complete information on the amounts spent. The only category of
expenses for which we found the amounts spent was corporate giving, which was measured as percent
of turnover [59,76,77].
Our dependent variables, CSR and profit, both as dummy variables, were also independent
variables in some models to test the reciprocity of the correlation, to highlight which one has a bigger
influence over the other. A dummy variable was chosen to express the profit because we could
not calculate the profitability indicators ratios because some companies registered losses. CSR is a

Sustainability 2018,10, 1041 11 of 23
multidimensional construct [
78
] but we chose corporate giving to measure it because it was the only
information available in the annual reports of the analyzed companies.
The following indicators are control variables included in the analysis, to control the reliability
of the model and reduce the risk of biases. The size of the profit depends on the turnover [
79
]
and by analyzing the accounting policies of the companies, this indicator is one of the hardest to
manipulate by a company’s management, which means that there is a high degree of certainty for
the value of this indicator. Another indicator that influences the profitability and value of companies
is assets impairment which negatively influences the stock price, as this affects the future financial
performance [80].
Distributed dividends were considered a market indicator because it is a form of communication
with the shareholders of the well-being of the companies [
81
]. Thus, a dummy variable, dividend,
was created, which takes the value 1 if the companies distributed the dividends and 0 if not. Market
capitalization is an indicator that influences economic growth [
82
] and is used in another studies as
control variable for size of the firms [83,84], the same as assets [85].
The model also included a dummy variable, ownership, that takes value 1 if the company has
a majority private shareholder and 0 if the majority of shareholders are state-owned. Size is another
dummy variable that takes value 1 if the company is a large company and 0 if the company is a small
and medium enterprise (SME).
The first phase of the empirical study is observing the variables dynamics using descriptive
statistics and checking for stationarity using Harris–Tzavalis test. All of the testing and estimation was
carried out using Stata Statistical Software: Release 13 (StataCorp LP, College Station, TX, USA).
Based on the literature review, three research hypotheses were formulated and tested.
Hypotheses 1 (H1). There is a significant correlation between “doing good” and “doing well”
To validate this hypothesis, the paper sought to assess the statistical significance of “doing well”,
expressed by accounting and market indicators, over the “doing good”, expressed by corporate social
contributions (as dummy) and by corporate giving (as percent of Turnover), for the listed companies,
using a panel data econometric model containing 318 observations of 53 companies for a period of
six years.
The research was done from two perspectives: in the first one, the impact of “doing well” over
the “doing good” was tested and, in the second one, the influence of “doing good” over the “doing
well” was tested.
For the first perspective, the following econometric model was applied in two situations: first,
when CSR was a dummy variable (if the company had at least one of the four CSR indicators mentioned
above it took the value 1, if not, 0), it used a logistic regression to analyze the decision to make CSR;
and, second, we took into account just one of the CSR indicators, corporate giving (CG, expressed as
percent of Turnover) as the dependent variable and used a multivariate linear regression:
CSRit =αi+β1Profitit +β2Impairmentit +β3Assetsit +β4Liabilitiesit+
β5Market_Capitalizationit +β6Dividendsit +β7Sizeit +β8Ownershipit +εit
(1)
where
αi
represents the unknown intercept of every company,
β1–8
are the coefficients of each
explanatory variable,
εit
is the error term, i= 1–53 companies and trepresents the years analyzed
(2011–2016).
For the logistic regression, the fitting of the model was tested using Pearson and
Hosmer–Lemeshow goodness-of-fit tests. We verified whether the model is correctly specified with
the Specification link test and, after that, a collinearity diagnostic was performed.
For the multivariate regression, the variance inflation factor (VIF) was calculated for the
independent variables to test for multicollinearity, we checked for homoscedasticity with the Modified
Wald test and for cross-sectional dependence using Pesaran CD test. In addition, the Wooldridge

Sustainability 2018,10, 1041 12 of 23
test was used to verify if there is a first-order autocorrelation in the panel data. After all tests were
performed, we decided to use a feasible generalized least squares (FGLS) regression.
To validate the second perspective, the paper sought to assess if there is a reverse correlation
between the concepts: whether “doing good”, more exactly, the existence of CSR, influenced “doing
well” for all the companies. A logistic regression was used because the dependent variable, profit,
was a dummy, testing the following model:
Profitit =αi+β1CSRit +β2Turnoverit +β3Impairmentit +β4Assetsit +β5Liabilitiesit+
β6Market_Capitalizationit +β7Dividendsit +β8Sizeit +β9Ownershipit +εit
(2)
The studied articles referred to the companies that register profit and showed its correlation with
CSR, thus we decided to do the same and formulated our second hypothesis.
Hypotheses 2 (H2). Companies are “doing good” while “doing well”
In this situation, only the companies that were doing well (registered profit) in all the studied
period were analyzed and whether the size of “doing well” had a significant impact on the amount of
“doing good” (expressed by the indicator corporate giving as percent of turnover) was tested. The same
multivariate regression model (Equation (1)) was used for a panel data containing 30 companies for a
period of six years, resulting in 180 observations.
Continuing the line of thought, we wanted to emphasize the behavior of the companies in the
years they register losses with regard to the CSR activities, thus the third hypothesis was formulated.
Hypotheses 3 (H3). Companies are “doing good” while “doing poorly”
For this hypothesis, we analyzed the companies that were doing poorly (registered losses) in the
studied period and tested if this situation affected the decision to “do good”. There were 23 companies
that registered losses in at least one year. To validate it, a pairwise correlation between the two main
indicators of “doing good” and “doing well” for the situations that met the criterion of “doing poorly”
in the studied period was performed.
4. Results and Discussion
The empirical research began with descriptive statistics of all the analyzed indicators and testing
for unit root using Harris–Tzavalis test for stationarity. It was validated for the variables that were
included in the model (all the indicators that were expressed in RON (the EURO/RON exchange rate
fluctuated from 4.3 to 4.5 between 2011 and 2016) were converted into natural logarithms) at 5% level
of confidence (the results are presented in Table 2).
We obtained that, on average, 76% were “doing good” (had CSR activities) and the amount of
corporate giving varied from 0% to 1.72% of their turnover.
Regarding the accounting indicators, in our group, 81% were “doing well” (registered profit),
the biggest value being 4.83 billion RON and the biggest loss was 1.07 billion RON. On average,
the impairment was 77.29 million RON, varying from 0.15 million RON to 5.68 billion RON. Total assets
of the companies were, on average 1.28 billion RON, the smallest amount was 11.48 million RON
and the biggest 43.17 billion RON. Liabilities were 326 million RON on average with a maximum of
6.96 billion RON and the minimum of 0.92 million RON.
The market indicators show us that, on average, the market capitalization was 606.1 million RON,
reaching the highest value of 26.61 billion RON and the lowest value of 14.31 million RON. In addition,
47% distributed dividend in the studied period.
In our group, there are 43% large companies and 88% from all the companies have a majority of
private shareholders.
The correlations between all the variables are presented in Table 3. One of our dependent
variables, CSR (as dummy), was positively correlated with all the indicators, except for the ownership
and the biggest correlation was with profit (as dummy) of 0.5119. If we consider corporate giving

Sustainability 2018,10, 1041 13 of 23
(as percent of turnover), it is also positively correlated with all of the indicators, except for liabilities
(
−
0.1052) and the strongest correlation is with profit (as dummy), 0.23, and with dividends (0.26).
The strongest direct correlation of the profit (as dummy) is with dividends (0.45) and a negative one
with ownership (−0.17).
Table 2. Descriptive statistics.
Variable Obs. Mean Std. Dev. Min Max Unit Root Test (z)
Assets (mil RON) 318 1282.2 5478.9 11.48 43174 −1.98 **
Ln_Assets 318 19.06 1.52 16.26 24.49 −12.97 ***
Impairment (mil RON) 318 77.29 442.2 0.15 5682.9 −11.72
Ln_Impairment 318 15.51 1.83 11.92 22.46 −5.40 ***
Liabilities (mil RON) 318 326.2 1079.06 0.92 6961.5 −2.70 ***
Ln_Labilities 318 17.64 1.75 13.74 22.66 −5.43 ***
Market capitalization (mil RON) 318 606.1 2855.6 1.63 26,611.4 −3.04 ***
Ln_Market capitalization 318 17.92 1.74 14.31 24.00 1.86 **
Turnover (mil RON) 318 758.5 2665.6 0.536 19,510 −1.20
Ln_Turnover 318 18.44 1.77 13.19 23.69 −5.18 ***
Profit 318 0.81 0.40 0 1 −8.36 ***
Profit (mil RON) 318 57.1 432.5 −1074.8 4839.3 −4.11 ***
Dividends 318 0.47 0.50 0 1 −11.32 ***
Size 318 0.43 0.50 0 1 −9.85 ***
Ownership 318 0.89 0.32 0 1 −9.85 ***
CSR 318 0.76 0.43 0 1 −9.56 ***
CSR (%Turnover) 318 0.09 0.16 0 1.72 −1.72 **
Note: **, 5% level of significance; ***, 1% level of significance.
The fitting of the model was tested, with all the independent variables, using Pearson and
Hosmer–Lemeshow goodness-of-fit tests from which we obtained a chi2(310) of 240.92 with a P-value
of 0.9941 indicating that the null hypothesis should be accepted. Our model was specified correctly
because the Specification link test resulted a LR chi2(2) of 134.79 with p-value 0.000, Pseudo R-squared
of 0.3880 and the prediction squared does not have an explanatory power, validating that the model is
correctly specified. Furthermore, the collinearity diagnostics revealed a mean VIF of 6.19 smaller than
7, which means there was no multicollinearity issues and all regressions are statistically significant
because the values obtained for Wald chi2 were bigger than the threshold at 1% level of confidence.
The results of the logistic regression (Table 4) show that the most important indicator that
influenced the decision to “do good” (have CSR activities) is to “do well” (have profit), between those
two indicators there is a positive relation, similar to other studies for Romanian listed companies [
72
,
75
].
The odds of doing CSR for the companies with profit are 8.31 times greater than the odds of the
companies which registered losses. If we took out of the model the variables that were not validated
(impairment, liabilities, dividends and ownership), the odds increased to 9.24.
The econometric analysis was continued with an OLS regression to test for multicollinearity and
obtained a mean VIF of 6.67. To decide what type of regression should be used, the Hausman test was
applied and obtained that chi2(4) was 12.91 with a p-value of 0.0445 leading us to accept the alternative
hypothesis. We performed a regression with fixed effects and tested for homoscedasticity with the
Modified Wald test, obtaining a chi2(53) of 82 with a p-value of 0.000, thus rejecting the null hypothesis.
To check for cross-sectional dependence of the residuals Pesaran CD test was used and accepted
the null hypothesis of independence (the p-value was 0.6692). Finally, the existence of first-order
autocorrelation in our panel data was verified using Wooldridge test and obtained an F (1,52) of 5.380
with a p-value of 0.0243, leading us to reject the null hypothesis of no first-order autocorrelation.
In accordance with the results obtained from the aforementioned tests, the most appropriate model
is a cross-sectional linear panel-data model, using feasible generalized least squares (FGLS). This allows
estimation in the presence of autocorrelation, with independent residuals and heteroscedasticity.
In addition, iterated GLS estimator was used instead of two-step GLS estimator.

Sustainability 2018,10, 1041 14 of 23
In Table 5, it can be observed that all regressions are statistically significant; the values obtained
for Wald chi2 were bigger than the threshold at 1% level of confidence. Performing the regression using
all the indicators resulted that if the companies are “doing well” (have profit) it could increase the
value of corporate giving by 0.03% of the turnover. We tested again the model, eliminating the market
indicators and keeping only the accounting ones and the explaining power of the profit increased
to 0.05. After that was excluded from the model the accounting indicators leaving only the market
indicators and the non-financial ones. In this case, the fact that the companies distributed dividends,
which could also be considered a “doing well” situation, had the biggest influence on corporate giving,
leading to an increase of 0.04%.
Another analysis was made to investigate if “doing good” (if the companies had CSR activities)
had an influence on the “doing well” (recording profit) for all the companies. From the logistic
regression a high relation between them was obtain (Table 6). The odds of recording profit for
the companies that had CSR activities are 14.48 times greater than the odds of the companies that
did not have CSR. Our result is similar to the one obtained by Skare and Golja who found that
“a CSR corporation is 6 times more likely to have better financial performance than a non-CSR
corporation” [86].
To validate the second hypothesis, we tested if the values of the profits have had a significant
influence on the values of the corporate giving (as percent of turnover).
The amount of corporate giving (as percent of turnover) is not influenced by the size of the
profit (Table 7) because the independent variable profit was not validated. The results showed that
market capitalization influenced the most the amount of corporate giving. If market capitalization
increased by 1%, the CG could increase by 0.6%. In addition, if the companies distributed dividends,
the value of corporate giving could increase by 0.2%. Therefore, the concept of creating share value by
Kramer and Porter [
9
] is confirmed: the goal of a company is to create value and not just profit, and,
to maximize this value, managers should make decisions on the long term, for all stakeholders [
87
].
Overall, the second hypothesis is validated: companies are “doing good” when they “doing well”.
For the third hypothesis, we considered only the companies that did not have profit in all years.
In our group, there are 23 companies that registered losses in at least one year; two had losses in all
six years; five in four years; and 16 in fewer than three years, leading to 62 observations. Of these,
seven are large companies and 16 SMEs, and all 23 have a majority of private shareholders.
A pairwise correlation between the two main indicators studied in this paper, “doing good”
(the situation in which the companies had CSR activities) and “doing poorly” (the situation in which
the companies registered losses), for 62 observations that met this criterion, was performed. The results
presented in Table 8showed that, in 33% of the situations, the firms that registered losses continued to
have social contributions, because in the long run these actions could generate profit, thus partially
validating our hypothesis that the companies were “doing good” even while they are “doing poorly”.
CSR activities are provided in the annual budget based on the financial results of the previous year,
so the profit of the current year may also be influenced by external factors, such as market conjuncture,
commodity prices and economic crises.
Analyzing the particularities of each company, we observed that large companies, the ones that
are subsidiaries of multinational enterprises, are more involved in CSR activities even when they record
losses, as these actions are demanded by the policies of the parent entity which controls them [
88
].
This result is corroborated with the finding of the study by Looser [
50
] on the case of companies from
Switzerland, from which large companies have come to understand that “ethics pays”. In addition,
Burke and Logsdon [
89
] considered that CSR “pays off” for organizations as well as for stakeholders
and leads to value creation.
Thus, it can be said that there is a close link between “doing well” and “doing good” because
companies that made profit had CSR activities, which also led to a positive relationship of CSR with
market capitalization and implicit value creation of the company. Thus, due to the CSR activities made,
the stakeholder acknowledged the value of the companies by increasing the market capitalization.

Sustainability 2018,10, 1041 15 of 23
Table 3. The correlation matrix.
1 2 3 4 5 6 7 8 9 10 11 12
1 csr (dummy) 1
2 cg (%Turnover) 0.3201 1
3 ln_assets 0.3689 0.0002 1
4 ln_liabilities 0.2242 −0.1052 0.8861 1
5 profit(dummy) 0.5119 0.2317 0.1158 −0.0391 1
6 profit (ron) 0.0779 0.0204 0.3999 0.2998 0.1341 1
7 ln_turnover 0.3959 0.0091 0.8649 0.8219 0.1653 0.3225 1
8 ln_impairment 0.3688 0.0330 0.9401 0.8218 0.1073 0.3867 0.8579 1
9 ln_mc 0.4754 0.1583 0.9072 0.7159 0.2214 0.4022 0.8560 0.8916 1
10 dividends 0.3699 0.2609 0.2010 0.0204 0.4592 0.1841 0.2113 0.2177 0.3255 1
11 size 0.3669 0.0859 0.7006 0.6003 0.2067 0.1488 0.6659 0.6603 0.6836 0.2770 1
12 ownership −0.1517 0.0061 −0.3743 −0.2169 −0.1758 −0.0556 −0.2784 −0.3486 −0.3547 −0.3431 −0.2879 1
Table 4. The results from the logistic regression model (in odds ratio).
Dependent Variable: CSR (Dummy)
Wald chi2 Profit Impairment Assets Liabilities Market Capitalization Dividends Size Ownership
91.01 *** 8.31 (4.91) *** 1.45 (1.44) 0.202 (−3.63) *** 1.21 (0.78) 3.34 (3.63) *** 1.67 (1.16) 4.28 (2.94) *** 0.317 (−1.12)
92.35 *** 9.24 (5.85) *** 0.287 (−4.69) *** 3.59 (4.50) *** 7.42 (4.44) ***
z values are reported in parenthesis; and *, ** and *** mean 10%, 5% and 1% level of significance, respectively.
Table 5. The coefficients resulted from the FGLS regression model.
Dependent Variable: CG (%Turnover)
Wald chi2 Profit Impairment Assets Liabilities Market Capitalization Dividends Size Ownership
1759.96 *** 0.0363 (8.64) *** −0.0038 (−2.11) ** −0.0371 (−9.10) *** 0.0090 (3.56) *** 0.0358 (12.89) *** 0.0227 (5.84) *** −0.0348 (−9.98) *** −0.0097 (−1.61)
1053.15 *** 0.0548 (10.55) *** 0.0052 (1.72) * 0.012 (3.12) *** −0.016 (−4.70) *** −0.0053 (0.93) −0.0203 (−2.34) **
459.40 *** 0.0031 (4.86) *** 0.041 (6.17) *** 0.006 (0.80) −0.025 (−2.68) **
z values are reported in parenthesis; and *, ** and *** mean 10%, 5% and 1% level of significance, respectively.

Sustainability 2018,10, 1041 16 of 23
Table 6. The results from the logistic regression model (in odds ratio).
Dependent Variable: Profit (Dummy)
Wald chi2 CSR Turnover Impairment Assets Liabilities Market Capitalization Size
106.42 *** 14.48 (6.02) *** 1.61 (2.05) ** 0.604 (−1.85) * 2.92 (2.08) ** 0.33 (−2.88) *** 0.86 (−0.44) 1.62 (1.09)
z values are reported in parenthesis; and *, ** and *** mean 10%, 5% and 1% level of significance, respectively.
Table 7. The results of the FGLS regression model for H2.
Dependent Variable: CG (%Turnover)
Wald chi2 Profit Impairment Assets Liabilities Market Capitalization Dividends Size Ownership
1065.55 *** 0.0009 (0.74) −0.009 (−2.6) *** −0.034 (−4.36) *** −0.0203 (−3.88) *** 0.0665 (11.10) *** 0.0201 (2.67) *** −0.0134 (−1.97) ** 0.0428 (4.43) ***
z values are reported in parenthesis; and *, ** and *** mean 10%, 5% and 1% level of significance, respectively.
Table 8. The results of the correlation for H3.
Profit
CSR 0.3336 (0.0001)
Number of Observations: 62
p-value is reported in parenthesis.

Sustainability 2018,10, 1041 17 of 23
One-third of the companies that experienced losses during the analyzed period are aware of the
need to fulfill a “duty to others” [
30
] and have incurred social expenses, which may implicitly lead to
increased reputation and recognition of interest for the needs of the stakeholders.
Our results are consistent with stakeholder theory because the analyzed companies were involved
in CSR in a proportion of 76%, which is the answer to the question that we asked at the beginning
of our study. The largest impediment is that the companies did not publish the information very
explicitly; they were not found in a single report; and they had to be collected from various sources
and compiled to have the overall picture of each CSR company. In addition, by engaging in CSR,
the studied companies have demonstrated that they have applied the principles of business ethics,
but we still believe that the CSR strategy and policies need to be improved, including an improvement
in the communication with the stakeholder [
90
]. To accomplish this mission, we consider it necessary
to report in detail all elements that explicitly reflect the actions they are involved in. For this reason,
we will leave open future research to analyze whether new reports that will be published are able
to provide the complete and real information necessary to stakeholders as required by the European
Directive 2014/95/EU which became effective in Romania at the beginning of 2017.
5. Conclusions
The present paper aims at identifying how significant the correlation between CSR and profit is,
and how companies behave in periods they have losses, whether they continue to do CSR activities,
reduce the activities or give them up [
91
]. This idea was not of interest for many researches since the
listed companies on other stock exchange had a high performance, and was found in only few studies
about the companies that have negative financial performance [92].
The first hypothesis is validated by analyzing it from two points of view: in the first one the
impact of “doing well” over the “doing good” was tested and in the second one the influence of “doing
good” over the “doing well” was tested.
The results for the first perspective show that the odds of doing CSR for the listed companies with
profit are 8.31 times greater than the odds of the companies which registered losses; in addition, it could
increase the value of corporate giving by 0.03% of turnover. In addition, if companies distributed
dividends, which could also be considered a “doing well” situation, it could lead to an increase of
corporate giving of 0.04% of turnover. The second perspective analyzes the odds of recording profit
for the companies that had CSR, resulting they are 14.48 times greater than the odds of companies
that did not have CSR activities. The significant positive correlation between corporate giving and
performance is in accordance with the results of other studies on CSR [93,94].
For the next hypothesis, we obtained that the amount of corporate giving (as percent of turnover)
is not influenced by the size of the profit, but if the companies distributed dividends, the value of
corporate giving could increase by 0.2% of turnover. In conclusion, we can say that the companies are
“doing good” when are they are “doing well”. The results concord with the conclusions of Margolis [
63
]
and other researchers [60,80].
The third hypothesis is validated by obtaining that, 33% of the time, firms that are “doing poorly”
continued to have CSR activities, to “do good”. Muirhead et al. [
91
] also observed that companies
that are not doing well financially are involved in CSR activities with the motivation that CSR will be
pay off.
This paper contributes to the literature by providing a review of the “doing good” and “doing
well” concepts, separately on qualitative and quantitative methods. This could be useful to the other
researchers to better understand the concepts and to formulate their research hypotheses. In addition,
knowledge of CSR strategies is important for all the stakeholders. The empirical results of this research
demonstrated that there is a relationship between “doing well” and “doing good” using logistic and
contemporaneous econometric analysis of the panel data [
55
] and the originality consists also on the
analysis of CSR activities for the companies that registered losses.

Sustainability 2018,10, 1041 18 of 23
Empirical research contributes to generating academic knowledge about topics of CSR,
our findings complete the existing research in this field. We believe the CSR–profit relationship
is still an unresolved puzzle [
54
] and remains a research topic which can be improved by new theories
and models [21].
In the last years, the international trend towards adopting a CSR strategy is followed by local
companies in Romania, which are in the process of improving their medium-term strategies regarding
community involvement [
95
]. CSR is a key concept for sustainability and managers should understand
that reporting the activities bring benefits to the stakeholders and to the company. The reporting
should not be limited to mandatory requirement without disclosing detailed additional information.
Our paper has some limitations regarding the data relating to characteristics of the sustainability
reports for the listed companies and the fact that there is no standardized model [
89
] to be followed by
all of them, as was noted by Sherman [
46
] who said that the reports must be relevant and comparable.
In addition, for the SMEs, the stakeholders need more information so that they can play a useful part
in decision making [96].
In the last years, the investment in socially responsible companies has grown substantially
in Europe. Under the influence of the economic policies defined by the European Commission
over these years, many companies quoted on European stock markets consider it advantageous
to publish sustainability reports, thus providing that information to their financial stakeholders.
The implementation of Directive 2014/95/EU will contribute to providing more consistent and
comprehensive data to improve research in the field of CSR for EU countries [
97
–
101
]. If CSR activities
are considered investments, the question of their evaluation and recognition as assets and their
impairment testing is another topic of debate for researchers.
A future research direction refers to a regional comparative analysis with other European countries
building a macro-structural indicator similar to the one from the study of Schwan [
102
]. Our results
can help policy makers adopt necessary regulatory reform to improve the CSR practices and enhance
organizational legitimacy. Continued research on these lines ensures the factors that take strategic
decisions in the companies the opportunity to give them a significant competitive advantage in the
current competitive environment, and for the investors the attitude towards risk [103,104].
Author Contributions:
This article was originally conceived and designed by Camelia-Daniela Hategan,
Nicoleta Sirghi, Ruxandra-Ioana Curea-Pitorac and Vasile-Petru Hategan who also wrote the paper and approved
the final manuscript.
Conflicts of Interest: The authors declare no conflicts of interest.
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