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A note on the interaction between corporate social responsibility and financial performance

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  • Scholtens, Bert

Abstract

This paper studies the interaction between financial and social performance. The research is about the overall social strengths and concerns of firms as well as strengths and concerns with respect to firms' community involvement, employee relations, diversity, environment and product. Using a sample of 289 firms from the US covering the period 1991-2004 and employing two different test methods, namely lagged OLS and Granger causation, there appears to be preliminary evidence that the direction of the 'causation' predominantly runs from financial to social performance. However, the specific interaction patterns tend to vary along the different dimensions.

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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 68 (2008)
Issue (Month): 1-2 (December)
Pages: 46-55

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Handle: RePEc:eee:ecolec:v:68:y:2008:i:1-2:p:46-55

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Web page: http://www.elsevier.com/locate/ecolecon

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Keywords: Financial performance Corporate social responsibility Interaction Stock market;

References

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  1. Michael Jensen, 2001. "Value Maximisation, Stakeholder Theory, and the Corporate Objective Function," European Financial Management, European Financial Management Association, vol. 7(3), pages 297-317.
  2. Leonardo Becchetti & Rocco Ciciretti, 2006. "Corporate Social Responsibility and Stock Market Performance," CEIS Research Paper 79, Tor Vergata University, CEIS, revised 22 Mar 2006.
  3. Bauer, Rob & Koedijk, Kees & Otten, Roger, 2005. "International evidence on ethical mutual fund performance and investment style," Journal of Banking & Finance, Elsevier, vol. 29(7), pages 1751-1767, July.
  4. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: Strategic Implications," Journal of Management Studies, Wiley Blackwell, vol. 43(1), pages 1-18, 01.
  5. Andy Lockett & Jeremy Moon & Wayne Visser, 2006. "Corporate Social Responsibility in Management Research: Focus, Nature, Salience and Sources of Influence," Journal of Management Studies, Wiley Blackwell, vol. 43(1), pages 115-136, 01.
  6. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
  7. Fama, Eugene F & French, Kenneth R, 1992. " The Cross-Section of Expected Stock Returns," Journal of Finance, American Finance Association, vol. 47(2), pages 427-65, June.
  8. Zakri Y. Bello, 2005. "Socially Responsible Investing And Portfolio Diversification," Journal of Financial Research, Southern Finance Association & Southwestern Finance Association, vol. 28(1), pages 41-57.
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Citations

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Cited by:
  1. Patricia Crifo & Vanina Forget, 2013. "La responsabilité sociale et environnementale des entreprises : mirage ou virage ?," Working Papers hal-00830642, HAL.
  2. Bouslah, Kais & Kryzanowski, Lawrence & M’Zali, Bouchra, 2013. "The impact of the dimensions of social performance on firm risk," Journal of Banking & Finance, Elsevier, vol. 37(4), pages 1258-1273.
  3. Klaus-Michael Menz, 2010. "Corporate Social Responsibility: Is it Rewarded by the Corporate Bond Market? A Critical Note," Journal of Business Ethics, Springer, vol. 96(1), pages 117-134, September.
  4. Jakub Kronenberg & Joanna Mieszkowicz, 2011. "Planting Trees for Publicity—How Much Are They Worth?," Sustainability, MDPI, Open Access Journal, vol. 3(7), pages 1022-1034, July.
  5. Vicente Lima Crisóstomo & Fátima de Souza Freire & Felipe Cortes de Vasconcellos, 2011. "Corporate social responsibility, firm value and financial performance in Brazil," Social Responsibility Journal, Emerald Group Publishing, vol. 7(2), pages 295-309, July.
  6. Wenjing Li & Ran Zhang, 2010. "Corporate Social Responsibility, Ownership Structure, and Political Interference: Evidence from China," Journal of Business Ethics, Springer, vol. 96(4), pages 631-645, November.
  7. Xiping Pan & Jinghua Sha & Hongliang Zhang & Wenlan Ke, 2014. "Relationship between Corporate Social Responsibility and Financial Performance in the Mineral Industry: Evidence from Chinese Mineral Firms," Sustainability, MDPI, Open Access Journal, vol. 6(7), pages 4077-4101, June.
  8. Lammertjan Dam & Bert Scholtens, 2013. "Ownership Concentration and CSR Policy of European Multinational Enterprises," Journal of Business Ethics, Springer, vol. 118(1), pages 117-126, November.
  9. Hilson, Gavin, 2012. "Corporate Social Responsibility in the extractive industries: Experiences from developing countries," Resources Policy, Elsevier, vol. 37(2), pages 131-137.
  10. Patricia Crifo & Vanina Forget, 2012. "The Economics of Corporate Social Responsibility: A Survey," Working Papers hal-00720640, HAL.
  11. Petri Ferreira & Charl de Villiers, 2011. "The association between South African listed companies' BEE scores and market performance: An introductory study," Meditari Accountancy Research, Emerald Group Publishing, vol. 19(1), pages 22-38, October.
  12. Ana S. Branca & Joaquim P. Pina & Margarida Catalão-Lopes, 2012. "Corporate Giving, Competition and the Economic Cycle," Working Papers Department of Economics 2012/15, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  13. Wagner, Marcus, 2010. "The role of corporate sustainability performance for economic performance: A firm-level analysis of moderation effects," Ecological Economics, Elsevier, vol. 69(7), pages 1553-1560, May.
  14. Lioui, Abraham & Sharma, Zenu, 2012. "Environmental corporate social responsibility and financial performance: Disentangling direct and indirect effects," Ecological Economics, Elsevier, vol. 78(C), pages 100-111.

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