The Correlation Research Between Corporate Social Performance And Financial Performance

Since 1990s, with global corporate social responsibility movement flourishing, the traditional corporation theory faces a strong challenge. Corporate social responsibility has become an important research area of modern corporation theory. Corporations undertaking their social responsibilities not only directly affect the vital interests of stakeholders, but also have intimate connection to the entire community's survival, development and progress. Corporate social responsibility has become an unavoided topic to all the corporations. In this context, corporate social performance has increasingly become an important dimension in the evaluation of company fulfilling their social obligations by their stakeholders. Investigation on corporate social performance has become a hot research topic during the global management and academia areas. What is the relationsheep between corporate social performance and corporate financial performance? Can corporate social performance improvement promote the improvement of corporate financial performance? These studies play a great significance role in answering these questions, just as whether a company should take social responsibility? How to strengthen the building of corporate social responsibility, and which is the main purpose to this study.This study was in accordance with the research ideas that putting forward problems, analyzing and demonstrating problems and solving problems at last, analyze the relevant topics by qualitative analysis combined with quantitative analysis, normative analysis combined with empirical analysis, the specific research aspects included as followings:Firstly, this paper reviewed the domestic and foreign content on the definition of corporate social performance, the research literatures on the correlation between corporate social performance and corporate financial performance, and then this study gave the definition of corporate social performance and the theoretical basis to correlation research.Secondly, the paper mainly selected the listed companies in textile and garment industry as the research objects. At first, analyzing the current status of textile and garment industry, industry social responsibility construction and the characteristics of industry social responsibility, and than extracting three main factors by factor analysis from the nine indicators, which were used to measure corporate social performance in this study, at last getting the corporate social performance composite score by the conclusion of individual responsibility factors scores. Accounting indicators, such as ROE, profit margin, earnings per share, and Tobin Q value as market indicator were selected to measure Financial performance. In this study, the integrated score of corporate social performance and composite scores of each individual factor were used as dependent variables to study the correlation between corporate social performance and financial performance of textile and garment industry.In order to verify the correctness of the theoretical basis and assumptions, this study took advantage of correlation analysis and regression analysis and got a conclusion. The conclusion showed that the correlation coefficients between corporate social performance and financial performance were generally big and significant for the textile and garment industry listed companies, the regression coefficients were generally positive, which showed that positive and significant correlation between corporate social performance and financial performance did exist. This study got the same conclusion from the research between previous corporate social performance and current corporate financial performance, so the conclusion that corporate social performance improvement is conducive to promoting the improvement of corporate financial performance. And the research result, by the use of composite scores of each individual factor, was more significant than the integrated score of corporate social performance.Finally, according to the theoretical and empirical research results of the listed companies from textile and garment industry, this study gave several recommendations on the social responsibility construction for the textile and garment industry, in order to further promote the academic and practical development of corporate social responsibility, such as improving oversight mechanisms on the fullfilling of corporate social responsibility in textile and garment industry to all levels of government departments, establishing a sound information disclosure system for corporate social performance for the companies in textile and garment industry, establishing corporate social performance evaluation model according the characteristics of textile and garment industry, and the implement of corporate social performance report audition gradually.