Research On The Relationship Between Corporate Social Responsibility And Financial Performance

Recently, with the development of society and the rise of consumer’s awareness, corporate social responsibility is gradually becoming the focus of social attention. In abroad, some companies treat their fulfillment of corporate social responsibility as a long-term investment and means for competition. Yet in China, our corporate social responsibility movement is still in its infancy, still the sense of social responsibility is in the growth, many companies even take the initiative to publish their Corporate Social Responsibility Report and Sustainability Report.However, there are still many arguments about whether an enterprise should take the initiative to shoulder social responsibility or not. Some scholars insist that corporate social responsibility will increase the cost, and eventually lowering the financial performance of the enterprise. So it is necessary and meaningful to research inter-relationship between financial performance and corporate social responsibilities. This will affect the enthusiasm of corporates’fulfillment of its social responsibilities. This paper dedicates to studying the relationship between social responsibility and financial performance, and so to provide constructive advice for social responsibility fulfillment during the growth of the company.Based on stakeholder theory, first we will identify the key stakeholders of the enterprise. Then, an evaluation index system and a multiple linear regression model will be established from the financial aspect to represent the inter-relationship between corporate social responsibility and its financial performance. To validate the model, we will construct a statistic sample with the companies in food and beverage industry, which are listed in Shanghai Stock Market and ShenZhen Stock Market during2008to2010. Dataset is built with the data from CSMAR databases. Finally, through correlation analyses and regression methods, we will discuss the relationship between financial performance and social responsibility of a company to see how they interact with each other. Results from the empirical research indicate that: corporate social responsibility and financial performance are positively correlated. Hysteresis effect is recognized in this study, but is not significant enough according to the results. This might be caused by the industry variance and small population of the sample.