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
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
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