Analyzing the impact of corporate social responsibility on corporate financial performance: evidence from top Indian firms

Sekhon, Amritjot Kaur; Kathuria, Lalit Mohan

doi:10.1108/cg-04-2019-0135

Cited by 63 publications

(72 citation statements)

References 96 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…The negative influence of CSR on the ROE of firms supports the theory by Friedman (1970) that the only responsibility of a business is to maximize profits and returns for its shareholders. Similarly, Sekhon and Kathuria (2019) show that the effect of CSR on financial performance is either neutral (ROA, Net Profit Margin) or negative (ROE). Finally, Buchanan et al (2018) suggest that the effect of CSR on firm value depends on the prevailing economic conditions and the level of institutional ownership.…”

Section: Theoretical Framework and Literature Reviewmentioning

confidence: 92%

The effect of ESG on value creation from mergers and acquisitions. What changed during the COVID-19 pandemic?

Tampakoudis

Noulas

Kiosses

et al. 2021

View full text Add to dashboard Cite

Purpose The purpose of this study is to investigate the relationship between environmental, social and governance (ESG) performance and shareholder wealth in the context of mergers and acquisitions (M&As) before and during the coronavirus (COVID-19) pandemic. Design/methodology/approach This paper uses a sample of 889 completed M&As announced by US firms between 1 January 2018 and 31 July 2020. Announcement abnormal returns are estimated using an event study methodology and the relation of ESG performance to shareholder value creation is tested with univariate and multivariate cross-sectional regressions. Findings This study provides evidence for a significant negative value effect of ESG performance for the shareholders of acquiring firms during the entire sample period. The negative effect appears to be stronger, as the onset of the COVID-19 crisis. This suggests that, during the pandemic-driven economic turmoil, the costs of sustainability activities outweigh any possible gains, providing evidence in support of the overinvestment hypothesis. Research limitations/implications The results of the study have important implications for firms, investors and policymakers. Firms should be more cautious with regard to extensive investments in ESG activities, particularly during economic turmoil. For shareholders, the results suggest that ESG engagement is not a resilience factor in an exogenous shock such as the COVID-19 pandemic. In terms of policymaking, the sustainability disclosure framework should remain voluntary allowing firms to report material ESG-related issues. The main limitation of the study is related to data availability regarding ESG performance. Originality/value To the best of the knowledge, this is the first study that investigates the effect of ESG performance on shareholder value in the market for corporate control before and during the COVID-19 pandemic.

show abstract

Section: Theoretical Framework and Literature Reviewmentioning

confidence: 92%

The effect of ESG on value creation from mergers and acquisitions. What changed during the COVID-19 pandemic?

Tampakoudis

Noulas

Kiosses

et al. 2021

View full text Add to dashboard Cite

show abstract

“…However, despite a large number of studies supporting the business case of CSR, overall, this literature is still inconclusive. It is evident that the impact of CSR on firm financial performance is not statistically significant 4 , especially after controlling for endogeneity 20 ; or negative [21][22][23] ; or mixed, depending on different dimensions of CSR [24][25][26] .…”

Section: Csr-firm Financial Performance Evidence In a Global Contextmentioning

confidence: 97%

Corporate social responsibility and firm financial performance: A literature review

Nguyen

2020

Sci. Tech. Dev. J. Econ. Law. Manag.

View full text Add to dashboard Cite

This paper aims to investigate the literature on Corporate Social Responsibility (CSR) to provide a comprehensive overview of whether CSR would make a difference to organisational financial outcomes. The paper also provides a closer focus on CSR research in Vietnam. Through an extensive analysis of 86 most recent empirical studies from 2015 to 2020, we found that the contribution of CSR to firm financial performance has received significant support from the literature. Yet the overall findings are still inconsistent, and the majority of evidence is mainly from developed countries. The current literature on CSR and firm performance highlights some important issues, ranging from theoretical background, CSR measures, methodological issues, the need to consider intervening factors in CSR-firm performance relationship, and the need to extend this literature further in developing and emerging countries. The literature on CSR-firm performance research in Vietnam closely resembles these problems. Research in this country domain is still scarce in both quantity and quality, reflecting in a number of issues including the limited number of international publications, the absence of theory-driven research, and the less rigorous research design. Building on these findings, we recommend future research to (i) adopt the multi-theoretical approach for a more extensive view on whether and how CSR contributes to firm performance; (ii) obtain more rigorous methodological approaches to measure a wide range of CSR dimensions and address the issue of endogeneity in CSR-firm performance causal relationship; (iii) open the Pandora box to explore why and through which channels CSR can improve firm financial performance with the presence of situational factors; and (iv) build the literature with more evidence from different country contexts and from developing and emerging countries.

show abstract

“…The dependent variable in this study is financial performance which is given by two accounting based financial ratios return on assets (ROA) and total net profit margin (TNPM). Previous empirical studies show support for both market based and accounting based measures of performance such as TNPM (Arora and Sharma 2016, Darko, Aribi et al 2016, Haque and Arun 2016, Lamichhane 2018, Salin, Ismail et al 2019, Sekhon and Kathuria 2019, and ROA (Hermalin and Weisbach 1991, Sarkar and Sarkar 2000, O'Connor, Kinsella et al 2014, Ciftci, Tatoglu et al 2019) and Tobin's Q (Lozano, Martínez et al 2016, Wang 2018, Shao 2019. Both accounting and market based performance measures have caveats (Ciftci, Tatoglu et al 2019).…”

Section: Dependent Variablesmentioning

confidence: 98%

The Board Model Corporate Governance Mechanism and Financial Performance of Non-financial Listed Chinese Firms

Kong¹,

Famba²,

Chituku-Dzimiro³

et al. 2020

Preprint

View full text Add to dashboard Cite

Corporate governance is widely suggested by economists and regulators as a solution to reduce agency problems and improve firm performance. However previous studies have failed to generate consistent results. Using a dynamic panel system GMM estimator to alleviate endogeneity concerns we determine the effect of corporate board structure on the performance of a panel of 1265 Chinese firms listed on the Shanghai and Shenzhen stock exchanges from 2010 to 2016. We compare the dynamic system GMM estimator to some commonly used estimators; ordinary least squares (OLS), fixed effects (FE) and the dynamic OLS, and show that these estimates are biased due to endogeneity. The dynamic system GMM estimator incorporates the dynamic nature of internal governance choices to provide valid and powerful instruments that address unobserved heterogeneity and simultaneity. Our results show support for the board model corporate governance mechanism. We find that board size is positive and significantly related to both return on assets and total net profit margin. In addition board independence is positive and significantly related to return on assets but insignificantly related to total net profit margin. Duality was found to have a negative but statistically insignificant relation with firm performance.

show abstract

Analyzing the impact of corporate social responsibility on corporate financial performance: evidence from top Indian firms

Cited by 63 publications

References 96 publications

The effect of ESG on value creation from mergers and acquisitions. What changed during the COVID-19 pandemic?

The effect of ESG on value creation from mergers and acquisitions. What changed during the COVID-19 pandemic?

Corporate social responsibility and firm financial performance: A literature review

The Board Model Corporate Governance Mechanism and Financial Performance of Non-financial Listed Chinese Firms

Contact Info

Product

Resources

About