Social Responsibility and Financial Performance: The Role of Good Corporate Governance

By Mercedes Rodríguez-Fernández. 2016

417 citations recorded by the source corpus.

The objective of this theoretical-empirical study is to investigate the bidirectional relationship between Corporate Social Responsibility and Financial Performance in Spanish listed companies. A complete theoretical framework – based on agency, stewardship, dependency resources, and stakeholder theories – provides the basis for the conceptual model. An important contribution is the use of a social behavioral index formed by four components: Global Reporting Initiative participation, Dow Jones Sustainability Index firm inclusion, Good Corporate Governance Recommendations compliance, and Global Compact signee. The conclusions drawn from the empirical study performed on the companies registered on the Madrid Stock Exchange demonstrate positive relationships in both directions, namely that the social is profitable and that the profitable is social, thereby originating a positive feedback virtuous circle. The results of this analysis have practical applications in the boardroom; they are proof that all social policies increment financial resources, and vice versa, that increased financial performances lead to greater social benefits. As a consequence, this paper encourages all board members to seriously weigh investing financial resources in developing policies that boost the levels of social behavior components in order to contribute globally to the improvement of society.

Subfields: Accounting, Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/b18cdbb2692e66752d1c2a0ffba92e28f711967b

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Citations in the corpus

Corporate governance and firms financial performance in the United Kingdom (2020, methodology): “Tobin’s Q also captures investors’ expectations to future events, including evaluation of current business strategies (Rose-Ackerman, 1973; Demsetz and Villalonga, 2001; Ehikioya, 2009; Christensen et al., 2010; Rodriguez-Fernandez, 2016).”
The link among board characteristics, corporate social responsibility performance, and financial performance: Evidence from the hospitality and tourism industry (2020, background): “Abundant studies have addressed the links between BC and CSR practices, particularly regarding environment-focused firm practices (Bose, Khan, Rashid, & Islam, 2018; Post et al., 2011; Rodriguez-Fernandez, 2016; Wang & Sarkis, 2017).”
Environmental policy, environmental performance, and financial distress in China: Do top management team characteristics matter? (2018, background): “…distress The role of corporate governance varying mechanism in improving firm’s financial performance is evident in both developed and developing markets (Ntim, 2016; Ntim et al., 2012; Ntim and Soobaroyen, 2013a & 2013b; Price and Sun, 2017; Rodriguez-Fernandez, 2016; Wang and Qian, 2011).”
Environmental, Social and Governance (ESG) Scores and Financial Performance of Multilatinas: Moderating Effects of Geographic International Diversification and Financial Slack (2019, background): “2009; Lo and Sheu 2007; Rodriguez-Fernandez 2016; Wang and Sarkis 2017), certain researchers have found negative effects (Branco and Rodrigues 2008; Brammer et al.”
Corporate Social Performance and Firm Performance: Comparative Study among Developed and Emerging Market Firms (2019, background): “Advocates of socially responsible actions showcased the benefits that firms receive through improved financial performance [1].”