On the Relationship between CSR and Financial Performance : An empirical study of US firms

Abstract: Corporations  care  more  and  more  about  their social  responsible  performance,  and  this stands to reason. Conscience, business ethics and pressure of public opinion are playing important  roles. Furthermore,  some  evidence  shows that  better  CSR  performance  may bring the financial performance of a corporation to a higher stage. The purpose of this study  is  to  investigate  the  relationship  between  corporate  social  responsibility  (CSR) and corporate financial performance (CFP). Drawing on the triple bottom line principle and the stakeholder theory, we divided the stakeholders that corporations should take re-sponsibility  for  into  seven  categories: shareholders,  employees,  customers,  suppliers, creditors, community and environment (natural environment).  We  used  a quantitative  method  to  conduct the empirical  study. The  empirical  study  is based  on  samples  of 95 US  listed  firms.  We  have  used  seven CSR  indicators  as  inde-pendent variables and the CFP index as dependent variable. The independent variables concern CSR performance on shareholders, customers, suppliers, creditors, employees, community  and  environment.  SPSS  software  was  used  as  a  help for investigating  the correlation  between  the  dependent  variable  and  each  independent  variables.  We  run  a multi-index  regression  using  the  indexes  we  calculated  or  got  directly  from  databases. There is a significant positive short-term relationship between CSR for employees and CFP and a significant negative short-term relationship between CSR for community and CFP. Our  main  results  show  that the  seven  groups  of  stakeholders  (including  environ-ment) can be divided into three groups: fast responders, long term responders, and occa-sional supporter.