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A Non-Linear and Disaggregated Approach to Studying the Impact of CSR on Accounting Profitability: Evidence from the Polish Banking Industry

Łukasz Matuszak () and Ewa Różańska ()
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Łukasz Matuszak: Department of Accounting, Faculty of Management, Poznań University of Economics and Business, 60-681 Poznań, Poland
Ewa Różańska: Department of Accounting, Faculty of Management, Poznań University of Economics and Business, 60-681 Poznań, Poland

Sustainability, 2019, vol. 11, issue 1, 1-21

Abstract: Corporate social responsibility (CSR) is now extensively promoted in the European Union and highly desired by stakeholders. However, from a manager’s point of view, the question of whether or not corporations should conduct CSR activities is controversial because of the accompanying high cost and uncertain benefits. The vast empirical literature appears to be rather inconclusive with respect to the question of whether CSR business engagement creates or destroys financial performance (FP). This study suggests that the inconsistent findings may be due to the use of aggregated CSR measures and a linear approach, as well as the omission of the industry or country context. Thus, the purpose of this study is to provide an updated assessment of the relationship between CSR and FP. Based on content analysis, we developed four individual CSR disclosure indices, corresponding to the environmental, human resources, product and customers, and community involvement dimensions, instead of an overall CSR composite score, and we examined their impact on accounting-based measures. We applied both linear and non-linear approaches. Data from Poland’s banking industry for the period 2008–2015 provided the background for this study. Our results confirm the existence of a U-shaped relationship between human resources and FP, and an inverse-U-shaped relationship between FP and community involvement, and FP and product and customers. This study contributes not only to the CSR literature by providing new insights into this relationship between CSR dimensions and FP, but it also offers policy suggestions for both bank managers and government regulators.

Keywords: corporate social responsibility; CSR disclosure; financial performance; non-linear relationship; banking industry; Poland (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2019
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