Corporate social responsibility and financial performance nexus

2018 ◽  
Vol 9 (3) ◽  
pp. 301-328 ◽  
Author(s):  
Joseph Dery Nyeadi ◽  
Muazu Ibrahim ◽  
Yakubu Awudu Sare
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Positive Impact ◽  
Public Investment ◽  
Data Set ◽  
Content Type ◽  
The Public ◽  
Firm Financial Performance ◽  
Corporate Social ◽  
The Impact

Purpose The paper aims to investigate empirically the impact of corporate social responsibility (CSR) on financial performance in South African listed firms. Design/methodology/approach The paper uses panel corrected standard errors to estimate the effect of CSR on firm financial performance and thus addresses contemporaneous cross-correlations across the panel cross sections. The study uses a broad base measure of CSR created by the Public Investment Corporation data set and the combination of accounting and economic means of measuring firm financial performance. Findings CSR is found to have a strong positive impact on firm financial performance in South Africa. When CSR is decomposed further into its major components, governance performance positively impacts a firm’s financial performance with no evidence of any relationship between social components and firm performance and between environmental components and firm performance. The positive impact of CSR on firm performance is greater in big firms. At the industry level, CSR is noticed to impact positively on financial performance in the extractive industry via good governance and responsible environmental behaviors. It however has no impact on firm performance in the financial sector. Research limitations/implications The results should be interpreted with caution and some limitations. Due to the limiting nature of the Public Investment Corporation data set (the survey was carried out on selected firms on the Johannesburg Stock Exchange for three years spanning from 2011 to 2013). This resulted in a sample of 56 firms. It is therefore very problematic to generalize the findings to a larger population over a long period of time. This is more limiting especially on individual sector studies where the sample has further shrunk to a smaller sample. As a result of the smaller sample size, the authors were unable to explore some other sectors which could have given more revealing findings. The authors recommend that future research should explore other data sets or use primary data approach that can allow for more sample size and elongated time period for a more holistic view and for easy generalization of the findings. The authors also identify an important lacuna necessitating further research effort. It would be interesting to empirically examine the threshold point of firms’ size beyond which CSR damages firms’ performance. Knowledge of this will guide managers of firms in their strategic CSR decision. Practical implications This study does not only serve as a reference work for subsequent investigations into the impact of CSR on firm performance in sub-Saharan Africa but also serves as a guide to policymakers on the financial impact of CSR adoption. Originality/value This study is one of the pioneering works that comprehensively examines the effect of CSR on financial performance amongst South African firms via size and sector and also controls for contemporaneous cross-correlation effects from the firms in the panel set.

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.

scholarly journals Empirically examining the impact of corporate social responsibility on financial performance: evidence from Indian steel industry

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nripinder Kaur ◽  
Vikramjit Singh
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Steel Industry ◽  
Positive Impact ◽  
Value Added ◽  
Annual Reports ◽  
Content Type ◽  
Corporate Social ◽  
The Impact

PurposeThis paper aims to examine the impact of corporate social responsibility (CSR) on financial performance (FP) of Indian steel industry in terms of value-added (VAM), profitability (PM), market (MM) and growth measures (GM).Design/methodology/approachIt is an empirical study using secondary data of 40 companies for 14 years collected from CSR/annual reports/official websites of the companies and Prowess database. The panel regression analysis, MANOVA and univariate ANOVA have been conducted to examine the impact of CSR on FP.FindingsThe result indicates a positive impact of CSR on FP in terms of VAM, PM and GM, thereby indicating that more investments in CSR will generate wealth for shareholders, enhance profitability and sales. Moreover, this study shows no noticeable relationship between CSR and MM.Social implicationsThis study contributes to the literature on the CSR–FP relationship and also has implications for managers, investors and other stakeholders. Companies with higher CSR rating create a brand image, attract proficient employees, get greater profit, loyal customers and have less possibility of bribery and corruption. This study may result in being influential to companies confined not only to this sector but also reaching to the others, thus inspiring them to contribute their share of profit for the welfare of society.Originality/valueTo the best of the authors' knowledge, it is the first comprehensive study to examine the impact of CSR on FP of Indian steel industry by considering four dimensions for measuring FP. It provides evidence about the relationship between CSR and FP.

scholarly journals The impacts of corporate social resposibility practices on firm financial performance: Empirical evidence from Asian oil and gas industry

2021 ◽  
pp. 52-56
Author(s):  
Nguyen Thanh Dat Nguyen
Keyword(s):  
Financial Performance ◽  
Social Practice ◽  
Oil And Gas ◽  
Oil And Gas Industry ◽  
Asian Countries ◽  
Data Set ◽  
Gas Industry ◽  
Firm Financial Performance ◽  
Corporate Social ◽  
The Impact

The paper aims to investigate the impact of Corporate Social Responsibility (CSR) practices on the financial performance of oil and gas firms in Asian countries by using a panel data set that includes 23 firms from 7 Asian countries from 2004 to 2017. The empirical results support the research hypothesis that CSR practices have a negative impact on the financial performance of oil and gas companies. This means CSR practices may impose a substantial burden on firms in the oil and gas industry. In addition, we find that different CSR practices have different sizes of impact on firm financial performance. In particular, environment practice has the biggest impact, social practice ranks second, and governance practice has the weakest impact. The main results are also confirmed by several robustness tests.

Board gender diversity, board compensation and firm performance. Evidence from Jordan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Taha Almarayeh
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Least Squares ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Firm Financial Performance ◽  
Board Compensation ◽  
Board Gender Diversity ◽  
The Impact

Purpose This study aims to analyze the relationship between board gender diversity, board compensation and firm financial performance in the developing country, Jordan, whose cultural, economic and institutional context is very different from most previously analyzed countries’ context. Design/methodology/approach Ordinary least squares regression was used to examine the association between board gender diversity, board compensation and firm financial performance in a sample of 510 firm-year observations during the years 2009–2018. Generalized least squares estimation method was used to confirm that the results are robust. Findings The author provides new evidence that board gender diversity does not contribute to firm financial performance. The author also detects that there is a positive relationship between board compensation on firm financial performance. Originality/value This paper examines the under-researched relationship between board gender diversity, board compensation and firm financial performance. In so doing, the author tries to provide new insights into this relationship within the developing context, the case of Jordan that has a different environment from that of advanced markets. To the best of the researcher’s knowledge, this is almost certainly the first research to investigate the impact of board gender diversity and board compensation on firm financial performance in the Jordanian market. This manuscript is expected to be used as a reference by the regulators and policymakers – both in Jordan and other countries with a similar institutional, cultural setting – to provide a deep understanding of the impact of board gender diversity and board compensation on the firm performance.

Corporate social responsibility and firm financial performance

2017 ◽  
Vol 32 (3-4) ◽  
pp. 106-133 ◽  
Author(s):  
Mingming Feng ◽  
Xiaodan Wang ◽  
Jerry Glenn Kreuze
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Industrial Sector ◽  
Content Type ◽  
Firm Financial Performance ◽  
Stakeholder Groups ◽  
Heterogeneous Nature ◽  
Corporate Social ◽  
Industry Sectors ◽  
Practical Implications

Purpose Despite the intensive research on corporate social responsibility (CSR) and firm financial performance, little is known about how the linkage between CSR and firm financial performance is heterogeneous across industries and how the performance implications are differentiated among specific categories of CSR activities. The purpose of this paper is to explore how the association between a firm’s engagement in CSR and firm financial performance is heterogeneous across industries and CSR categories. Design/methodology/approach Using a sample of 17,083 firm-year observations representing 1,877 firms from the largest 3,000 US companies during years 1991 and 2011, the authors compare the association between CSR and firm financial performance across ten industry sectors defined by Global Industry Classification Standard and across the four CSR categories classified by Mandl and Dorr (2007). Findings The authors find that the association between the overall CSR activities and firm performance is heterogeneous across industries. CSR has significant positive implications for firms from most, but not all, industries. Comparing the performance implication of CSR practices targeting different stakeholder groups, the empirical results indicate that different types of CSR have different influences on financial performance of firms from different industry sectors. Research limitations/implications This study provides new angles for managers in maximizing firm performance through CSR activities and suggests an important and interesting direction for researchers who engage in CSR research. Due to its heterogeneous nature, the CSR-performance relationship needs to be examined more specifically – across industries and different CSR categories. Findings from studies incorporating both company industrial sector and CSR categories would provide more meaningful and practical implications for managers. Practical implications This study provides important managerial implications. First, to maximize firm performance through CSR activities, managers must interpret the linkage between CSR and firm financial performance from the perspective of a specific industrial sector and acknowledge the importance of CSR practices across different CSR categories. Second, the findings suggest that CSR practices aiming at different stakeholder groups generate different financial returns in different industries. Firms engage in CSR to satisfy different stakeholder groups. When budgets are tight, managers may give higher priority to the CSR practices that have stronger effects on firm financial performance. Originality/value This study advances our understanding of the CSR-financial performance relationship by exploring its heterogeneous nature across industry sectors and across specific categories. To obtain the biggest gain from CSR spending, managers must have a good understanding how a specific CSR category can contribute to the financial performance of their particular company in their particular industry.

The impact of information technology investment on enterprise financial performance in China

2019 ◽  
Vol 14 (3) ◽  
pp. 529-542
Author(s):  
Peinan Ji ◽  
Xiangbin Yan ◽  
Guang Yu
Keyword(s):  
Information Technology ◽  
Financial Performance ◽  
Listed Companies ◽  
Control Group ◽  
It Investment ◽  
Data Set ◽  
Content Type ◽  
Implementation Phase ◽  
Firm Financial Performance ◽  
The Impact

Purpose This paper aims to examine the influence of information technology (IT) investment, including innovative IT investment and non-innovative IT investment, on comprehensive enterprise financial performance in a developing country, China. Design/methodology/approach This paper applies the method proposed by Barber and Lyon to construct the control group to study the impact of IT investment on financial performance of enterprises, using a sample of 229 IT investment announcement data of Chinese listed companies between 2011 and 2015. Findings The analysis of the financial benefits of these IT implementations yields mixed results. The results show that companies investing in IT can significantly improve profitability both the implementation and post-implementation periods for the full sample, improve the solvency only during the implementation phase, improve the growth ability after implementation time and cannot reduce business costs in all periods. At the same time, the authors find that, compared with non-innovative IT investment, the innovative samples do not achieve better financial performance, except the profitability financial indicator. Research limitations/implications There are several limitations in this research. First, there is no large sample about the IT investment information data set in China, so this study was compelled to use limited sample data from China; hence, this could lead to errors of too early generalization. Second, the firms in the sample are all in China’s listed companies, so this may either not accurately or possibly could reflect the entire environment of developing countries. Originality/value First, it extends the scope of the established literature by examining the influence of IT investment with China’s public firms data and IT investment to see if such spending has had an influence on corporate financial performance. Second, there is a lack of research on the impact of IT investment on comprehensive financial performance of an enterprise, compared with the previous one-sided financial performance, such as profitability or financial cost. Third, as far as the authors are aware, there are no studies on the impact of IT investment on firm financial performance based on innovative and non-innovative classification.

Differentiating the impact of CSR strengths and concerns on firm performance

2017 ◽  
Vol 36 (3) ◽  
pp. 401-409 ◽  
Author(s):  
Albi Alikaj ◽  
Cau Ngoc Nguyen ◽  
Efrain Medina
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Latent Variables ◽  
Multinational Enterprises ◽  
Content Type ◽  
Future Studies ◽  
Domestic Firms ◽  
Firm Financial Performance ◽  
Individual Effects ◽  
The Impact

Purpose The purpose of this paper is to assess the Kinder, Lydenberg, Domini & Co. (KLD) dimensions by distinguishing between corporate social responsibility (CSR) strengths and concerns and examine their individual effects on firm financial performance. Additionally, the study distinguishes between US domestic firms and multinational enterprises (MNEs) to provide additional insights and explore if any differences exist. Design/methodology/approach Data from the KLD and Compustat databases are analyzed for a sample of 562 US firms, of which 359 are multinational corporations, and 203 operate solely in the USA. A path analysis was used to examine the effect of CSR strengths and concerns on firm financial performance. Findings The findings show that increases in CSR strengths as well reductions in CSR concerns are positively linked to firm financial performance. The results also suggest that addressing concerns would be more beneficial to MNEs as opposed to US domestic firms. Research limitations/implications First, it should be noted that this study is cross-sectional, thus limiting confirmation of causality. Future studies can confirm causality by conducting longitudinal analysis. Also, some country-specific regulations require firms to make certain CSR-related information publicly available. Future studies can focus on countries that have such regulations and make comparisons with countries that allow firms to decide for themselves whether or not to make CSR-related activities publicly available. Originality/value When measuring CSR, previous studies have combined the CSR strengths and concerns latent variables of the KLD database. This can potentially be a problem because CSR strengths and concerns are not meant to measure the same issues. By separating them into two distinct latent variables, the authors can better understand their individual effects on firm performance.

The impact of financial performance on corporate social responsibility disclosure: the case of VN100 in Vietnam

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Thinh Quoc Tran
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Positive Impact ◽  
Least Square ◽  
Series Data ◽  
Content Type ◽  
Corporate Social Responsibility Disclosure ◽  
Corporate Social ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of financial performance (FP) on corporate social responsibility disclosure (CSRD) in the top 100 listed enterprises in Vietnam (VN100). Design/methodology/approach This paper uses the ordinary least square method to test and uses time series data of VN100 in five years from 2015 to 2019. Findings The results of this study show that the return on assets and return on equity have a positive impact on CSRD of VN100. Research limitations/implications This paper has not covered all independent variables related to FP. Practical implications The paper contribute to increasing CSRD of VN100. Social implications The paper contribute to raising awareness of businesses about community and society. Originality/value This paper contributes to increase the level of useful information for stakeholders to meet the trend of regional and international integration.

The impact of training on firm outcomes: longitudinal evidence from Canada

2019 ◽  
Vol 41 (2) ◽  
pp. 117-131
Author(s):  
Stéphane Renaud ◽  
Lucie Morin
Keyword(s):  
Firm Performance ◽  
Positive Impact ◽  
Voluntary Turnover ◽  
Empirical Literature ◽  
Reverse Causality ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Firm Outcomes ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of three training indicators, namely offer, participation and cost, on three firm outcomes, namely voluntary turnover, firm performance and profit. Design/methodology/approach The empirical analysis is carried out using firm-level data sourced from a Canadian national data set. In total, data from 5,237 for-profits firms with ten employees or more were analyzed longitudinally over eight years. Results were generated by XTREG fixed effect longitudinal analyses between the three variables of training, voluntary turnover, firm performance and profit. Findings Training offer, operationalized as the number of different formal training programs offered annually by an employer, significantly decreases voluntary turnover while it significantly increases performance and profit. Training participation, operationalized as the percentage of employees receiving training per year, has a significant positive impact on voluntary turnover. Training cost, operationalized as the annual cost of training per employee, has no impact on the three firm outcomes. Practical implications Among the various human resource practices a firm can use to strengthen its human capital, training can have a significant impact of its own. Investing in a diversified training offer brings value to a firm by decreasing employee voluntary turnover while increasing firm performance and profit. Originality/value This research contributes to the strategic impact of organizational training, demonstrating the impact of training on key organizational outcomes over time. Further, this paper contributes to the empirical literature by making a distinction between voluntary and involuntary turnover. Last, even though this study does not entirely addresses the problem of possible reverse causality, using longitudinal objective data, this study addresses several limits of past research at the macro-level of analysis.

Corporate governance guidelines compliance and firm financial performance

2016 ◽  
Vol 31 (8/9) ◽  
pp. 891-914 ◽  
Author(s):  
Erick Rading Outa ◽  
Nelson M. Waweru
Keyword(s):  
Corporate Governance ◽  
Life Cycle ◽  
Firm Performance ◽  
Financial Performance ◽  
Firm Value ◽  
Design Methodology ◽  
Content Type ◽  
Firm Financial Performance ◽  
The Impact ◽  
The Relationship

Purpose This paper aims to examine the impact of compliance with corporate governance (CG) guidelines during the period 2002-2014 on firm financial performance and firm value of Kenyan-listed companies. Design/methodology/approach Using panel data of 520-firm year’s observations between 2005 and 2014, the authors test the hypothesis that compliance with CG guidelines issued in 2002 by Capital Markets Authority (CMA) improved firm financial performance and firm value. Findings Compliance with CG Index which is an aggregate of all the CG guidelines is positively and significantly related to firm performance and firm value. Board evaluation is also positively and significantly related to firm performance. The findings suggest that CG guidelines are associated with firm financial performance and firm value. Originality/value The authors provide evidence on the relationship between CG practices and firm financial performance and firm value in Kenya. Second, the authors provide evidence on board evaluation which has not been tested before in a “comply or explain” environment. Finally, they evaluate how CMA 2002 CG guidelines steered firm financial performance and firm value over its life cycle from 2002 to 2014. These results are important to CMA and other CG regulators and boards in their efforts to improve CG practices in the region.

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