The linkage between corporate social performance and corporate financial performance

Abstract

The concept of corporate social responsibility (CSR) emerged in the early 20th century in the U.S. However, a specific connotation of CSR has not been unified, though the norms and standards related to CSR are developing now. There are more Taiwanese enterprises participating in caring communities, and contributing to the community with specific actions to publicize their CSR related activities. Previous empirical studies have indicated an unclear relationship between CSR and financial performance, and literature has pointed out that innovation has a great impact upon CSP and corporate financial performance (CFP) . Therefore, size and R&D (research and development) are adopted in this study as control variables to investigate the relationship between CSP and CFP. In this study, companies listed in the TSEC Taiwan 50 Index and TSEC Taiwan Mid-Cap 100 Index are included as samples to analyze the link between CSP and CFP, and regression analysis is used in this study. The results of this study point out that previous CSP has positive impact on the return on assets for the next period, however, previous CFP has nothing to do with the latter CSP. In considering R&D and size, the previous CSP has a positive correlation with the latter return on assets. In addition, CSP has a negative correlation with return on equity in the financial industry, and CSP has nothing to do with CFP in the electronic industry.