Corporate Social Responsibility and Corporate Financial Performance

Abstract

In the recent decade, the study of the relationship between corporate social responsibility (CRS) and firm’s financial performance has been a hot topic in the academic world. This study examines the linkage between corporate social responsibility (CSR) and corporate financial performance. In this study, we investigate the relationship by analyzing the correlation of the corporate social responsibility rating based on KLD scores and several financial performance measurements based on accounting measures. The result indicates that there are significant correlations between corporate social responsibility and corporate financial performance. Though, this study does not explore the direction of the causality between them, where further research can be done to have a better understanding of the relationship.