Empirical Analysis of the Relationship Between CSR and Company’s Market Capitalization: Evidence from Bucharest Stock Exchange

Adina Dornean and Dumitru-Cristian Oanea
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Dumitru-Cristian Oanea: Bucharest University of Economic Studies, Faculty of Finance and Banking

Chapter Chapter 14 in Emerging Issues in the Global Economy, 2018, pp 159-168 from Springer

Abstract: Abstract The practice of corporate social responsibility (CSR) is much debated and criticized. There is a continuous debate regarding the link between CSR and corporate financial performance (CFP) because the narrative reviews of the literature and the empirical evidence are too varied and mixed in different country context to allow for definitive conclusions. This paper aims at empirically analyzing the relationship between CSR and company’s market capitalization, the indicator which measures the investors’ evaluation of a firm value. Starting from the existing literature, our paper investigates this relationship for the Romanian companies listed on Bucharest Stock Exchange (BSE). From a total of 85 listed companies, we selected only 70 of them which were listed on the BSE during the period 2010–2015, without being excluded from trading. Using panel least squares methodology, our results suggest a positive relationship between CSR activities and market capitalization of firms, which are also impacted by the dividend paid and return on equity. This is a clear clue that besides the financial performance of a firm, the investors take into account also the attitude of a firm regarding its CSR activities. Moreover, this paper highlights the benefits for both managers and investors, since CSR exerts a significant positive impact on the firm value.

Keywords: Corporate social responsibility; Bucharest stock exchange; Panel least squares (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-319-71876-7_14

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DOI: 10.1007/978-3-319-71876-7_14

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