Corporate Social Responsibility and Corporate Financial Performance: Evidence from Korea

Australian Journal of Management, Vol. 35, No. 3, pp. 291-311, 2010

Posted: 2 Apr 2011

See all articles by Jong-Seo Choi

Jong-Seo Choi

Pusan National University

Young-Min Kwak

Pusan National University

Chongwoo Choe

Monash University - Department of Economics

Date Written: December 1, 2010

Abstract

This paper studies the empirical relation between corporate social responsibility (CSR) and corporate financial performance in Korea using a sample of 1222 firm-years during 2002-2008. We measure corporate social responsibility by both an equal-weighted CSR index and a stakeholder-weighted CSR index suggested by Akpinar, et al. (2008). Corporate financial performance is measured by return on equity, return on assets, and Tobin’s Q. We find a positive and significant relationship between corporate financial performance and the stakeholder-weighted CSR index, but not the equal-weighted CSR index. This finding is robust to alternative model specifications and several additional tests, providing evidence in support of instrumental stakeholder theory.

Keywords: corporate financial performance, corporate social responsibility, instrumental stakeholder theory, KEJI index

Suggested Citation

Choi, Jong-Seo and Kwak, Young-Min and Choe, Chongwoo, Corporate Social Responsibility and Corporate Financial Performance: Evidence from Korea (December 1, 2010). Australian Journal of Management, Vol. 35, No. 3, pp. 291-311, 2010, Available at SSRN: https://ssrn.com/abstract=1800807

Jong-Seo Choi (Contact Author)

Pusan National University ( email )

College of Business
Kumjungku, Pusan 609-735
Korea

Young-Min Kwak

Pusan National University ( email )

mulgeumup beomyeli
Pusan 609-735, 50612
Korea, Republic of (South Korea)

Chongwoo Choe

Monash University - Department of Economics ( email )

Department of Economics
PO Box 197
Caulfield East, Victoria 3145
Australia
+61 2 9903 1125 (Phone)
+61 2 9903 1128 (Fax)

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