Can earning much lead to doing good? Firm performance implications for corporate social responsibility

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Siyu Hou ◽  
Zhaoyang Guo ◽  
Chuangneng Cai ◽  
Xiaobo Jiao
Keyword(s):  
Corporate Social Responsibility ◽  
Firm Performance ◽  
Social Responsibility ◽  
State Ownership ◽  
Data Sets ◽  
Content Type ◽  
Multiple Data ◽  
Instrumental Variable Regression ◽  
Multiple Data Sets ◽  
Corporate Social

Purpose The purpose of this study is to examine the influence of firm performance on corporate social responsibility (CSR) and its possible moderating effect. Despite the significance of CSR, there remains an extensive debate about how it is affected by firm performance. Design/methodology/approach The conceptual model is mainly built on goal-setting theory. Based on archival data from multiple data sets on 1,650 companies, collected from 2010 to 2017, the hypotheses are tested using the two-stage instrumental variable regression method. Findings There is an inverted U-shaped relationship between firm performance and CSR that first increases and then decreases. In addition, considering the boundary conditions, state ownership makes the inverted U-shaped curve steeper, while high executive wage concentration makes the inverted U-shaped curve flatter. Research limitations/implications This study harmonizes the traditional contradictory findings of the influence of firm performance on CSR, that is, it supports a positive, negative or neutral relationship between the two. Originality/value This research provides a necessary structure for the CSR literature. By delving deeply into the relationship between firm performance and CSR, it enables scholars to better address the critical management question of whether earning more will lead to doing good.

Corporate social responsibility and corporate payout policy: the impact of product market competition

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shahbaz Sheikh
Keyword(s):  
Corporate Social Responsibility ◽  
Firm Performance ◽  
Social Responsibility ◽  
Social Performance ◽  
Market Competition ◽  
Global Reporting Initiative ◽  
Product Markets ◽  
Content Type ◽  
Corporate Social ◽  
The Impact

PurposeThe purpose of this paper is to empirically investigate if and how firm performance in corporate social responsibility (CSR) is related to corporate payouts and how competition in product markets influences this relation.Design/methodology/approachLogit and Tobit regressions are used to estimate the relation between firm performance in CSR and corporate payouts.FindingsThe empirical results show that firm performance in CSR is positively related to the propensity and level of dividends, repurchases and total payouts (dividends plus repurchases). However, the positive relation between CSR performance and corporate payouts is significant only for firms that operate in low competition markets. In high competition markets, CSR performance does not seem to have any significant relation with corporate payouts.Research limitations/implicationsThis study uses MSCI social ratings data to measure net scores on CSR. There is no systematic conceptual reason for measuring social performance using MSCI social ratings. Future research should use other measures of social performance (e.g. Dow Jones Sustainability Index, Accountability Ratings and Global Reporting Initiative to estimate the relation between CSR and corporate payouts).Practical implicationsCSR firms are more likely to choose higher payouts when they operate in low competition markets.Originality/valueThis study contributes to the stream of research that evaluates the payout choices of CSR firms and competition in product markets. To the author's knowledge, this is the first study that documents the impact of market competition on the relation between firm performance in CSR and corporate payouts.

Corporate social responsibility, innovation capability and firm performance: evidence from SME

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dawit Bahta ◽  
Jiang Yun ◽  
Md Rashidul Islam ◽  
Muhammad Ashfaq
Keyword(s):  
Corporate Social Responsibility ◽  
Firm Performance ◽  
Social Responsibility ◽  
Financial Performance ◽  
Developing Country ◽  
Equation Modeling ◽  
Innovation Capability ◽  
Content Type ◽  
Corporate Social

Purpose The purpose of this paper is to examine corporate social responsibility (CSR) and its effect on small and medium enterprises’ (SMEs) innovation capability and financial performance from the perspective of a developing country. It also aims to explore the role of innovation capability as a mediating factor in the linkage between CSR and SMEs’ financial performance. Design/methodology/approach A questionnaire was distributed among managers/owners of the sampled companies. Using a data set of 402 Eritrean firms and partial least squares structural equation modeling, direct and mediating effects were tested. Findings The result reveals that CSR has a positive and significant effect on the financial performance and innovation capability of SEMs. Besides, innovation capability has a positive and significant effect on the business performance of SMEs. The result also supports a partial mediation effect of innovation capability on the association between CSR and firm performance. Practical implications The findings from this research could enhance the awareness of the entrepreneurs, researchers and policymakers on CSR-SMEs’ relationship and help understand the importance of CSR as a crucial driver mechanism for companies to become more innovative and competitive. Originality/value By empirically examining the relationship between CSR, innovation capability and performance in SMEs, this study contributes to the ongoing scholarly discussion on the linkage between CSR and financial performance. Also, to the best of the authors’ knowledge, no other study investigated the mediating role of innovation capability on the link between CSR activities and firms’ financial performance in SMEs from a developing country perspective, making substantial contributions to research in terms of theory, practice and policy.

Corporate social responsibility, firm performance and tax risk

2019 ◽  
Vol 34 (9) ◽  
pp. 1101-1130
Author(s):  
Xiaojun Lin ◽  
Ming Liu ◽  
Simon So ◽  
Desmond Yuen
Keyword(s):  
Corporate Social Responsibility ◽  
Firm Performance ◽  
Social Responsibility ◽  
Corporate Culture ◽  
Business Decision ◽  
Content Type ◽  
Ethical Implications ◽  
Ethical Work Climate ◽  
Tax Savings ◽  
Corporate Social

Purpose The purpose of this study is to investigate whether corporate social responsibility (CSR) can lower tax risk. Previous studies have demonstrated a negative link between CSR and tax aggressiveness. Generally, corporations engaging in social irresponsibility tend to undertake aggressive tax planning; whereas socially responsible firms enjoy tax savings. Because several recent studies have suggested that lower tax payments do not necessarily create higher tax risk, an exploration of the relationship between CSR and tax risk was not only interesting but also important. Design/methodology/approach Using an ethical perspective of CSR, this paper argues that executives who are nourished by an ethical climate tend to make responsible and reliable operating decisions. Therefore, their corporations would have better control of tax administration, and the corresponding tax risk would be constrained. Such corporations would enjoy greater tax savings while keeping their tax risk at relatively low levels. However, this reasoning ignores the fact that limited economic resources would constrain a firm from practicing CSR in the form of donations. This situation would also influence its attitude toward tax strategies. Specifically, when a firm’s performance is unsatisfactory, the cultural effect of CSR may diminish or even disappear. Findings Firms donating additional resources to CSR activities can construct a more ethical work climate that encourages executives to control tax risk while lowering tax expenses. For firms with unsatisfactory performance, the ethical benefits of CSR could disappear, thus suggesting a relationship with firm performance. This finding contributes to the knowledge on the ethical implications of CSR and proposes that the culture argument is conditional on satisfactory firm performance. Originality/value This study explores the association between corporate culture (CSR) and tax risk. The empirical results help shareholders, analysts and other investors to make their business decision better because CSR or corporate culture is less likely to change suddenly or dramatically in an abbreviated time. The finding of this study shed light on the importance of corporate culture on making an investment evaluation or decision. In addition, this study extends the research on CSR by demonstrating that the effects of CSR are conditioned on firm performance. The beneficial effect of CSR on tax risk would disappear when firms have unfavorable financial performance.

scholarly journals Corporate social responsibility and Latin American firm performance

2017 ◽  
Vol 17 (3) ◽  
pp. 403-445 ◽  
Author(s):  
Chiara Amini ◽  
Silvia Dal Bianco
Keyword(s):  
Corporate Social Responsibility ◽  
Firm Performance ◽  
Social Responsibility ◽  
Latin American ◽  
Data Set ◽  
Content Type ◽  
Business Operations ◽  
Corporate Social ◽  
The Impact ◽  
Matching Techniques

Purpose The purpose of this paper is to analyse the impact of corporate social responsibility (CSR) on firm performance in six Latin American economies. Firm performance includes five distinct dimensions, namely, firm turnover, labour productivity, innovativeness, product differentiation and technological transfer. The countries under scrutiny are Argentina, Bolivia, Chile, Colombia, Ecuador and Mexico. Design/methodology/approach Propensity score matching techniques are used to identify the causal effect of CSR on firm performance. To this end, World Bank Enterprise Survey (2006 wave) is used. This data set collects relevant firm-level data. Findings CSR has a positive impact on the outcome variables analysed, suggesting that corporate goals are compatible with conscious business operations. The results also vary across countries. Research limitations/implications The pattern that emerges from the analysis seems to suggest that the positive effects of CSR depend on countries’ stage of industrialisation. In particular, the least developed the economy, the wider the scope of CSR. Nonetheless, the relationship between conscious business operations, firm performance and countries’ level of development is not directly tested in the present work. Practical implications The main practical implication of the study is that Latin American firms should adopt CSR. This is because corporate responsible practices either improve firm performance or they are not shown to have a detrimental effect. Social implications The major policy implication is that emerging countries’ governments as well as international organisation should provide meaningful incentives towards CSR adoption. Originality/value The paper provides three major original contributions. First, it brings new descriptive evidence on CSR practices in Latin America. Second, it uses a broader and novel definition of firm performance, which is aimed at capturing developing countries’ business dynamics as well as at overcoming data limitations. Finally, it reassesses and extends the empirical evidence on the impact of CSR on firm performance.

Corporate social responsibility, firm performance and the moderating effect of earnings management in Chinese firms

2018 ◽  
Vol 10 (2/3) ◽  
pp. 184-199 ◽  
Author(s):  
Muhammad Safdar Sial ◽  
Zheng Chunmei ◽  
Tehmina Khan ◽  
Vinh Khuong Nguyen
Keyword(s):  
Corporate Social Responsibility ◽  
Firm Performance ◽  
Social Responsibility ◽  
Earnings Management ◽  
Generalized Method Of Moments ◽  
Chinese Firms ◽  
Content Type ◽  
Corporate Social ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between corporate social responsibility (CSR) and firm performance and the moderating role of earnings management on the relationship between CSR and firm performance. Design/methodology/approach The empirical study used the updated data set (3,481 unbalanced observations for period 2009–2015) from Chinese listed companies on Shenzhen and Shanghai stock exchanges. The generalized method of moments (GMM) statistical approach has been used for the analysis. The authors utilized STATA to test GMM on a sample of Chinese listed firms data over the period 2009–2015. The unbalanced sample obtained 3,481 observations from China stock market and accounting research database and CSR ratings provided by Rankins (RKS). Findings The results demonstrated that CSR has a positive and significant relationship with firm’s performance; also, earnings management has a negatively moderate relationship between CSR and firm performance. These results imply that a high value of earnings management, which results in high level of symbolic CSR, converts to low firm performance of the Chinese firms. CSR actions (only as symbolic measures) promoted by managers as a means to cover their profit management incite an adverse effect on the company’s performance. This study has highlighted the impact of two different corporate social responsibilities: substantive and symbolic (genuine CSR vs greenwashing) on firm performance. Research limitations/implications The results of this investigation will be of distinct interest to company owners who wish to ascertain the effectiveness of the sustainability decisions of directors and managers, and also to investors and public authorities to estimate the positive relationship between CSR and company’s reputation and image, and thus, the positive influence on firm performance. Originality/value Previous studies have generally focused on the relationship between CSR and firm performance. This study provides the impact of earnings management (measurement of both aspects of accrual-based earnings management and real earnings management) on this relationship. Furthermore, this study examines the state of CSR in the Chinese market and provides empirical evidence of this relationship in emerging markets.

Does board gender enhance Palestinian firm performance? The moderating role of corporate social responsibility

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohammed W.A. Saleh ◽  
Mohammad A.A. Zaid ◽  
Rabee Shurafa ◽  
Zaharaddeen Salisu Maigoshi ◽  
Marwan Mansour ◽  
...  
Keyword(s):  
Corporate Social Responsibility ◽  
Firm Performance ◽  
Panel Data ◽  
Social Responsibility ◽  
Gender Diversity ◽  
Content Type ◽  
Listed Firms ◽  
Board Gender Diversity ◽  
Corporate Social

Purpose This study aims to examine how the salient board gender diversity among board directors affects firm performance both directly and indirectly, through the role of corporate social responsibility (CSR) in listed firms on the Palestine Stock Exchange over the period 2010–2017. Design/methodology/approach Based on panel data of 384 observations from all firms listed on the Palestine Security Exchange during the period from 2010 to 2017, this study uses panel data regression to examine the effect of the predictors on firm performance. In addition, to mitigate the endogeneity issue, the analysis was repeated by using one-step generalized method of moments. Findings The results show that board gender diversity has a positive and insignificant influence on firm performance. However, under the moderating effect of CSR, the finding turns from positive insignificant to positive significant. Originality/value The study is timely given that gender diversity plays pivotal roles in determining the performance in terms of monitoring and controlling and further willing to engage in social responsibility. The prior research in Palestine has never investigated the effect of board gender diversity. As such, Palestine has not established a legal quota of minimum female representation on boards, and because of it, the country has weak women’s representation among firms. It, therefore, becomes a necessity to examine the influence of board gender diversity on the financial performance of listed firms in Palestine. Besides, the mixed result in previous literature on the board gender diversity and firm performance indicates that there is an indirect effect that needs alternative explanations.

Corporate social responsibility and firm performance: does institutional quality matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Majdi Karmani ◽  
Rim Boussaada
Keyword(s):  
Corporate Social Responsibility ◽  
Firm Performance ◽  
Social Responsibility ◽  
Positive Impact ◽  
Panel Data Analysis ◽  
Institutional Quality ◽  
Dynamic Panel Data ◽  
Content Type ◽  
Corporate Social ◽  
The Relationship

PurposeThe purpose of this paper is to investigate whether institutional quality influences the corporate social responsibility (CSR) and firm performance (FP) relationship.Design/methodology/approachThis paper uses a large sample of 814 European firms from roughly 2008 to 2017. In order to resolve the problem of endogeneity and heterogeneity the system generalized method of moment is performed.FindingsFirst, the effect of CSR on FP is simultaneously positive and significant for the economic, social and overall score based on an equal-weighted performance of four CSR pillars. Second, we found that the institutional quality matters, as corruption significantly decreases the FP, while government stability law and order exert a positive impact. Third, results suggest, similarly, that FP benefits from the interactional relationship between CSR and institutional quality. Finally, as for firm specifics, we found that the lagged performance and growth rate of sales significantly increase the European FP. However, FP is negatively sensitive to the leverage ratio.Research limitations/implicationsThis study aims to fill the gap in the CSR-FP interrelation and institutional context. Since we have a large number of firms (814) compared to a relatively small temporal dimension (10 years), the dynamic panel data analysis, and more precisely, the SGMM approach, is the most appropriate to resolve the problem of endogeneity and heterogeneity.Practical implicationsThe institutional environment affects the firm's CSR response and results. The strong institutional quality may result in increased regulatory pressures placed on the firm related to social responsibility compliance and can thereby enhance the CSR–FP relationship.Originality/valueTo the best of our knowledge, this is the first study that explored the relationship between CSR–FP and institutional quality in the European context. Indeed, this paper shows that institutional quality mediates the relationship between CSR practices and FP.

scholarly journals Corporate social responsibility: engaging the community

2016 ◽  
Vol 19 (2) ◽  
pp. 225-240 ◽  
Author(s):  
Linda Deigh ◽  
Jillian Farquhar ◽  
Maria Palazzo ◽  
Alfonso Siano
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Community Engagement ◽  
Ad Hoc ◽  
Stakeholder Group ◽  
Content Type ◽  
Study Approach ◽  
Multiple Data ◽  
Community Theory ◽  
Corporate Social

Purpose This paper aims to extend corporate social responsibility (CSR) theory by exploring how firms engage with community. The community is frequently cited as a stakeholder of the firm, but in spite of its status in networks it has not been the focus of research. Drawing on community theory and Carroll’s pyramid for the foundation of this study, the authors undertake an empirical investigation to advance knowledge in CSR engagement with a particular stakeholder group. Design/methodology/approach To generate an in-depth insight, the study adopts a multiple case study approach involving the purposeful selection of three retail banks in Ghana as units of analysis. It draws on multiple data sources to strengthen its findings. Findings The study finds that community engagement consists of four spheres of activity: donations, employee voluntarism, projects and partnerships. Philanthropy forms part of largely ad hoc CSR actions by firms. The study also finds that philanthropy is not merely a desired function of the CSR pyramid but an essential one. Practical implications This research imparts increased understanding of how firms engage with an important but frequently overlooked stakeholder group – community. Originality/value This study presents specific theoretical extensions to CSR through its identification of four core activities of community engagement.

Profitability, state ownership, tax reporting and corporate social responsibility: evidence from Chinese listed firms

2016 ◽  
Vol 12 (1) ◽  
pp. 23-31 ◽  
Author(s):  
Bixia Xu ◽  
Tao Zeng
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Sample Size ◽  
State Ownership ◽  
Reporting Behavior ◽  
Content Type ◽  
Listed Firms ◽  
Tax Reporting ◽  
Corporate Social ◽  
The Relationship

Purpose – This paper aims to examine corporate social responsibility (CSR) in the context of listed Chinese firms. In particular, it examines the relationships between CSR and profitability, state ownership and tax reporting behavior. Design/methodology/approach – The paper is an empirical study using CSR reports published by the Chinese Academy of Social Sciences and financial data collected from the China Stock Market Financial Statement Database (CSMAR). Findings – The paper finds that state ownership is positively associated with CSR and its three components including the governance, social and environmental scores; firm profitability is positively associated with CSR and its market score; and tax reporting behavior is negatively associated with the environmental score. But the result is weak. Research limitations/implications – The results in this study should be treated with some caution as the sample size of 85 observations represents only a small fraction of China’s listed firms. A larger sample size is desirable and may affect our results. Social implications – This paper is of interest to policy-makers, corporate management and academics who wish to explore the relationship between CSR and other firm characteristics. Originality/value – This paper is the first study which provides a comprehensive examination of CSR and its four components in connection with Chinese firms. In particular, it examines the relationship between CSR and profitability and state ownership.

Corporate social responsibility reporting: meeting stakeholders expectations or efficient allocation of resources?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Afzalur Rashid
Keyword(s):  
Corporate Social Responsibility ◽  
Firm Performance ◽  
Social Responsibility ◽  
Intrinsic Value ◽  
Negative Influence ◽  
Performance Measure ◽  
Least Square ◽  
Content Type ◽  
Csr Reporting ◽  
Corporate Social

Purpose This study aims to examine whether corporate social responsibility (CSR) reporting adds any value to the firm. Design/methodology/approach This study uses content analysis to capture the specific CSR-related attributes and to construct a CSR reporting index. The data is manually collected from 115 publicly listed firms on the Dhaka Stock Exchange. The companies audited financial statements were the source of data. This study uses an ordinary least square regression analysis to examine the relationship between CSR reporting and firm performance. Findings The results of this study show that firms’ involvement in CSR activities and related reporting has a significant positive influence on firm performance only under an accounting-based performance measure. However, firms’ involvement in CSR activities and related reporting has a significant negative influence on firm performance under a market-based performance measure. Research limitations/implications This study is subject to some limitations, such as the subjectivity or judgement associated in the coding process. Practical implications The findings of this study imply that firms may be involved in CSR reporting to meet the stakeholders’ expectations, CSR reporting does not necessarily increase the intrinsic value of the firm. Originality/value This study supports the stakeholder theory and contributes to the literature on the practices of CSR reporting in the context of developing countries.

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