Corporate social responsibility: How much is enough? A higher dimension perspective of the relationship between financial and social performance

Iordanis Kalaitzoglou (), Hui Pan () and Jacek Niklewski ()
Additional contact information
Iordanis Kalaitzoglou: ReMA Special Interest Group in Regulation, Market Structure and Asset Pricing
Hui Pan: Faculty of Business and Law
Jacek Niklewski: Faculty of Business and Law

Annals of Operations Research, 2021, vol. 306, issue 1, No 9, 209-245

Abstract: Abstract We investigate the nature of the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) by examining how it changes across a third dimension that accounts for firm-specific factors. We propose a semi-latent specification of an endogenous control variable, which can, for the first time, explicitly identify, for each individual firm, the threshold level where the marginal impact of CSR on CFP turns positive. We provide empirical evidence that this threshold depends on the additional dimension and consequently, the previously reported U-shape seems to be an aggregation of relationships of differential magnitude and direction. This disaggregation fits the data better and therefore, we maintain that the addition of a higher dimension, along with the identification of the threshold level, can explain the conflicting results in the literature.

Keywords: Corporate social responsibility (CSR); Firm size; Corporate financial performance (CFP); Endogeneity; Asymmetric relationship (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s10479-020-03834-y

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