The Empirical Research On The Relationship Between Corporates' Social Responsibility And Their Financial Performance

Corporate social responsibility is presently a new problem that china's enterprises face. Our country have made eye-catching achievements during more than thirty years'reform and opening up, which not only leads to the settlement of millions of people's food and clothing problem, but also make more and more people enter the wealthy class. The economic growth solves some of the old social problem, but other new social problems and social contradictions are spinging up. Some enterprises pay so much attention to profit goals that they neglect the variety of social responsibilities that they should bear. In order to realize the sustainable development of nature, economy and society, our country advances the scientific outlook on development and the construction of harmonious society in new period. This includes the social responsibility that should be taken on by enterprises. The performance and disclosure of corporate social responsibility of China's enterprises are still in its infancy. There are still some disparities compared with foreign countries. Therefore, the most important thing is to guide the enterprises to disclose the situation of undertaking social responsibility during the process of production and operation objectively, fairly and duly. This is conducive to the long-term development of the business as well as the establishment of the fair and reasonable new order of socialist market economy.The article defined corporate social responsibility according to the point of the maximum of stakeholders'interest. The interist has two main features:firstly, it can be expressed by currency; secondly, it is limited in certain scope of time and space, and is linked with specific accounting entities. The two traits aboved determine that the interest of stakeholders can be reflected and defined by financial statements. The article uses the theory of corporate life cycle for reference, and analyzes the relationship between corporate social responsibily and corporates'financial performance on the basis of dividing the enterprises in different stages. The empirical research uses the comination of investment and financing cash flows as standards to define the life cycle stage which the sample enterprise belongs to. The factor analysis was used to calculate the corporate social responsibility score as the explanatory variable, with financial performance being the dependent variable, a multivariate regression model was established. The relationship between corporate social responsibility and finacial performance was studied within certain life cycle stages, then relevant proposals was given.Results showed:(1) The listed companies in china are mainly in growing stage and declining stage, the amount are much greater than those in maturity stage. The distributing situation in three life cycle stages differs greatly among industries. (2) The finacial performance of enterprises in three life cycle stages shows a remarkable differences. Enterprises in maturity stage show the best finacial performance, in growing stage the finacial performance is a little worse, and in declining stage the performance is the worst. (3)Good implementation of social responsibility in current period would facilitate a better finacial performance in the same period. (4) It is found that good implementation of social responsibility in growing stage and maturity stage would facilitate a better finacial performance. However, this relationship is ambiguous for corporations in declining stage. (5) Good implementation of social responsibility in previous period has positive effects on accounting-based measures in present period, such as ROA and ROE. However, for market-based measures the effects are ambiguous.In view of the study, there comes the following proposals:(1) An enterprise should take social responsibilities in accordance with its life cycle. Enterprises in growing period and maturity period should undertake social responsibility of more extensive aspects, because this would be conducive to promote or maintain their financial performance. (2) The company's consciousness of social responsibility needs to be strengthened, they should be much more aware of the positive significance draws from social responsibility.The committee of corporate social responsibility should be established to examine and supervise the implementation of corporate social responsibility. (3) The information disclosure system of corporate social responsibily should be strengthened. An enterprise system both compulsory and voluntary should be established to further standardize the form and content of the information disclosure of corporate social responsibility, so the motivation and pressure of corporates to disclose social responsibility can be further enhanced.