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The financial aspects of the Corporate Responsibility Index in Egypt

Author

Listed:
  • Tarek Eldomiaty
  • Ahmad Soliman
  • Ahmed Fikri
  • Marwa Anis

Abstract

Purpose - – The purpose of this paper is to examine the financial aspects of high vs low-ranked firms in the Corporate Responsibility Index in Egypt, and to construct aZ-score model to discriminate between high- and low-ranked firms in the Corporate Responsibility Index. Design/methodology/approach - – This study empirically examines a comprehensive list of financial ratios for 24 firms listed in EGX30 for four fiscal years, 2007-2010. The authors calculate 90 financial ratios to provide better insights and evaluation of the firms’ financial performance. The ordinary least square regression method and discriminant analysis are utilized to explain differences between the low- and high-ranked firms regarding their corporate social governance index. Findings - – The results show that corporate governance and corporate social responsibility (CSR) are positively related to the firms’ financial performance in terms of sales turnover and customer loyalty. This suggests that in the long run, the market mechanism should be able to provide additional resources to those companies that are better at maximizing a widely defined bottom line of their social governance. The results also show that highly ranked firms are characterized financially by: strong bargaining power with suppliers; financing growth in fixed assets using debt mainly. Originality/value - – The study contributes to the literature in terms of providing practical insights on the financial strategies that help support effective CG and CSR in Egypt. In addition, this study offers a unique quantitative attempt to measure and examine the benefits of incorporation of socioeconomics into business practices.

Suggested Citation

  • Tarek Eldomiaty & Ahmad Soliman & Ahmed Fikri & Marwa Anis, 2016. "The financial aspects of the Corporate Responsibility Index in Egypt," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 43(3), pages 284-307, March.
  • Handle: RePEc:eme:ijsepp:v:43:y:2016:i:3:p:284-307
    DOI: 10.1108/IJSE-06-2014-0118
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    Citations

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    Cited by:

    1. Ahmed Abdel Magid & Khaled Hussainey & Javier De Andrés & Pedro Lorca, 2023. "The Moderating Role of Online Social Media in the Relationship between Corporate Social Responsibility Disclosure and Investment Decisions: Evidence from Egypt," IJFS, MDPI, vol. 11(2), pages 1-26, April.
    2. Jamali, Dima & Jain, Tanusree & Samara, Georges & Zoghbi, Edwina, 2020. "How institutions affect CSR practices in the Middle East and North Africa: A critical review," Journal of World Business, Elsevier, vol. 55(5).

    More about this item

    Keywords

    Egypt; Corporate governance; Financial performance; Institutional economics; Corporate Responsibility Index; G14; D21; L21;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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