Corporate Social Responsibility and Financial Performance

Exploring the Relationship between CSR and Financial Performance

Abstract

The field of corporate socialresponsibility (CSR) has grown exponentially in the last decade. Nevertheless,there remains a protracted debate about the legitimacy and value of corporateresponses to CSR concerns. There are different views of the role of the firm insociety and disagreement as to whether wealth maximization should be the solegoal of a corporation. Using extensive data over a period of five years, thisstudy explores and tests the sign of the relationship between corporate socialresponsibility and financial performance. The dataset includes most of theS&P 500 firms and covers the years 1996-2000. The relationship is tested byusing empirical methods. The results indicate that the sign of the relationshipis positive and statistically significant; supporting the view that sociallyresponsible corporate performance can be associated with a series of bottom-linebenefits.