Corporate Social Responsibility and Corporate Performance: Evidence from a Panel of Us Listed Companies

57 Pages Posted: 27 Dec 2005

See all articles by Leonardo Becchetti

Leonardo Becchetti

University of Rome Tor Vergata - Faculty of Economics

Stefania Di Giacomo

University of Rome Tor Vergata - Faculty of Economics

Damiano Pinnacchio

University of Rome Tor Vergata - Faculty of Economics

Date Written: December 2005

Abstract

We investigate whether inclusion and permanence in the Domini social index affects corporate performance on a sample of around 1,000 firms in a 13-year interval by controlling for size, industry, business cycle and time invariant firm idiosyncratic characteristics. Our results find partial support to the hypothesis that corporate social responsibility is a move from the shareholders wealth to a multistakeholders welfare target. On the one side, permanence into the Domini index is shown to increase (reduce) significantly total sales per employee (returns on equity but not when large and R&D investing firms are excluded from the sample). On the other side, lower returns on equity for Domini firms seem nonetheless to be accompanied by relatively lower conditional volatility and lower reaction to extreme shocks with respect to the control sample.

An explanation for these findings, suggested by the inspection of Domini criteria, is that social responsibility implies, on the one side, decisions leading to higher cost of labour and of intermediate output, but may, on the other side, enhance involvement, motivation and identification of the workforce with company goals with positive effects on productivity.

Keywords: social responsibility, stakeholders, corporate performance

JEL Classification: M14, L21

Suggested Citation

Becchetti, Leonardo and Di Giacomo, Stefania and Pinnacchio, Damiano, Corporate Social Responsibility and Corporate Performance: Evidence from a Panel of Us Listed Companies (December 2005). CEIS Working Paper No. 78, Available at SSRN: https://ssrn.com/abstract=871402 or http://dx.doi.org/10.2139/ssrn.871402

Leonardo Becchetti (Contact Author)

University of Rome Tor Vergata - Faculty of Economics ( email )

Via Columbia, 2
I-00133 Rome
Italy

Stefania Di Giacomo

University of Rome Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy

Damiano Pinnacchio

University of Rome Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
2,203
Abstract Views
8,339
Rank
12,811
PlumX Metrics