Corporate Social and Financial Performance: Empirical Evidence from American Companies

Globsyn Management Journal, Forthcoming

19 Pages Posted: 15 Oct 2009

Date Written: October 15, 2009

Abstract

The objective of this study is to address the issue of the relationship between corporate social and financial performance by moderating company size and financial leverage with the use of type of industry as control variable. The Corporate social performance (CSP/CSR) is measured using seven item developed initially by Michael Jantzi Research Associate, Inc and used by Mahoney and Robert (2007). To attain main research objective, the measure of CSP composite is used. Furthermore, company size, financial leverage, and type of industry are measured by total asset, degree of internal and external source to finance the company’s assets, and dummy variable (0 for non manufacture and 1 for manufacture), respectively. A moderated multiple regression model is used in the present study. Four models are developed in the study based on the theory of slack resource and good management. The result of the present study is that corporate social performance (CSP/CSR) has no effect on corporate financial performance (CFP) under slack resource and good management theory it is also shown that only financial leverage could moderate the interaction between CSP/CSR and financial performance (CSP). However, based on the overall analysis, it may be reasonable to come to conclusion that the relationship between CSP and financial performance is spurious as Orlitzki (2000) concluded.

Keywords: Corporate social performance, corporate social responsibility, financial performance, good management theory, stakeholder, and slack resource theory

JEL Classification: M19, M40, M49

Suggested Citation

Fauzi, Hasan, Corporate Social and Financial Performance: Empirical Evidence from American Companies (October 15, 2009). Globsyn Management Journal, Forthcoming . Available at SSRN: https://ssrn.com/abstract=1489494

Hasan Fauzi (Contact Author)

Sebelas Maret University ( email )

Jl. Ir. Sutami 36A
Kentingan
Surakarta, Jawa Tengah 57126
Indonesia

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