The Inverted U-shaped Impact of Corporate Social Responsibility on Corporate Performance

Xindong Zhang¹ and Ruiyun Guo^1,

¹School of Economics and Management, Shanxi University, Taiyuan, China

Cite this paper:
Xindong Zhang and Ruiyun Guo. The Inverted U-shaped Impact of Corporate Social Responsibility on Corporate Performance. Journal of Finance and Economics. 2018; 6(2):67-74. doi: 10.12691/jfe-6-2-5

Abstract

With the development of economic globalization, economic growth, industry upgrading, deepening exchanges and cultural integration have important influence on the company’s traditional values and responsibilities. Paying more attention to natural resources, ecological environment, workers' rights and business ethics, and taking more responsibility to stakeholders and society have become the trend of global enterprise development. Since ancient times, China has had a humanistic tradition of “shoulder social responsibilities”. The moral idea of "Enjoying the world afterwards" requires leaders from all walks of life to consider social factors fully. The purpose is to achieve harmony between human and nature, as well as human and society. This is not only the common responsibility of global companies, but also the inherent requirement for building a harmonious society in China. Based on the perspective of stakeholders, this paper uses 2,618 observations of companies listed on GEM from 2010 to 2016 to empirically test the impact of corporate social responsibility on corporate performance. This study finds that the relationship between corporate social responsibility and corporate financial performance is inverted U-shaped, and accounting indicators have stronger explanatory power than market indicators.

Keywords:
social responsibility accounting performance market performance

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