An Empirical Research On Relationship Between CSR And Financial Performance

The issue of Corporate Social Responsibility (CSR) has received more and more recognition from both academy and business, business's concern focus on whether CSR has negative impact on corporate pursuing profit and whether business will find balance between them. Taking on social responsibility has been considered as a long term investment and a competitive means in foreign corporate. However, in the condition of the imperfect market economy system, many corporate hold an opinion that taking on social responsibility will increase corporate' burden and decrease their profits. The empirical research on the relationship between CSR and corporate financial performance (CFP) will provide the answers.This study starts from the concept of CSR with making retrospection and Stakeholder and summarizes the earlier research concerning the relationship between CSR and CFP, which particular emphasis on methodological inconsistencies.Secondly, this paper identifies and weights the stakeholders of corporation. In consideration of imperfect information disclosure of CSR in the company's annuals, the paper mainly analyzes the stakeholders of corporation from six aspects of government, employees, shareholders, creditors, customers and suppliers. Then, the paper constructs index system of CSR based on the accounting reports and describes the situation of CSR for each corporation based on the index system.Thirdly, empirical research has been done on the relationship between the CSR and CFP. The investigation based on data from a sample of 1097 companies from 2001 to 2004 in china. Through correlation analysis and regression analysis, empirical results shows that CSR has significantly positive relationship with CFP of the year, CFP last year has positive impact on the current CSR, and CSR previous year have positive impact on the current CFP. Based on the CSR index system, the paper describes the situation of CSR in China and finds out that CSR is positively related with CFP and there is a reciprocal causation between these two variables.