Corporate Social Responsibility and Financial Performance

What is it about?

The research investigates whether companies listed on the Johannesburg Stock Exchange's Socially Responsible Investment (SRI) Index show better financial performance. The study, covering the years 2009-2014, uses logistic regression to analyze the relationship. The findings suggest that being on the SRI Index doesn't necessarily lead to improved financial performance. However, there is a connection between larger companies and their presence on the SRI Index, indicating that bigger companies might be more capable of investing in social activities. In simpler terms, the study explores if socially responsible actions by companies directly translate to better financial outcomes, focusing on those listed on the JSE.

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Photo by Thought Catalog on Unsplash

Photo by Thought Catalog on Unsplash

Why is it important?

This research is important because it addresses a key question regarding corporate social responsibility (CSR): whether a company's commitment to socially responsible practices translates into better financial performance. Understanding this relationship is crucial for stakeholders, including employees and shareholders, who want assurance that their involvement with socially responsible companies brings financial benefits. The findings contribute to the body of knowledge on CSR and financial performance, revealing that being listed on the Johannesburg Stock Exchange's Socially Responsible Investment Index doesn't necessarily lead to improved financial performance. The research highlights the complexity of the relationship between CSR and financial outcomes, providing valuable insights for investors, businesses, and policymakers.