Corporate social and financial performance in different industry contexts: the chicken or the egg?

2016 ◽  
Vol 12 (4) ◽  
pp. 672-686 ◽  
Author(s):  
Anni Tuppura ◽  
Heli Arminen ◽  
Satu Pätäri ◽  
Ari Jantunen
Keyword(s):  
Financial Performance ◽  
Granger Causality ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Causality Test ◽  
Content Type ◽  
Forest Industries ◽  
The Usa ◽  
Causality Relationship ◽  
Corporate Social

Purpose The purpose of the paper is to examine empirically Granger causality relationships between corporate social performance (CSP) and corporate financial performance (CFP) in four different industries. Design/methodology/approach The paper uses the Granger causality test to analyse the causality relationships between CSP and CFP in clothing, energy, food and forest industries in the USA. The panel data used combined CSP and CFP measures over the years 1991-2009. CSP strengths and concerns are handled as distinct constructs. Findings There is some evidence of bidirectional causality between CSP and CFP in the clothing, energy and forest industries; but in the food industry, CSP appears not to Granger-cause CFP. The results encourage accounting for the industry in empirical analyses, as well as the use of more than one measure for CFP in the analyses. Originality/value The direction of causality between CSP and CFP has been specifically addressed in only a few studies. Because the causality relationship may, in addition, be concealed when multi-industry data are used, this paper contributes to the literature by examining the Granger causality between CSP and CFP in four different industry contexts using two different measures of CFP.

Labour reputation and financial performance: is there a causal relationship?

2018 ◽  
Vol 40 (1) ◽  
pp. 43-57 ◽  
Author(s):  
María Dolores Odriozola ◽  
Antonio Martin ◽  
Ladislao Luna
Keyword(s):  
Financial Performance ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Causality Test ◽  
Content Type ◽  
Generalised Method Of Moments ◽  
Corporate Social ◽  
Relationship Of ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to analyse if there is a circular relationship of causality between the labour dimension of corporate social performance (CSP) and corporate financial performance (CFP). Design/methodology/approach The sample is formed by the best companies to work for in Spain according to the labour reputation (LR) ranking developed by MERCO from 2006 to 2013. This study overcomes the limitations of previous studies using the panel data methodology (System generalised method of moments) and the Granger causality test. Findings The results suggest that the labour dimension of CSP cause CFP, but there is not causality in the opposite direction. Originality/value Studies about the relationship between dimensions of CSP and CFP demonstrated that there are divergences in the results depending on the dimension analysed. Despite managers and employees are interested in the impact of labour dimension of CSP on CFP, there are few studies about it and they have important limitations.

Estimating the hidden corporate social performance of Japanese firms

2016 ◽  
Vol 12 (2) ◽  
pp. 348-362 ◽  
Author(s):  
Megumi Suto ◽  
Hitoshi Takehara
Keyword(s):  
Financial Performance ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Estimation Model ◽  
Content Type ◽  
Public Firms ◽  
Research Perspective ◽  
Stable Relationship ◽  
The Difference ◽  
Corporate Social

Purpose Managers sometimes hide their level of corporate social performance (CSP) from investors, intentionally or unintentionally. The purpose of this study is to estimate such “hidden CSP” of firms. Design/methodology/approach In this study, it is assumed that Japanese public firms can be classified into two groups based on the difference in corporate social responsibility (CSR) awareness. Thus, the respondents to the CSR questionnaire survey are classified as the CSR-aware group, and the non-respondents are treated as the CSR-unaware group. It is further assumed that a significant relationship exists between CSP and a firm’s attributes, including financial performance and stock ownership. Under these assumptions, a model to estimate the CSP of non-respondents is constructed using the relationship between CSP and a firm’s observable attributes. Findings There is a significant latent gap between the CSP of respondents and the hidden CSP of non-respondents because of differences in firm size, foreign dependency of business and reputation and trust in the financial markets, rather than because of differences in financial performance. Insider-oriented ownership structures are negatively associated with CSP. Research limitations/implications The estimation model developed in this study depends on a set of assumptions. In particular, a stable relationship between CSP and firm-specific variables, i.e. there is no structural change during the observation period, is assumed. Despite these limitations, this study extends the CSR research perspective, as it makes it possible to estimate the hidden CSP of public firms. Practical implications In practice, the findings of this study surface a part of the missing CSR that investors need and that could alert non-respondent firms to the importance of CSR strategy and related disclosures to adapt to rapidly changing social and environmental business settings. Originality/value This study is the result of academic interest in examining the missing information related to CSR activities to obtain an overall picture of the CSP distribution of Japanese listed firms as a whole.

Long-run dynamics between CFP and CSP in the GCC banking sector: estimation of non-stationary heterogeneous panels allowing for cross-sectional dependence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ismail Ben Douissa ◽  
Tawfik Azrak
Keyword(s):  
Financial Performance ◽  
Granger Causality ◽  
Banking Sector ◽  
Social Performance ◽  
Content Type ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Corporate Social ◽  
The Relationship ◽  
Long Run Equilibrium

Purpose Causality between corporate financial performance (CFP) and corporate social performance (CSP) has been extensively debated in previous research works; however, little research has been done to investigate the long-run dynamics between these two constructs. The purpose of this paper is to enrich the CFP–CSP literature by estimating the long-run equilibrium relationship between financial performance and social performance in the banking sector in the Gulf Cooperation Council countries over the period 2009–2019. Design/methodology/approach The paper adopts an approach that is primarily used in financial economics: first, the authors perform panel long-run Granger causality following Canning and Pedroni’s procedure to indicate the direction of the causal relationship. Second, the authors estimate an error correction model using Chudik and Pesaran’s (2015) dynamic common correlated effects mean group estimator to determine the sign of the relationship. Findings The present research findings prove the existence of a long-run equilibrium relationship between CFP and CSP, while indicating at the same time that panel Granger causality runs positively from CSP to CFP, which means that changes in CSP produce lasting changes in CFP. Practical implications The findings of the paper would guide strategists to build fit for purpose corporate social responsibility (CSR) strategies in their firms and establish a continuous investment in CSR activities in the long run rather than harshly investing in CSR activities in the short run. Originality/value To the best of the authors’ knowledge, this paper is the first one to address heterogeneity in long-run Granger causality tests to estimate the relationship between CSP and CFP.

The illusion of CSR: drawing the line between core and supplementary CSR

2016 ◽  
Vol 7 (1) ◽  
pp. 125-151 ◽  
Author(s):  
Pablo Gomez-Carrasco ◽  
Encarna Guillamon-Saorin ◽  
Beatriz Garcia Osma
Keyword(s):  
Financial Performance ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Theoretical Framework ◽  
Content Type ◽  
Savings Banks ◽  
Strategic Csr ◽  
Key Aspects ◽  
Corporate Social ◽  
The Relationship

Purpose – The purpose of this paper is to contribute to the development of the theoretical framework for corporate social responsibility (CSR) and to provide a number of conceptual considerations which can be considered in the design of measures for corporate social performance (CSP). Design/methodology/approach – This study develops a theoretical framework of CSR and provides conceptual considerations to improve the measurement of CSP. The example of Spanish savings banks is used to illustrate the complexity of the concept of CSR, which includes different dimensions and relationships. Findings – CSP evaluation can be affected by the illusion of CSR, which may result in invalid conclusions on the relationship with financial performance. This risk mainly affects those studies whose CSP measure is based on charity or philanthropic activities, as most of the time they are disconnected from core business. These activities enjoy great visibility and, in some cases, such as Spanish savings banks, they become a thick veil that can be used to hide serious deficiencies in other key aspects of CSP. Research limitations/implications – This study has implications for the literature on the conceptual and theoretical framework of CSR and the research on the link between CSP and financial performance. This paper highlights the importance of seeking comprehensive measures that cannot be misleading because of the relationships between the components of CSR. Originality/value – The paper provides a novel conceptual framework for CSR, which connects the conceptual debate around “Strategic CSR” with the theoretical framework designed by Carroll’s (1991) Pyramid of CSR and emphasizes the importance of a meticulous examination of the CSP construct before studying its relationship with financial performance.

Bringing theory to practice: how to extract value from corporate social responsibility

2014 ◽  
Vol 5 (1) ◽  
pp. 22-44 ◽  
Author(s):  
Maria Federica Izzo
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Business Strategy ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Integrated Approach ◽  
Company Performance ◽  
Content Type ◽  
Corporate Social

Purpose – This contribution aims to clarify the role of corporate social responsibility (CSR) as an issue of governance and a strategic tool more than a mere communication activity, with a potential impact on both organizations and their economic and financial performance. Design/methodology/approach – The paper provides an overview of the literature contribution on CSR and its impact on value, offering a new conceptual model useful both for managers and relevant stakeholders in assessing, through an integrated approach, the company performance. Findings – The analysis focuses on how CSR investments can create value for companies and for stakeholders in general. This can occur if the related benefits exceed the related costs, generating a favorable balance toward what we called the virtuous cycle of CSR. This cycle is made up of four steps – decision, design, action and result – that define a potential value creation path that a responsible firm can take, assuming that it integrates a social agenda into its competitive strategy and assuming that the market appreciates real and effective social efforts of companies. Research limitations/implications – Because the descriptive chosen approach, the research could be enriched with a quantitative analysis to test the proposed propositions further. Originality/value – This paper fulfils the need, identified in the major literature, of a temporary ceasefire on corporate social performance and its link to financial performance, focusing on tools and instruments that can practically modify the companies' approach to CSR and the evaluation processes of its impact on business, strategy and disclosure.

Revisiting the financial performance – corporate social performance link

2018 ◽  
Vol 30 (7) ◽  
pp. 2586-2602 ◽  
Author(s):  
Serin Choi ◽  
Seoki Lee
Keyword(s):  
Financial Performance ◽  
Agency Theory ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Content Type ◽  
Corporate Social ◽  
The Impact ◽  
The Relationship ◽  
Moderating Role

Purpose The existing literature has focused heavily on investigating the effect of corporate social performance (CSP) on financial performance (FP) but has not paid sufficient attention to an inverse causation of the relationship. Moreover, while some of the literature argues that FP positively affects CSP, based on the slack resources theory, others have found negative effects of FP on CSP, supporting the managerial opportunism perspective. Thus, this paper aims to address the impact of FP on CSP. Further, this study examines the moderating role of franchising to better understand the relationship. Design/methodology/approach This study uses and expands the models derived from the CSP literature to confirm the effects of FP on CSP with the moderating role of franchising within the restaurant industry. Using two-way fixed effects models, it effectively addresses important problems embedded in the panel data. Findings The findings show a positive effect of FP on CSP, which is inconsistent with Park and Lee’s (2009) findings and supports the slack resources theory. Further, the interesting results show that the impact of FP on CSP diminishes as a firm franchises more, supporting the double-sided moral hazard framework of the agency theory. Originality/value This paper fills the lacuna in both the existing literature on the relationship between CSP and FP and the franchising. This study contributes to enhancing restaurant practitioners’ understanding of the double-sided moral hazard of agency theory unique to franchising context.

The curvilinear relationship between corporate social performance and financial performance

2019 ◽  
Vol 10 (1) ◽  
pp. 87-100 ◽  
Author(s):  
Shafat Maqbool ◽  
Abu Bakr
Keyword(s):  
Financial Performance ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Linear Perspective ◽  
Curvilinear Relationship ◽  
Managerial Implication ◽  
Content Type ◽  
Long Run ◽  
Corporate Social ◽  
The Relationship

Purpose The relationship between corporate social responsibility (CSR) and financial performance (FP) has bourgeoned widespread debate among researchers. In recent years, the debate has explored more dynamic links, one of which is the curvilinear relationship, between CSR and FP. This paper aims to empirically test the curvilinear relationship between CSR and FP in the context of Indian companies. Design/methodology/approach This paper empirically tests the curvilinear relationship between CSR and FP in the context of Indian companies. The study used a panel data of 43 listed companies over a period of ten years from 2008 to 2017. A correlation and panel regression were carried out to examine the possible link. Findings The findings demonstrate that a curvilinear relationship exists between CSR and FP, suggesting that two long competing viewpoints may be complementary. Research limitations/implications The study mainly focuses on top companies, so the generalizations of results to other small companies are unwanted. Practical implications An immediate managerial implication of the findings suggests that to serve the interests of the shareholders, a long-run planning and considerable resources should be dedicated at this direction, given that CSR expenditure does not pay off immediately. Originality/value In the Indian context, very few studies have analyzed the linkages between CSR and FP. Using an improved and distinctive approach, the study empirically tests the relationship between CSR and FP from non-linear perspective.

Impact of corporate social performance on financial performance of manufacturing companies (IMC) listed on the Tehran Stock Exchange

2016 ◽  
Vol 58 (6) ◽  
pp. 634-659 ◽  
Author(s):  
Ghazal Sadeghi ◽  
Mehdi Arabsalehi ◽  
Mahnoosh Hamavandi
Keyword(s):  
Financial Performance ◽  
Corporate Social Performance ◽  
Negative Impact ◽  
Stock Exchange ◽  
Social Performance ◽  
Manufacturing Companies ◽  
Content Type ◽  
Socially Responsible Investments ◽  
Corporate Social ◽  
The Impact

Purpose This study aims to investigate the impact of corporate social performance (CSP) on financial performance of manufacturing companies listed on the Tehran Stock Exchange and thus contributes to understanding the significance of socially responsible investments for companies. Design/methodology/approach The CSP was measured by a questionnaire composed of 53 items related to customers’ social performance of the firm, workers and environmental and community dimensions. Besides, corporate financial performance was measured by two measures, return on equity (ROE) and return on assets (ROA). In this study, 74 observations were investigated from 2006 to 2012. The data were analyzed using the multiple regression method. Findings The results of the study revealed that customers’ social performance of the firm has a negative impact on ROA of the firm. Besides, social performance of the workers dimension of the firm has a positive impact on ROA. The results, also, showed that none of the CSP dimensions affected the ROE of the firms. Originality/value The present study is useful for managers to develop future social performance policies that may lead to better financial performance in the long-term. The paper, also, contributes to the corporate social responsibility literature, as it presents empirical evidence of the effects of CSP on the financial performance in the manufacturing sector of developing countries.

Doing good with or without being known? Media coverage of corporate social performance and its impact on corporate financial performance

2014 ◽  
Vol 40 (9) ◽  
pp. 883-902 ◽  
Author(s):  
Hsiang-Hsuan Chih ◽  
Hsiang-Lin Chih
Keyword(s):  
Financial Performance ◽  
Media Coverage ◽  
Corporate Social Performance ◽  
Stock Exchange ◽  
Social Performance ◽  
Social Activities ◽  
Content Type ◽  
The Media ◽  
Corporate Social ◽  
Positive Evaluation

Purpose – The purpose of this paper is to examine the media coverage of corporate social performance (CSP), as well as the ultimate impact that such coverage has on the financial performance of corporate entities. Design/methodology/approach – Based on a sample of financial holding companies (FHC) listed on the Taiwan Stock Exchange, the authors select the two most popular newspapers in Taiwan, to construct the unique media coverage of CSP activity database. Findings – First, the quantity of news articles about social activities of FHCs is positively correlated with financial performance. Second, the authors find that news articles about FHCs’ positive social activities for shareholders will trigger a positive evaluation by shareholders; however, news articles about FHCs’ positive (negative) social activities for employees will trigger a negative (positive) evaluation by shareholders. But if the news articles about FHCs’ positive social activities for employees are initiated by the media, rather than by the company itself, they will trigger a positive evaluation by shareholders. Originality/value – The average shareholders may praise management for one particular CSP activity of a positive nature, whereas they may criticize another CSP activity, despite it being generally regarded outside of the firm as also being positive in nature. It therefore becomes clear that when setting out to investigate whether “doing good” actually does translate into “doing well,” the authors should not attempt to total different kinds of information on CSP; In this paper, the authors emphasize that they need to be analyzed separately.

Corporate governance, corporate social responsibility and corporate performance

2010 ◽  
Vol 16 (5) ◽  
pp. 641-655 ◽  
Author(s):  
Chi-Jui Huang
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Corporate Social Performance ◽  
Positive Impact ◽  
Social Performance ◽  
Outside Directors ◽  
Asian Economy ◽  
Corporate Social

AbstractPrevious research has analyzed and debated corporate governance (CG) and corporate social responsibility (CSR) independently. This paper aims to empirically explore the interrelationship between CG, CSR, financial performance (FP) and Corporate Social Performance (CSP) using a sample of 297 electronics companies operating in Taiwan, a newly industrialized Asian economy. The results show that a CG model which includes independent outside directors and which has specific ownership characteristics has a significantly positive impact on both FP and CSP, whereas FP itself does not influence CSP. The presence of independent outside directors in the firm has the greatest impact on the social performance of the firm's worker, customer, supplier, community and society dimensions. Government shareholders enhance a firm's social performance extraordinarily because government shareholders will be more likely to request that companies fulfill their social responsibilities. Only government shareholders positively and significantly relate to a firm's environmental performance. Furthermore, foreign institutional stockholders help to increase worker and supplier performance by paying more attention to employee policies and supply chain relationships. Finally, independent outside directors, foreign institutional stockholders and domestic financial institutional stockholders are shown to improve financial performance.

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