Corporate social responsibility, firm value and financial performance in Brazil

Abstract

The purpose of the paper is to examine the relationship between Corporate Social Responsibility (CSR) and firm performance, taking into account firm value and financial performance, in an emerging market-Brazil. Content analysis was conducted to extract data from two different sources, one relative to CSR data (IBase) and another that provided financial data (Economática). CSR indexes and financial performance measures were calculated to allow the estimation of regression analysis conducted to examine the relationship between CSR and performance. The results indicate that CSR is value destroying in Brazil since a negative correlation between CSR and firm value was found. Additionally, a neutral relationship characterizes the mutual effect between CSR and financial performance. The study has examined the relationship between CSR and firm performance in a country where, as in most other non-developed markets, such relationship has not been object of research. Besides, we also see the use of a three dimensional measure of CSR, mainly considering a research undertaken in an emerging market, as a valuable contribution.

Tailoring CSR Strategy to Company Size?

“…Since CSR is, inevitably, part of the business strategy of a company, a large number of academic studies have investigated the impact that CSR would have on the financial performance (Aras, Aybars & Kutlu, 2010;Barnett & Salomon, 2006;Bauer, Gunster & Otten, 2004;Bohlin & Wiebe, 2016;Brammer & Millington, 2008;Brower & Mahajan, 2013;Callan & Thomas, 2009;Chen & Wang, 2011;Choi, Kwak & Choe, 2010;Cochran & Wood, 1984;Dodd & Supa, 2011Flammer, 2015;Gilley, Worell & EI-Jelly, 2000;Hansen, Ibarra & Peyer, 2013;Isaksson, Kiessling & Harvey, 2014;Johnson, 2003;Hellwig 2000;Kaufmann & Olaru, 2012;Lima Crisóstomo, de Souza Freire & Cortes de Vasconcellos, 2011;Lundgren, 2007;Mackey, Mackey & Barney, 2007;Mangolis, Elfenbein & Walsh, 2009;McGuire, Sundgren & Schneeweis, 1988;Nelling & Webb, 2009;Orlitzky, Schmidt, and Rynes, 2003;Pava & Krausz, 1996;Peloza, 2006;Peters & Mullen, 2009;Rangan, Chase & Karim, 2012;Rhou, Singal & Koh, 2016;Saeidi et al 2015;Scholtens, 2008;Soto-Acosta et al, 2016;Surroca, Tribó & Waddock, 2010;Tang, Hull & Rothenberg, 2012;Thornton, Kagan & Gunningham, 2003;…”

Understanding Complexity: the Curvilinear Relationship Between Environmental Performance and Firm Performance

“…The following studies reported negative relationships: Brammer et al (2006), Cordeiro and Sarkis (1997), Dobre et al (2015), Filbeck and Gorman (2004), Konar and Cohen (2001), Moore (2001), Cordeiro (2001), andLima Crisóstomo et al (2011). A main argument for the existence of negative relationship is that firms trying to enhance EP draw resources and management effort away from core areas of the business, resulting in lower profits.…”

Stakeholder Theory and Value Creation Models in Brazilian Firms

“…Many of these articles relate to the examination of the relationship between corporate social performance and corporate financial performance (the CSP-CFP link), using stakeholder groups as a lens for trying to quantify non-financial performance (e.g., Boaventura, 2012;Boaventura et al, 2009;Crisóstomo, Freire, & Vasconcellos, 2011;Machado, 2002). Some also examine stakeholder relationships within the context of a single industry to better understand these relationships within the particular industry being examined.…”