The Impact of Corporate Social Responsibility on Financial Performance
Date Issued
2012
Date
2012
Author(s)
Hsieh, Yun-Hsi
Abstract
The objective of this study is to explore whether investing in corporate social responsibility will add value for the enterprise, and this study focus on finding relationship between corporate social responsibility and (a) accounting performance and (b) the volatility of stock returns：
(A) the correlation between investment in corporate social responsibility and corporate financial performance is more complex：
First, with accounting performance indexes which indicate management capacity (ex, return on equity, return on capital rate, the after-tax net profit margin and earnings per share), there is no significant correlation with investing in CSR;
Second, accounting performance index which indicates productivity (average sales per employee) marked a significant positive correlation with investing in CSR;
Third, accounting performance indexes which indicate increasing shareholder value (per common share cash dividend), there is a significant positive correlation with investing in CSR.
(B) Companies which indulge in CSR have smaller degree of corporate stock return volatility, showing a lower risk of investing in these stocks.
(C) Use the lists of 2007-2010 Excellence in Corporate Social Responsibility as equity portfolio and hold for one , two , three , four and five year, the average cumulative return of the portfolios are 2.45%, 4.47%, 4.08% , 7.47% and 17.2% respectively, all perform better than the market.
Subjects
Corporate Social Responsibility
Corporate Financial Performance
Excellence in Corporate Social Responsibility
SDGs
Type
thesis
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