A Study On The Influence Of Corporate Social Responsibility On Financial Performance

Recently, governments, enterprises and non-profit organizations (NPOs) are paying more and more attentions to the issue of the social duty of corporate. Scholars have also done many further researches and yield very significant results. These, in a certain sense, have promoted the development of the corporate social responsibility movement, thus, making the importance of social duty been realized in the modern business environment. However, the phenomenon of not bearing social duty still happens frequently. Problems like safety of product’s quality, ecological environment destruction, labor issues and others are still deeply restricting the development of sustainable development. On the one hand, the main reason is that our market economic system is still not perfect. We haven’t set an evaluation and incentive mechanism which can drive our enterprises to take the initiative to undertake its corporate social responsibility.On the other hand, it’s because many enterprises are afraid that taking social responsibility will increase cost so that the financial performance will be influenced. The root of the problem is the relation between social responsibility and financial performance. Therefore, further study of the relations between corporate’s social duty and its financial performance is quite significant to the development of corporate social responsibility. Especially in2013, the3rd Plenum of the18th Communist Party of China put forward the " Actively develop a diversified ownership economy." against this historical background, it is the greater importance which studys on the consistency and difference of driving mechanism about the social responsibility of State-owned enterprises and private enterprises as well as the financial impact of the development of diversified ownership economy.Based on the Property-Right theory, the Stakeholder theory, the sustainable development theory and the mainstream idea of the academic circles, and taking our national conditions in to consideration, this article first defines corporate social responsibility and the nature of firm, airing the view of balance about corporate social responsibility. Then, the article deeply analyzes corporate social responsibility’s impact on financial performance, whether the nature of the corporate would effect the financial performance of corporate social responsibility, the risk as well as the sustainability of the financial performance of corporate social responsibility. This paper raises4hypotheses:1. Taking social responsibility is helpful for the increasing of corporate’s financial performance.2. The nature of corporate will not cause obvious changes for the impact of corporate social responsibility to its financial performance.3. Private corporation takes higher risk of their financial performance of corporate social responsibility than State-owned enterprises.4. The increase of financial performance of corporate social responsibility is not sustainable. At last, the paper takes China’s2009-2011listing corporations’social responsibility report as a sample, and2009-2013financial data, use economics, management as well as other knowledge comprehensively, adopt normative approach and positive approach, and makes positive research on the above four hypotheses.From the study of the relations between corporate social responsibility and financial performance, we found that the enterprises that act well on bearing social responsibility also have good financial performance. Good corporate social responsibility will have social responsibility financial effect.Through the empirical analysis of whether social responsibility financial effect will change with the different natures of enterprises or not. That is, is there any difference on this kind of effect between state-owned enterprises and private sectors? The research shows that this effect did not change significantly when the nature of enterprise changes. At the same time, the study also finds that the corporation social responsibility did not cause the effect of State-owned enterprise’s management cash flow) while it does affect the management (cash flow) of private enterprise. At last, it also studies that whether the financial performance of corporate social responsibility will change with the time. The conclusion demonstrates that as time went by, the positive impact of corporate social responsibility to financial performance will gradually weaken, which means that the increase of the financial performance on corporate social responsibility is not sustainable.While reaching the conclusion through theoretical analysis and positive study, we also get a lot of inspiration. That is under the Chinese characteristics socialist market economy, the sustainable development of enterprises must attach importance to stakeholders, to face up to public problems, pay attention to social capital effect and so on under the system of China’s socialist market economy. Meanwhile, the paper concluded it is the huge investment potential in the corporate social responsibility and social responsibility needs management and creative inspiration. Especially the enterprise’s financial performance of the social responsibility has promoted such promotion which does not change significantly because of the nature of the enterprise’s results.the conclusion will provide theoretical support for China’s deepening reform of diversified ownership.The Government should make clear the duty of the Government to establish social responsibility guidance mechanism for the strengthen construction of laws and regulations and to strengthen social responsibility drivers for the establishment of incentive mechanism of social responsibility and to perfect evaluation criteria of social responsibility for the social responsibility and to established evaluation mechanisms built social capital markets for the establishment of incubators of social responsibility, the enterprise should deal with stakeholder relations for the mechanism of social responsibility strategy and to strengthen the sense of corporate social responsibility and social responsibility for the Starting mechanism and to strengthen operating processes for the Operational Mechanism of social responsibility. There are3novelties in this paper:1. The paper raises the view of balance about social responsibility based on Chinese social and economic background and also through the comparison of enterprises’development logic of social responsibility at home and abroad. And the paper especially makes the novelly research on the definition of green profit, the corporate’s business thinking pattern and so on.2.Based on the above research, this paper, through various evidences, further proves that there are not obvious change of the financial performance of corporate social responsibility with the change of the nature of enterprise, which provides new evidences for the the control variable selection about the empirical study of corporate social responsibility and financial performance.3.This paper further confirms the corporate social responsibility on financial performance. It proves that the enterprises that act well on bearing social responsibility also have good financial performance. However it does not mean that the better the enterprise undertake corporate social responsibility, the better it financial performance is. The increase of corporate social responsibility’s impact on financial performance is not sustainable.