An Empirical Research On The Relationship Between Corporate Social Responsibility (CSR) And Financial Performance

Since the reform and open to the outside world, China has been developing in leaps and bounds, and these achievements come from the birth and development of enterprises. As important participants in the market, enterprises continuously create material and spiritual wealth. Under these circumstances many problems arise, such as a series of fake and shoddy products, problems of production safety, environmental pollution and other exogenous problems. Social Responsibility has become a hotspot of common concern to today’s theorists and practitioners.Since the1820s, Chinese scholars attached importance to corporate social responsibility. Compared with foreign scholars, the research seems to be untargeted, and the majority research is qualitative rather than quantitative. Many scholars used the experience of other countries for reference rather than for Chinese unique national conditions.Today, our government and the general public are calling for implementation of corporate social responsibility. Then questions are brought up:what’s the content of social responsibility? How to assess the result of fulfilling corporate social responsibility? What’s the affect corporate social responsibility have on the financial performance? This paper attempts to solve these questions.This thesis is based on stakeholder theory, and takes the listed companies of the food and beverage industry as the sample. The main research concentrates in the affect corporate social responsibility have on the financial performance, specifically divided into the following six parts, and the main content and viewpoint of each part are as follows:Part I:Introduction. This section describes the research background of this topic, which is put forward as the present situation of Social Responsibility in China. It has a major significance in theory and practice. In this part, research and research methods of this article is proposed, and a brief introduction is offered. Part II:Literature Review. By reading and organizing related literature, I summarize concept of domestic and international organizations, academics and corporate social responsibility, and sketch out the stakeholder theory. Corporate social responsibility and stakeholder theory was originally two separate research areas. Since the scholars of these two theories combined them, it’ll be clearer that the enterprise on which the principal should assume social responsibility and stakeholders of different type should assume what kind of social responsibility. Based on stakeholder theory, this paper divides corporate social responsibility into the six dimensions, providing a theoretical basis for the empirical part.Part III:Analysis of the status quo about the food and beverage industry and its social responsibility. Combined with unique national conditions, introduce the food and beverage industry trends and the listed companies in the industry and analysis the status quo of corporate social responsibility among the industry. Although putting more emphasis on the fulfillment of corporate social responsibility, there are still many problems in actual operation for the different motives and goals exist in the industry. The fulfilling of corporate social responsibility is not consistent, attaching less importance to the issue, encroaching on consumer rights and interests by fake and shoddy products, ignoring the damage to environment, and so on. On the contrary some companies actively fulfill their social responsibilities. In the paper, I analyze the motivation and influencing factors of the behavior.Part IV:The empirical design. According to the theoretical basis corporate social responsibility is divided into five dimensions of investors, employees, governments, suppliers, consumers and the public. And then to establish a theoretical model based on the stakeholder theory. Select Main Board listed companies of food and beverage industry in the Shenzhen Stock Exchange and the Shanghai Stock Exchange as the sample. The main source of data is the actual data disclosed in the Annual Report. Select accounting indicators and market ones to study the financial results across-the-board and better measure corporate financial performance. In selecting social responsibility indicators, the main consideration is about the enterprise status, the characteristics of the food and beverage industry, as well as the availability of data.Part V:Empirical test. In this paper, SPSS16.0statistical analysis software is used. Deal with the relevant variables of the sample chosen with the method of descriptive statistics, correlation analysis and multivariate linear regression. In this paper, I consider that fulfilling the social responsibility will not only affect the current state of the corporate, but also may have a lag affect on the financial results in the future. Based on this hypothesis, this paper is divided into three groups to analysis separately:the influence to financial performance during the current period made by enterprise’s social responsibility fulfilled during the current period、the influence to financial performance during the next period made by enterprise’s social responsibility fulfilled during the current period、the influence to financial performance during the next two period made by enterprise’s social responsibility fulfilled during the current periodPart VI:The research conclusions, recommendations, research limitations and prospects. Through the empirical research, conclusions is summarized as: using market indicators to measure the goodness of fit of the regression results of corporate financial performance was significantly higher than using accounting indicators, indicating that corporate social responsibility are much able to explain market performance of companies; generally speaking, fulfilling social responsibility will increase the financial performance of enterprises, for fulfilling the claim of corporate investors, employees, government and suppliers can increase a company’s financial performance, of consumers won’t increase the performance remarkably which can not verify the hypothesis; In the analysis of corporate’ fulfilling the claim of public, the regression results only in the current accounting indicators to measure financial results inconsistent with the hypothesis, while the other results showing positive correlations consistent with the hypothesis. Social donation will result in the reduction of current profits, but can provide a good reputation, visibility and other advantages, and then increase the company’s financial performance in the visible future. Based on the regression results and the characteristics of the food and beverage industry, I put forward specific proposals in the following four aspects, such as government regulation, industry promoting, corporate self-regulation and public concern, which can be used to provide recommendations for promoting the performance of China’s food and beverage industry in social responsibility.This thesis has the following main contributions: (1)The research contents and sample selection. The research about social responsibility and financial performance is common, but after comprehensively reading the literature, I find that there are more qualitative research rather than quantitative analysis, more general overview rather than rarely targeted analysis and the of research findings have not been unified yet. In China, research about corporate social responsibility and financial performance is few related to us. Under this condition, selecting food and beverage industry as a research sample not only will avoid the impact of multi-industry differences, but also accumulate data for further theoretical research and provide targeted stakeholders references in decision-making, management and other aspects.(2)The design of the research methods. In China, because the social database data such as KLD is not available, it is difficult to quantify the social responsibility of listed companies. According to stakeholder theory, I measure the corporate social responsibility through dimension as investors, employees, governments, suppliers, consumers and the public’s.(3)The choice of indicators and variables. There are many indicators to Measure corporate financial performance, such as ROA, ROE, EPS, Tobin Q. previous studies mostly focus on single accounting indicators, but this thesis use both accounting indicators and market indicators to measure financial performance, and introduce enterprises scale, corporate nature, the growth, financial results of the last period as control variables into the model to make the model more complete and to make the conclusion more convincing.(4)This paper confirmed that the impact on the financial performance of listed companies’fulfilling their social responsibilities. Taking into account the effect of this influence may be manifested in the current financial performance as well as the later period, this paper explore the impact of the current corporate social responsibility on the current financial performance and analysis of the impact of corporate social responsibility to the next financial results.The main limitations of this thesis are:(1)Subjective factors exist in the selection and measure of indicators. Because the social database data such as KLD is not available, it is difficult to quantify the social responsibility of listed companies. Though I measure the corporate social responsibility through six dimensions, there are many subjective factors exist in the selection.(2)In order to improve the relevance and comparability, this paper only selected listed companies of food and beverage industry in Shenzhen and Shanghai Stock Exchange as samples, as a result the researcher range is a bit of narrow and the regression results are not used broadly. On the other hand whether the results can be extended to all companies in food and beverage industry, as well as all medium and small enterprises, is a question which is worthy of argument.