Corporate Social Responsibility Contract and the Impact of the Rating on Company Performance and Risk

28 Pages Posted: 21 May 2020

See all articles by Yuqing Zhao

Yuqing Zhao

University of Western Ontario

Date Written: April 23, 2020

Abstract

In this paper, I determine the compensation component of the corporate social responsibility (CSR) contract that can improve CSR rating the most by considering two types of the contract. Based on my results, I find that for objective contracts and subjective contracts, the best-performing component is ethical conduct and social responsibility respectively. In addition, I study how the CSR performance affects firm financial performance and financial risk. From the regression results, I can conclude that both large and small firms with high CSR ratings tend to have a better financial performance, in terms of ROA, and the impact of CSR on small firms tend to be slightly higher. The relationship between CSR performance and risk is not significant, which may be explained by several reasons mentioned at the end of the paper.

Keywords: Corporate Social Responsibility, Compensation Component, CSR Contract, Firm Financial Performance, Firm Risk Measures

JEL Classification: G30

Suggested Citation

Zhao, Yuqing, Corporate Social Responsibility Contract and the Impact of the Rating on Company Performance and Risk (April 23, 2020). Available at SSRN: https://ssrn.com/abstract=3584046 or http://dx.doi.org/10.2139/ssrn.3584046

Yuqing Zhao (Contact Author)

University of Western Ontario ( email )

1151 Richmond Street
Suite 2
London, Ontario N6A 5B8
Canada

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
46
Abstract Views
267
PlumX Metrics