Investigating the Relationship between the Social and Economic-financial Performance

Abstract

Hundreds of studies have explored and measured financial returns related to social performance (Margolis and Walsh, 2003), with controversial results. In addition to these studies" outcomes, we found, in this body of literature, a lot of innovation in the integration and adaptation of financial analysis tools and models to the study of statistical relationships.In this paper, we investigate the relationship between corporate social performance and corporate financial (and economic) performance, using multiple measures of financial and social performance and by looking statistically at the movement of actual financial and social performance over time. We emphasize the worth of statistical analysis in traditional financial representations.Our findings show how ratio analysis and statistical cause-and-effect validation are not alternatives for developing the financial analysis of sustainability and reporting. We show, through constant testing and a double learning process, the critical relationship between the key factors of financial, economic and social performance.

The Effect of ESG Performance on Economic Performance in the High Profile Industry in Indonesia

“…In line with Zhang (2010), the reason for not finding influence between social performance and financial performance is the existence of a very dynamic market situation, so that management's attention is more directed to deal with market conditions that are directly related to earnings and sales compared to non-financial performance, like employee development. This result is consistent with the research of Barnett & Salomon(2011)and Elijido-ten (1985).This research contradicts the results of Oeyono, Samy, & Bampton (2011)and Vaia, Bisogno, & Tommasetti(2017)who found a positive influence. Therefore, based on the discussion above, hypothesis 2a is rejected.…”

Asymmetric effects of corporate sustainability strategy on value creation among global automotive firms: A dynamic panel quantile regression approach

“…Overall, more than 118 million data components related to corporate sustainability strategy performance obtained from the 525 information sources are brought together to form the index (CSRHub, 2017). The corporate sustainability strategy index is on a scale of 0 to 100, with 100 being the most ideal and positive rating (Vaia, Bisogno, & Tommasetti, 2017; Yan, Chou, Chang, & Darcy, 2017). This means that the higher a rating goes, the better a firm's corporate sustainability strategy performance.…”

Mitigating endogeneity in corporate social responsibility research: An investigation using a neoclassical production function

“…Similar to other firm‐level studies of production functions (e.g., Dhawan & Gerdes, 1997; Fioretti, 2008; Van Beveren, 2012), we use real firm sales as the proxy for production output 2 . To approximate firm‐level CSR, an annual composite CSR score between 0 and 100 and its four sub‐components (related to community, employees, environment, and governance scores) were obtained from CSRHub, a reputable source of CSR data that is sold commercially and used by investors and researchers (e.g., Lin et al, 2019; Soytas et al, 2019; Vaia et al, 2017). Following accepted practice (e.g., Ghoul et al, 2011; Hasan et al, 2018), the governance score is removed from the composite CSR measure to isolate the impact of external social outcomes on production rather than the internal impact of corporate governance.…”

“…Similar to other firm-level studies of production functions (e.g., Dhawan & Gerdes, 1997;Fioretti, 2008;Van Beveren, 2012), we use real firm sales as the proxy for production output. 2 To approximate firm-level CSR, an annual composite CSR score between 0 and 100 and its four sub-components (related to community, employees, environment, and governance scores) were obtained from CSRHub, a reputable source of CSR data that is sold commercially and used by investors and researchers (e.g., Lin et al, 2019;Soytas et al, 2019;Vaia et al, 2017).…”

“…These agencies use a variety of sources to compile firm data on a number of CSR areas, ultimately providing component and aggregate CSR ratings for each firm. Like the MSCI KLD 400 social index, CSRHub is cited in a variety of CSR studies related to firm outcomes (e.g., Lin et al, 2019; Soytas et al, 2019; Vaia et al, 2017). We use the CSRHub ratings in our analysis and, as described in Section 3.2, the normalized and weighted CSR rating for any given firm falls between 0 (low CSR rating) and 100 (high CSR rating).…”