| This dissertation undertakes an empirical examination of the application of stakeholder theory and investigates two pertinent research questions: (1) what are the institutional and community determinants of banks' community stakeholder performance? and (2) does investing in community stakeholder performance have detrimental effect on banks' shareholders performance? This research provides a better understanding of the factors explaining the variability of banks' commitment and involvement with a key stakeholder, namely the community, and examines a major contention of stakeholder theory, specifically that a firm could enhance the interest of relevant stakeholders without hurting shareholders' interests. Considering that community performance is a key determinant of corporate social performance, the study also helps in advancing the knowledge about banks' social performance.; Among the various determinants analyzed, the study hypothesized and found significant positive relationships between profit, M&A, competition, institutional imitation, and banks' community stakeholder performance. It also hypothesized and found a significant negative relationship between bank size, risk, black minority, income level and banks' community stakeholder performance. Finally, further results found that investing in community stakeholder performance has no detrimental effect on banks' shareholder performance. Rather the results supported a positive relationship. This latest finding reinforced the perception of stakeholder theorists that balancing the relationship with key stakeholders could have a positive impact on financial performance. |
