Authors: А. Dornean, ORCID ID 0000000280094961, Doctor of Sciences (Finance), Associate Professor, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, Iasi, Romania
D.-C. Oanea, ORCID ID 0000000200479758, Doctor of Sciences (Finance), University of Economic Studies, Faculty of Finance and Banking, University of Economic Studies, Bucharest, Romania
Abstract: The present paper aims at analysing the link between Corporate Social Responsibility (CSR) and Corporate Financial Performance (CFP) in the case of Romanian listed companies. For accomplishing this, we will start from the existing literature and we will use data for period 2007-2015 (panel data) to which will apply a simple regression model. From the total number of companies listed on Bucharest Stock Exchange (BSE), we selected 59 companies without being excluding from trading and for which financial data were available for the entire period. The results indicated increased financial performance for CSR companies (only 16 of 59 companies have CSR activities) compared with NON-CSR companies. This study has important implications for policy makers, managers, investors, stakeholders, in generally.
Key words: corporate social responsibility, corporate financial performance, Bucharest Stock Exchange
1st Revision: 27/08/2018
The present paper aims at analysing the link between Corporate Social Responsibility (CSR) and Corporate Financial Performance (CFP) in the case of Romanian listed companies. For accomplishing this, we will start from the existing literature and we will use data for period 2007–2015 (panel data) to which will apply a simple regression model. From the total number of companies listed on Bucharest Stock Exchange (BSE), we selected 59 companies without being excluding from trading and for which financial data were available for the entire period. The results indicated increased financial performance for CSR companies (only 16 of 59 companies have CSR activities) compared with NON-CSR companies. This study has important implications for policy makers, managers, investors, stakeholders, in generally.
Baron, D., 2001. Private Politics, Corporate Social Responsibility and Integrated Strategy. Journal of Economics and Management Strategy, 10(1), pp.7-45, DOI: https://doi.org/10.1111/j.1430-9134.2001.00007.x.
Beltratti, A., 2005. The Complementarity between Corporate Governance and Corporate Social Responsibility. The Geneva Papers, 30(3), pp.373-386, DOI: https://doi.org/10.1057/palgrave.gpp.2510035.
Becker-Blease, J.R., 2012. Corporate Socially Responsible Investments. In Baker, K., Nofsinger, J., Socially Responsible Finance and Investing: Financial Institutions, Corporations, Investors, and Activists, John Wiley&Sons, Inc., New Jersey: Hoboken, 515p.
CSR Europe and GRI, 2017. Member State Implementation of Directive 2014/95/EU – A comprehensive overview of how Member States are implementing the EU Directive on Non-financial and Diversity Information.
Directive 2014/95/EU of The European Parliament and of The Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, Official Journal of the European Union. Available at: http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/? uri=CELEX:32014L0095&from=EN, last accessed 2018/01/15.
Edmans, A, 2011. Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices. Journal of Financial Economics, 101(3), pp.621-640, DOI: https://doi.org/10.1016/j.jfineco.2011.03.021.
European Commission, 2018. Non-financial reporting. Available at: https://ec.europa.eu/info/business-economy- euro/company-reporting-and-auditing/company-reporting/non-financial-reporting_en, last accessed 2018/01/15.
European Commission, 2001. Green Paper- Promoting a European framework for Corporate Social Responsibility, COM (2001) 366. Available at: http://ec.europa.eu/transparency/regdoc/rep/1/2001/EN/1-2001-366-EN-1-0.Pdf, last accessed 2018/02/02.
European Commission, 2011. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – A renewed EU strategy 2011-14 for Corporate Social Responsibility. COM/2011/0681 final. Available at: http://eur-lex.europa.eu/legal-content/EN/TXT/
?uri=CELEX:52011DC0681, last accessed 2018/02/02.
EY Romania and CSRmedia.ro, 2016. Tendinte si Realitati CSR in Romania. Available at: https://www.csrmedia.ro/ exclusiv-studiu-companiile-care-fac-csr-si-au-majorat-bugetul-dedicat-acestor-actiuni/, last accessed at 2018/01/16.
Galant, A., Cadez, S., 2017. Corporate social responsibility and financial performance relationship: a review of measurement approaches. Economic Research – Ekonomska Istrazivanja, 30(1), pp.676-693, DOI: https://doi.org/ 10.1080/1331677X.2017.1313122.
Global Sustainable Investment Alliance, 2016. Global Sustainable Investment Review 2016. Available at: http://www.gsi-alliance.org/wp-content/uploads/2017/03/GSIR_Review2016.F.pdf, last accessed 2018/01/15.
Hennessy, C.A., Livdan. D., 2009. Debt, Bargaining, and Credibility in Firm-Supplier Relationships. Journal of Financial Economics, 93(3), pp.382-399, DOI: https://doi.org/10.1016/j.jfineco.2008.05.006.
Holme, R., Watts, P., 2000. Corporate social responsibility: making good business sense. World Business Council for Sustainable Development Report. Available at: http://www.wbcsd.org/pages/edocument/edocumentdetails.aspx?id=83, last accessed 2018/01/10.
Hopkins, M., 2004. Corporate Social Responsibility: An Issues Paper. Working Paper no. 27. International Labor Organization, Geneva, DOI: http://dx.doi.org/10.2139/ssrn.908181.
Jensen, M.C, 2010. Value Maximization, Stakeholder Theory, and the Corporate Objective Function. Journal of Applied Corporate Finance, 22(1), pp.32-42, DOI: https://doi.org/10.1111/j.1745-6622.2010.00259.x.
Jiao, Y., 2010: Stakeholder Welfare and Firm Value. Journal of Banking & Finance, 34(10), pp.2549-2561, DOI: https://doi.org/10.1016/j.jbankfin.2010.04.013.
Johansson, S., Karlsson, A., Hagberg, C., 2015. The relationship between CSR and financial performance – A quantitative study examining Swedish publicly traded companies, Linnaeus University, Sweden.
Levin, A., Lin, C.F., Chu, C.S.J., 2002. Unit root tests in panel data: asymptotic and finite-sample properties. Journal of Econometrics, 108(1), pp.1-24, DOI: https://doi.org/10.1016/S0304-4076(01)00098-7.
Lin, C.H., Yang, H.L., Liou, D.L., 2009. The impact of corporate social responsibility on financial performance: Evidence from business in Taiwan. Technology in Society, 31(1), pp.56-63, DOI: https://doi.org/10.1016/j.techsoc.2008.10.004.
Lu, W.M., Wang, W.K., Lee, H.L., 2013. The relationship between corporate social responsibility and corporate performance: evidence from the US semiconductor industry. International Journal of Production Research, 51 (19), DOI: https://doi.org/10.1080/00207543.2013.776186.
Margolis, J.D., Walsh, J.P., 2003. Misery Loves Companies: Rethinking Social Initiatives by Business. Administrative Science Quarterly, 48(2), pp.268-305, DOI: https://doi.org/10.2307/3556659.
McWilliams, A. Siegel, D.S., 2001. Corporate Social Responsibility: A Theory of the Firm Perspective. Academy of Management Review, 26(1), pp.117-127, DOI: https://doi.org/10.5465/amr.2001.4011987.
Moon, S.G, Bae, S., Jeong, M.G., 2014. Corporate Sustainability and Economic Performance: an Empirical Analysis of a Voluntary Environmental Program in the USA. Business Strategy and the Environment, 23(8), pp.534-546, DOI: https://doi.org/10.1002/bse.1800.
Nollet, J., Filis, G., Mitrokostas, E., 2016. Corporate social responsibility and financial performance: A non-linear and disaggregated approach. Economic Modelling, 52(B), pp.400-440, DOI: https://doi.org/10.1016/j.econmod.2015.09.019.
Oh, W., Park, S., 2015. The Relationship Between Corporate Social Responsibility and Corporate Financial Performance in Korea. Emerging Markets Finance and Trade, 51(sup3), pp.85-94, DOI: https://doi.org/ 10.1080/1540496X.2015.1039903.
Order no. 1.938 of 17 August 2016 on the Amendment and Completion of Accounting Regulations, published in Official Monitor no. 680 of 2 September 2016.
Orlitzky, M., Schmidt, F.L., Rynes, S.L., 2003. Corporate Social and Financial Performance: A Meta-analysis. Organization Studies, 24(3), pp.403-441, DOI: https://doi.org/10.1177/0170840603024003910.
Renneboog, L., Horst, J. Ter, Zhang, C., 2008. Socially responsible investments: Institutional aspects, performance, and investor behaviour. Journal of Banking and Finance, 32, pp.1723-1742, DOI: https://doi.org/ 10.1016/j.jbankfin.2007.12.039.
Rodriguez-Fernandez, M., 2016. Social responsibility and financial performance: The role of good corporate governance. Business Research Quarterly, 19(2), pp.137-151, DOI: https://doi.org/10.1016/j.brq.2015.08.001.
Servaes, H., Tamayo, A., 2013. The impact of corporate social responsibility on firm value: The role of customer awareness. Management Science, 59(5), pp.1045-1061, DOI: https://doi.org/10.1287/mnsc.1120.1630.
Simionescu, L., Dumitrescu, D., 2014. Corporate social responsibility and financial crisis. Monetary, Banking and Financial Issues in Central Eastern EU Members Countries: How can Central and Eastern EU Members overcome the current economic crisis 2, pp.281-289, DOI: https://doi.org/10.1007/978-3-319-27573-4_41.
Skare, M., Golja, T., 2015. Corporate Social Responsibility and Corporate Financial Performance – Is There A Link?. Economic Research-Ekonomska Istrazivanja, 25(sup 1), pp.215-242, DOI: https://doi.org/10.1080/ 1331677X.2012.11517563.
United Nations Global Compact, 2012. Sustainable Stock Exchanges. A Report on Progress. Available at: https://www.unglobalcompact.org/docs/issues_doc/Financial_markets/Sustainable_Stock_Exchanges.pdf, las accessed 2018/02/22.
Wang, M., Qiu, C., Kong, D., 2011. Corporate Social Responsibility, Investor Behaviors, and Stock Market Returns: Evidence from a Natural Experiment in China. Journal of Business Ethics, 101, pp.127-141, DOI: https://doi.org/10.1007/s10551-010-0713-9.