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Return on Equity and the Global Compact: Its Effect on Colombian Companies that Have Adhered to It

Liliana Ruiz Acosta (), David Andres Camargo Mayorga () and Octavio Cardona Garcia ()
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Liliana Ruiz Acosta: Universidad Militar Nueva Granada
David Andres Camargo Mayorga: Universidad Militar Nueva Granada
Octavio Cardona Garcia: Universidad Militar Nueva Granada

No 07LR, Working papers from Research Association for Interdisciplinary Studies

Abstract: This document analyzes whether belonging to the Global Compact (GC) affected the Return on Equity (ROE) in 1,000 of the largest Colombian companies that reported their financial information to the Superintendency of Corporations in 2017. The impact was calculated using the Ordinary Least Squares (OLS) with standard errors and Feasible and Generalized Least Squares (FGLS) models; the variables ROE and GC were linked to each other by considering control variables such as financial variables (size and leverage) and non-financial variables (economic sector). Statistically, no significant relationship was found between the return on equity and these companies being members of the Global Compact; which is consistent with the neutrality hypothesis, which affirms that socially responsible companies do not experience changes in economic benefits or in the wealth of shareholders, hence showing that socially responsible investments have no effect. This research contributes to the empirical research on the relationships between finance and corporate social responsibility, which contributes to decision making in the field of sustainability by companies.

Keywords: Profitability Ratios; Social Responsibility; Financial Statements; Linear Regression Model; Corporations (search for similar items in EconPapers)
Date: 2018-11
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Published in Proceedings of the 11th International RAIS Conference on Social Sciences and Humanities, November 19-20, 2018, pages 45-48

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