Does Corporate Socfial Responsibility Pay Off?

In this article, we examine the effect of corporate social responsibility on firm’s financial performance. Previous empirical research, when comparing the financial performance of CSR-firms and NonCSR-firms, did not control the impact of other firm characteristics, so the results may be distorted by these characteristic differences and face a sample selection bias problem.We select108manufacturing companies included in the Shenzhen and Shanghai index of corporate social responsibility as our sample, and in order to ensure the CSR-effect is not contaminated by other factors or samples are randomly drawn, we employ the propensity score matching methods. Results indicate that the financial performance of CSR-firms is significantly better than NonCSR-firms. There is evidence that corporate social responsibility behavior can improve financial performance.