Study On The Relationship Between Corporate Social Responsibility And Corporate Financial Performance Under Media Coverage

Issues related to Corporate Social Responsibility have always been researched by scholars from different countries. However, researches on the relationship between Corporate Social Responsibility and Corporate Financial Performance have no unanimous conclusions until now. The reason is mainly due to the disunity of theoretical studies, methods and indicators. Stakeholder theory emphasizes the survival of the corporate environment is a symbiosis with other members such as consumers, community, government, environment and so on. They can either have a significant impact on the survival and development of enterprises, or they can be benefited or influenced by the companies. Stakeholder theory also emphasizes that different stakeholders can play different roles in the company and cause different degree of influences.In recent years, as the happenings of "Enron financial fraud incident","melamine milk"," lean meat","waste oil" and other corporate scandals, the role of media as a regulator cannot be ignored. The media plays much more important role in the regulation of the corporate scandals. The "Enron" accounting fraud case, which is first reported by the media and disclosed the inside story. The power of media coverage has been given the role of external regulation and corporate governance. More and more evidences show that media coverage can play a crucial role in regulating, improving corporate information disclosure, affecting corporate financial performance and influencing corporate governance.The purpose of this paper is to explore the relationship between Corporate Social Responsibility and Corporate Financial Performance under media coverage. Specifically, aiming to find the relationship between Corporate Social Responsibility and Corporate Financial Performance and the intermediary role of media coverage.Based on stakeholder theory, the paper calculated Corporate Social Responsibility index and chose return on assets (ROA) to measure Corporate Financial Performance. In order to study the impact of the lagged effects of media coverage, this paper hand-collected the previous period of negative media coverage. Then, begin to explore the relationship between Corporate Social Responsibility and Corporate Financial Performance under media coverage by empirical study.This paper can be divided into five chapters.The first chapter is the Introduction, which introduces research background, significance, methods, and the arrangement of this article in order to enable the reader to have a general framework.The second chapter is a literature reviews, including the literature about media coverage and the relevant literature on Corporate Social Responsibility and Corporate Financial Performance at home and abroad. Then draws a conclusion of the literature, which discovering the current limitations, achievements and future research directions in the related field.The third chapter is the theoretical analysis, including definition of Corporate Social Responsibility, stakeholder theory and the combination of them. It lays a solid theoretical foundation for the empirical study of the relationship between Corporate Social Responsibility and Corporate Financial Performance under Media Coverage.The fourth chapter is empirical study, using the number of negative reports to measure media coverage, calculating the Corporate Social Responsibility Index, selecting the total return on assets (ROA) to measure financial performance. This paper then creates an appropriate model to research the relationship between Corporate Social Responsibility and Corporate Financial Performance under media coverage.The fifth chapter is the conclusion, on the basis of empirical conclusion; the paper gives a brief summary of the full text and proposes relevant recommendations. Based on the review of the shortcomings of this article, this paper puts forward future research directions.This paper draws the following conclusions:First, higher(lower) levels of Corporate Social Responsibility can lead to higher(lower) levels of Corporate Financial Performance; higher(lower) levels of Corporate Financial Performance can lead to higher(lower) levels of Corporate Social Responsibility. From the perspective of input-output theory, assuming good Corporate Social Responsibility can make a good corporate external image, enhancing the influence of the companies, which means the rewards outweigh the costs; from the perspective of the strategy, higher levels of the Corporate Social Responsibility can build more competitive advantage; from the perspective of stakeholders, only companies assume good Corporate Social Responsibility for all stakeholders, including shareholders, employees, consumers, government, suppliers, creditors and other stakeholders, can they survive and develop better. From economic perspective, higher levels of financial performance of a company can guarantee the adequate funding to take more social responsibility; from time allocation point of view, better financial performance of a company can have more time and effort to focus on social responsibility; from strategic perspective, better financial performance of a company may have a more strategic vision of its chief executive officer, thus can invest more to the company’s sustainable development.Second, previous media coverage can play a regulatory role on the impact of current Corporate Social Responsibility to current financial performance; previous media coverage can enhance the impact of current Corporate Social Responsibility to current financial performance. It testified that media coverage plays a crucial role in the external regulatory and governance. When there had a negative report, the company will be under great pressure from the public and other parties, it will incline to fulfill its Corporate Social Responsibility actively in the next year in order to reduce the negative media coverage and establish a good public image. The enhancement of good public opinion can also improve its performance, especially financial performance.Based on the conclusions, the paper puts forward the following recommendations:First, from the perspective of media, it should continue to strengthen its external regulation and coverage in a more objective way.Second, from the perspective of government, it should strengthen legal construction related to Corporate Social Responsibility and improve regulations in order to urge enterprises to actively fulfill their social responsibilities.Third, from the perspective of enterprises, they should strengthen ideological sense of social responsibility, recognizing it is meaningful for a company to assume social responsibility either intentionally or from the reputation or other aspects. Furthermore, it is a win-win thing to assume social responsibility both for the company and all the stakeholders.Fourth, from the perspective of society, it should create a better social atmosphere so that more and more enterprises can assume more social responsibility in a voluntary way.The probable innovation of this paper is mainly reflected in the following aspects:First, this paper introduces the media coverage as a moderator variable. Predecessors study a lot on Corporate Social Responsibility and Corporate Financial Performance, but only a few of them introduce media coverage as a regulator variable. This not only makes the field of research about the media coverage has been supplemented, but also provides another perspective for research on Corporate Social Responsibility.Second, this paper based on the stakeholder theory which is put forward and developed by foreign scholars and refers to the methods of domestic scholars to calculate the Corporate Social Responsibility Index. Using media as an intermediary variable to explore the impact of Corporate Social Responsibility to Corporate Financial Performance of Chinese listed companies. It enriches the application of stakeholder theory in our national conditions.Third, in the study of media coverage of the intermediary role, this paper uses the "lag phase" model, taking the lagged effect of media coverage into account. This further clarifies the regulatory role of the media coverage in advance, which provides a new perspective in media-related field.