Title
Corporate social responsibility and financial performance: the “virtuous circle” revisited
Document Type
Article
Publication Date
5-14-2009
Abstract
We examine the causal relation between corporate social responsibility (CSR) and financial performance. Consistent with past studies, we find that the two variables appear to be related when we use traditional statistical techniques. However, using a time series fixed effects approach, we find that the relation between CSR and financial performance is much weaker than previously thought. We also find little evidence of causality between financial performance and narrower measures of social performance that focus on stakeholder management. Our results suggest that strong stock market performance leads to greater firm investment in aspects of CSR devoted to employee relations, but that CSR activities do not affect financial performance. We conclude that CSR is driven more by unobservable firm characteristics than by financial performance.
Language
English
Recommended Citation
Nelling, Edward and Cooper, Elizabeth W., "Corporate social responsibility and financial performance: the “virtuous circle” revisited" (2009). Department of Finance. 3.
https://digitalcommons.lasalle.edu/finance/3
DOI
https://doi.org/10.1007/s11156-008-0090-y
Comments
This article is the authors' final published version in Review of Quantitative Finance and Accounting, Volume 32, Issue 2, February 2009, Pages 197-209.
The published version is available at https://doi.org/10.1007/s11156-008-0090-y. Copyright © Springer Nature