CSR disclosure and financial performance revisited: A cross-country analysis

Abstract

The relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) has been the subject of intensive research. However, limitations with this literature include the use of localised samples, poorly specified control variables and self-constructed CSR disclosure measures that may not represent a firm’s actual CSR performance. Answering the call for ‘better’ CSR research in this field, as well as extending research to a cross-country analysis, this study examines the relationship between corporate CSR engagement (measured by diversity in voluntary disclosure practices) and financial performance across three reporting jurisdictions: Australia, Hong Kong and the United Kingdom. We use the Global Reporting Initiative (GRI) framework to rate companies on their CSR engagement and control for actual CSR performance using the Vigeo-Eiris CSR sustainability ratings as the proxy measure. Based on a sample of 116 large public companies, we find evidence that CSR engagement can be indicative of actual CSR performance. We also find evidence of a significant relationship between CSR engagement and financial performance, even after controlling for the CSR performance proxy, firm size, industry-level fixed effects, financial risk and type of assurer. The results appear to be robust across national reporting jurisdictions and alternative CSR metrics constructed from the CSR engagement measure. JEL classification: M41, M14

Sustainable development and economic performance: Gaps and trends for future research

“…Wagner () used social indices developed by Waddock and Graves, Ekatah et al () developed key performance indicators for social performance, Sariannidis et al () used nonfarm payroll employment as a social indicator, Ferrero‐Ferrero et al () analyzed the ESG performance of companies, and Beck et al () used Vigeo‐Eiris for CSR and sustainability ratings.…”

“…They found that there is a significant negative short-term impact of CSR adoption and business performance. The CSR-CFP Corporate Financial Performance (CFP) relationship was visited again by several authors (Škare & Golja, 2012;Pätäri, Arminen, Tuppura, & Jantunen, 2014;Vergini, Jacomossi, Turra, & Hein, 2015;Rodriguez-Fernandez, 2016;Carini, Comincioli, Poddi, & Vergalli, 2017;Choongo, 2017;Oh, Hong, & Hwang, 2017;Ang & Weber, 2018;Beck, Frost, & Jones, 2018;Hategan, Sirghi, Curea-Pitorac, & Hategan, 2018;Cherian et al, 2019;Lin, Hung, et al, 2019;Lin, Law, et al, 2019), some of which considered environmental leadership (DiSegni, Huly, & Akron, 2015), its impact on innovation, and firm performance as possible moderating variables (Martinez-Conesa, Soto-Acosta, & Palacios-Manzano, 2017). Ekatah, Samy, Bampton, and Halabi (2011) sought to explore whether CSR is linked to profitability employing simple statistic methods and linear regression.…”

Sustainability – A key to Australian finance directors improving their organisation's CSR culture

“…Asian CSR research highlights the contextual issues of the region, such as government power, labour rates, education disparity, and more recently quantifying CSR reporting (Chapple & Moon, 2007;Jain, Keneley, & Thomson, 2015;Kim & Moon, 2015). Within the Australian context, there has been a focus on governance, reporting, stakeholder engagement, and small-to-medium sized organisations (Beck, Frost, & Jones, 2018;Lane & Devin, 2018;Sheedy, 2016;Stewart & Gapp, 2014). Across all regions, including Australia, there is an increasing focus on the role of board diversity and corporate governance (Furlotti, Mazza, Tibiletti, & Triani, 2018;Galbreath, 2011;Manning, Braam, & Reimsbach, 2019;Setó-Pamies, 2015;Uribe-Bohorquez, Martínez-Ferrero, & García-Sánchez, 2018).…”

Effect of corporate social responsibility disclosure on firms' sales performance: A perspective of stakeholder engagement and theory

“…First, most previous studies have been evaluated the impact of CSRD activities either internal or external particularly on organizational financial performance (e.g., Bayoud, 2012;Beck, Frost, & Jones, 2018;Eccles, Ioannou, & Serafeim, 2014;Hou, 2018;Rasheed, Arshed, Malik, & Mahmood, 2018;Tang, Hull, & Rothenberg, 2012;Yang & Baasandorj, 2017). First, most previous studies have been evaluated the impact of CSRD activities either internal or external particularly on organizational financial performance (e.g., Bayoud, 2012;Beck, Frost, & Jones, 2018;Eccles, Ioannou, & Serafeim, 2014;Hou, 2018;Rasheed, Arshed, Malik, & Mahmood, 2018;Tang, Hull, & Rothenberg, 2012;Yang & Baasandorj, 2017).…”

“…The motives to conduct this research are as follows. First, most previous studies have been evaluated the impact of CSRD activities either internal or external particularly on organizational financial performance (e.g., Bayoud, 2012;Beck, Frost, & Jones, 2018;Eccles, Ioannou, & Serafeim, 2014;Hou, 2018;Rasheed, Arshed, Malik, & Mahmood, 2018;Tang, Hull, & Rothenberg, 2012;Yang & Baasandorj, 2017). However, this study attempts to examine the influence of CSRD by adopting both internal and external CSR activities with respect to sales performance that has been ignored in the past.…”