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Corporate Social Performance and Firm Performance: Comparative Study among Developed and Emerging Market Firms

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  • Irene Wei Kiong Ting

    (Faculty of Accounting, Ton Duc Thang University, Ho Chi Minh City 758307, Vietnam)

  • Noor Azlinna Azizan

    (College of Business Administration, Prince Sultan University, Riyadh 12435, Saudi Arabia)

  • Rajesh Kumar Bhaskaran

    (Department of Finance, Institute of Management Technology, Dubai 345006, UAE)

  • Sujit K Sukumaran

    (Department of Finance, Institute of Management Technology, Dubai 345006, UAE)

Abstract

This study examines the impact of firms’ environmental, social and governance (ESG) initiatives on financial performance. It also compares the valuation effects of corporate social performance initiatives in developed and emerging market firms. The study was based on ESG ranking scores in the Thomson Reuters database, and the sample comprised 1317 emerging market firms and 3569 developed market firms. In comparison with developed market firms, emerging market firms had higher ESG combined scores, ESG Controversy scores, category scores of resources use, workforce, human rights and corporate social responsibility strategy scores. This study finds that stakeholder initiatives positively impact valuation effects, based on all sample results. Firm-generated controversies may decrease valuation effects in the stock market. Results indicated that ESG initiatives have a significant positive to the firm performance. The presence of independent board members and ownership by investors is a positive determinant for value creation. The adoption of best practice corporate governance principles is an important determinant of the valuation of firms. Firms’ propensity to use defence mechanisms decreases valuation effects. Developed market firms received positive valuation effects due to ESG initiatives.

Suggested Citation

  • Irene Wei Kiong Ting & Noor Azlinna Azizan & Rajesh Kumar Bhaskaran & Sujit K Sukumaran, 2019. "Corporate Social Performance and Firm Performance: Comparative Study among Developed and Emerging Market Firms," Sustainability, MDPI, vol. 12(1), pages 1-21, December.
    • Handle: RePEc:gam:jsusta:v:12:y:2019:i:1:p:26-:d:299434
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    2. Eva Daniela Cvik & Radka MacGregor Pelikánová, 2021. "The Significance of CSR During COVID-19 Pandemic in the Luxury Fashion Industry - A Front-Line Case Study," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 7(1), pages 109-126.
    3. Bai, Min & Ho, Ly, 2022. "Corporate social performance and firm debt levels: Impacts of the covid-19 pandemic and institutional environments," Finance Research Letters, Elsevier, vol. 47(PB).
    4. Saeed, Asif & Alnori, Faisal & Yaqoob, Gohar, 2023. "Corporate social responsibility, industry concentration, and firm performance: Evidence from emerging Asian economies," Research in International Business and Finance, Elsevier, vol. 64(C).
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    7. Wafa Ghardallou & Noha Alessa, 2022. "Corporate Social Responsibility and Firm Performance in GCC Countries: A Panel Smooth Transition Regression Model," Sustainability, MDPI, vol. 14(13), pages 1-21, June.
    8. Radka MacGregor Pelikánová & Martin Hála, 2021. "CSR Unconscious Consumption by Generation Z in the COVID-19 Era—Responsible Heretics Not Paying CSR Bonus?," JRFM, MDPI, vol. 14(8), pages 1-19, August.
    9. Jin Zhu & Fei Huang, 2023. "Transformational Leadership, Organizational Innovation, and ESG Performance: Evidence from SMEs in China," Sustainability, MDPI, vol. 15(7), pages 1-23, March.
    10. Paitoon Varadejsatitwong & Ruth Banomyong & Puthipong Julagasigorn, 2022. "A Proposed Performance-Measurement System for Enabling Supply-Chain Strategies," Sustainability, MDPI, vol. 14(19), pages 1-25, September.
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