Original Research
Corporate social responsibility and financial performance: Evidence from the Johannesburg Stock Exchange, South Africa
Submitted: 21 February 2017 | Published: 18 October 2018
About the author(s)
Elda du Toit, Department of Financial Management, University of Pretoria, South AfricaKarabo Lekoloane, Department of Financial Management, University of Pretoria, South Africa
Abstract
Background: Stakeholders are increasingly concerned whether the companies they are involved with act in a socially responsible way. However, stakeholders like employees and shareholders also have a direct financial interest in those companies and need to be assured that company actions bring forth some financial benefit.
Aim: The research investigated one of the main questions surrounding the concept of corporate socially responsibility, namely whether a company’s investment in and effort towards corporate social responsibility results in improved financial performance. The purpose of this study was to narrow the gap in the body of knowledge in relation to corporate social responsibility and its relationship to financial performance.
Setting: This research investigated whether there was a relationship between being listed on the Johannesburg Stock Exchange (JSE) Socially Responsible Investment (SRI) Index and financial performance. The unit of study comprises 885 company-years of companies listed on the JSE over the period 2009–2014.
Methods: Logistic regression was used to find evidence of a relationship between a listing on the JSE SRI Index and financial performance.
Results: It is evident that there was no real relationship between inclusion on the JSE SRI Index and financial performance, but there was a direct relationship between the size of a company and having a listing on the JSE SRI Index.
Conclusion: A listing on the JSE SRI Index does not have a clear and direct impact on financial performance, but it appeared that larger companies are perhaps better able to invest in corporate social activities and are, as a result, more likely to be listed on the JSE SRI Index.
Keywords
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Crossref Citations
1. SUSTAINABLE METAMORPHOSIS: EXAMINING SUSTAINABILITY TRANSFORMATION INTO VALUE OF FINANCIAL INSTITUTIONS
Indrė Lapinskaitė, Viktorija Skvarciany
Journal of Business Economics and Management vol: 24 issue: 5 first page: 923 year: 2023
doi: 10.3846/jbem.2023.20665