Impact of Corporate Social Performance on Financial Performance: Case of Firms Listed on the Stock Exchange of Casablanca
Keywords:
company social performance, financial performance, top performers, panel data
Abstract
This paper examines empirically the impact of corporate social performance (CSP) on financial performance (FP). The study relates to a panel of 32 firms listed on the Stock Exchange of Casablanca during the period of study from 2011 to 2017. The empirical findings obtained, by linear regressions on panel data, clearly find the lack of impact of the corporate social performance on the financial performance measured by the Return on Investment (ROI), Return on Equity (ROE) and Earnings Per Share (EPS) ratios. The influence of corporate social performance on financial performance is statistically insignificant. The financial performance of firms classified or not socially efficient are almost identical. Finally, the results obtained clearly show the absence of this causal link between corporate social performance (CSP) on financial performance (FP), which confirms the research hypothesis. Finally, since the relationship between these two performances could be non-linear, we can deepen this article using econometric methods that can analyze the non-linear effect such as quantile regression and the regime-change model.
References
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Ngoc, N. B. (2018). The effect of corporate social responsibility on financial performance: Evidence from credit institutions in Vietnam. Asian Social Science, 14(4), 109-122. https://doi.10.5539/ass.v14n4p109
Preston, L. E., & O'bannon, D. P. (1997). The corporate social-financial performance relationship: A typology and analysis. Business & Society, 36(4), 419-429. https://doi.org/10.1177/000765039703600406
Saadaoui, K. (2008). Does ethical commitment penalize performance? Analysis of the performance of socially responsible French funds. Presentation presented at the 5th ADERSE Congress: Transversality of Corporate Social Responsibility, pp.15.
Strouhal, J., Gurvits, N., Nikitina-Kalamäe, M., & Startseva, E. (2015). Finding the link between CSR reporting and corporate financial performance: Evidence on Czech and Estonian listed companies. Central European Business Review, 4(3), 48-59. https://doi.10.18267/j.cebr.132
Tebini, H. (2013). Relationship between financial performance and social / environmental performance: a critical analysis. Doctoral dissertation, University of Quebec in Montreal. pp. 275.
Wang, Q., Dou, J., & Jia, S. (2016). A meta-analytic review of corporate social responsibility and corporate financial performance: The moderating effect of contextual factors. Business & Society, 55(8) ,1083-1121. https://doi.org/10.1177/0007650315584317
Wood, D. J. (1991). Corporate Social Performance Revisited. Academy of Management Review, 16(4), 691-718. https://doi.10.2307/258977
Blankenberg, A. K., & Gottschalk, J. F. (2018). Is socially responsible investing (SRI) in stocks a competitive capital investment? A comparative analysis based on the performance of sustainable stocks. Center for European, Governance and Economic Development Research Discussion Papers, No. 349. Retrieved from http://hdl.handle.net/10419/178700
Bnouni, I. (2011). Social performance and financial performance: State of the art. Presentation presented at the 20th AIMS Conference 2011.
Bouslah, K., M’zali, B., Kooli, M., & Turcotte, M. F. (2006). Social and environmental responsibility, certifications and financial performance. Management, 27(3), 125-133. https://doi.org/10.1002/csr.1899
Brammer, S., Brooks, C., & Pavelin, S. (2006). Corporate Social Performance and Stocks Returns: UK Evidence from Disaggregate Measures. Financial Management, 35(3), 97-116. https://doi.org/10.1111/j.1755-053X.2006.tb00149.x
Carroll, A. B. (1979). A three-dimensional conceptual model of Corporate Social Performance. Academy of Management Review, 4(4), 497-505. https://doi.org/10.5465/amr.1979.4498296
Chetty, S., Naidoo, R., & Seetharam, Y. (2015). The Impact of corporate social responsibility on firm's financial performance in South Africa. Contemporary Economics, 9(2), 193-214. https://10.5709/ce.1897-9254.167
Choi, J.H., Kim, S., & Yang, D. H. (2018). Small and medium enterprises and the relation between social performance and financial performance: Empirical evidence from Korea. Sustainability, 10(6), 1816. https://doi.org/10.3390/su10061816
Clarkson, M. B. E. (1995). A stakeholder framework for analyzing and evaluating corporate social performance. Academy of Management Review, 20(1), 92-117. https://doi.org/10.5465/amr.1995.9503271994
El Yaagoubi, J. (2019). Impact of the social responsibility of companies listed on the Casablanca stock exchange on their financial performance. Doctoral dissertation. pp. 243.
Han, J. J., Kim, H. J., & Yu, J. (2016). Empirical study on relationship between corporate social responsibility and financial performance in Korea. Asian Journal of Sustainability and Social Responsibility, 1(1), 61-76. https://doi.org/10.1186/s41180-016-0002-3
Igalens, J., & Gond, J. P. (2005). Measuring corporate social performance in France: A critical and empirical analysis of ARESE data. Journal of business ethics, 56(2), 131-148. https://doi.org/10.1007/s10551-004-3529-7
Jawadi, F., Jawadi, N., & Cheffou, A. I. (2019). A statistical analysis of uncertainty for conventional and ethical stock indexes. The Quarterly Review of Economics and Finance, 74(11), 9-17. https://doi.org/10.1016/j.qref.2018.03.002
Kiymaz, H. (2019). Performance evaluation of SRI funds: an analysis of fund types. Accounting and Finance Research, 8(1), 212-221. https://doi.org/10.5430/afr.v8n1p212
Kreander, N., Gray, R.H., Power, D.M., & Sinclair, C.D. (2005). Evaluating the performance of ethical and non ‐ ethical funds: a matched pair analysis. Journal of Business Finance & Accounting, 32(7-8), 1465-1493. https://doi.org/10.1111/j.0306-686X.2005.00636.x
Laskar, N. (2018). Impact of corporate sustainability reporting on firm performance: an empirical examination in Asia. Journal of Asia Business Studies, 12(4), 571-593. https://doi.org/10.1108/JABS-11-2016-0157
Lee, D. D., Faff, R. W., & Langfield-Smith, K. (2009). Revisiting the vexing question: does superior corporate social performance lead to improved financial performance? Australian Journal of Management, 34(1), 21-49. https://doi.org/10.1177/031289620903400103
Leite, P., & Cortez, M. C. (2018). The performance of European SRI funds investing in bonds and their comparison to conventional funds. Investment Analysts Journal, 47(1), 65-79. https://doi.org/10.1080/10293523.2017.1414911
Malki, T. E. (2010). Business environment, social responsibility and performance: empirical analysis in the case of Morocco. Doctoral dissertation, Aix-Marseille II. pp.501.
Manrique, S., & Martí-Ballester, C. P. (2017). Analyzing the effect of corporate environmental performance on corporate financial performance in developed and developing countries. Sustainability, 9(11), 1957. https://doi.org/10.3390/su9111957
Maqbool, S., & Bakr, A. (2019). The curvilinear relationship between corporate social performance and financial performance: Evidence from Indian companies. Journal of Global Responsibility, 10(1), 87-100. https://doi.org/10.1108/JGR-11-2018-0060
Margolis, J. D., & Walsh, J. P. (2003). Misery loves companies: rethinking social initiatives by business. Administrative Science Quarterly, 48(2), 268-305. https://doi.org/10.2307/3556659
Masoud, N., & Hasaleh, A. (2017). Corporate Social Responsibility and Company Performance: An Empirical Analysis of Jordanian Companies Listed on Amman Stock Exchange. British Journal of Education, Society & Behavioral Science, 29(1), 1-26. https://doi.org/10.9734/BJESBS/2017/30496
Mollet, J. C., & Ziegler, A. (2014). Socially responsible investing and stock performance: New empirical evidence for the US and European stock markets. Review of Financial Economics, 23(4), 208-216. https://doi.org/10.1016/j.rfe.2014.08.003
Moses, O., Olayinka, M., Ulan, V. J., Janet, O. M. A., & Ambrose, A. O. (2014). Firms’ performance and corporate social disclosures: cross-sectional evidence of Nigerian firms. International Journal of Management Practice, 7(4), 341-365. https://DOI.10.1504/IJMP.2014.065231
Mouatassim, L. H., & Ibenrissoul, A. (2016). Is there an impact of CSR on the financial performance of the company: Empirical study on Moroccan companies listed on the Casablanca stock Exchange. HAL. pp.14.
Nelling, E., & Webb, E. (2009). Corporate social responsibility and financial performance: the virtuous circle revisited. Review of Quantitative Finance and Accounting, 32, 197-209. https://doi.org/10.1007/s11156-008-0090-y
Ngoc, N. B. (2018). The effect of corporate social responsibility on financial performance: Evidence from credit institutions in Vietnam. Asian Social Science, 14(4), 109-122. https://doi.10.5539/ass.v14n4p109
Preston, L. E., & O'bannon, D. P. (1997). The corporate social-financial performance relationship: A typology and analysis. Business & Society, 36(4), 419-429. https://doi.org/10.1177/000765039703600406
Saadaoui, K. (2008). Does ethical commitment penalize performance? Analysis of the performance of socially responsible French funds. Presentation presented at the 5th ADERSE Congress: Transversality of Corporate Social Responsibility, pp.15.
Strouhal, J., Gurvits, N., Nikitina-Kalamäe, M., & Startseva, E. (2015). Finding the link between CSR reporting and corporate financial performance: Evidence on Czech and Estonian listed companies. Central European Business Review, 4(3), 48-59. https://doi.10.18267/j.cebr.132
Tebini, H. (2013). Relationship between financial performance and social / environmental performance: a critical analysis. Doctoral dissertation, University of Quebec in Montreal. pp. 275.
Wang, Q., Dou, J., & Jia, S. (2016). A meta-analytic review of corporate social responsibility and corporate financial performance: The moderating effect of contextual factors. Business & Society, 55(8) ,1083-1121. https://doi.org/10.1177/0007650315584317
Wood, D. J. (1991). Corporate Social Performance Revisited. Academy of Management Review, 16(4), 691-718. https://doi.10.2307/258977
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2020-06-17
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