The relationship between corporate social performance and corporate financial performance and the role of innovation: evidence from German listed firms

Thomas Fischer () and Angelika Sawczyn ()

Metrika: International Journal for Theoretical and Applied Statistics, 2013, vol. 24, issue 1, 27-52

Abstract: Corporate social performance (CSP) has become increasingly important in recent years, primarily because of growing stakeholder requirements regarding a firm’s environmental and social concerns. Satisfying stakeholder expectations and needs through transparent corporate activities may actually improve a firm’s reputation and financial results. With an empirical study of the CSP disclosures of large German listed firms, we tested the hypothesized causal relationship between CSP and corporate financial performance (CFP). We measure CSP as an equal weighted CSP-Index based on Global Reporting Initiative’s social and environmental core key performance indicators. CFP is measured by return on assets. Based on correlation and regression analyses, we find support for a positive and significant interaction between CSP and CFP for large German listed firms. Our findings indicate that the CSP–CFP relationship is affected by the degree of innovation. Furthermore, there is evidence for a unidirectional Granger causal relationship running from CFPt-1 to CSPt. Thus, firms with superior CFP may use their surplus of monetary or non-monetary resources for further improvements of their CSP. Copyright Springer-Verlag Berlin Heidelberg 2013

Keywords: Corporate social performance; Corporate social performance index; Corporate social disclosure; CSP-CFP-relation (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (22)

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DOI: 10.1007/s00187-013-0171-5

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