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| Could Corporate Social Responsibility Act as Insurance for Financial Performance? |
Sandy Yu-Rung Yang ,Yuan Chang, Sean Te-Hsun Lin
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Abstract:
Though empirical research on the relationship between corporate social responsibility (CSR) and financial performance (FP) did exist, there has been inconsistence in whether doing CSR is rewarded by improved performance. Recently, there has been a lack in research on whether the effects of CSR actions are more salient in the economic upturn or downturn although previous research reveals that CSR could act as insurance for performance during abnormal time (such as downturn or firm-specific unexpected negative events) [1]. Based on the data of TWSE-listed companies during 2005Q1~2010Q3, we examine whether CSR firms outperform NonCSR firms during recession via regression analysis. The findings reveal that during upturn, firms with CSR outperform NonCSR firms, whereas during downturn, performance of all firms is decreased. However, the degree of performance superiority of CSR firms, though present, is insignificant during downturn. Therefore, our findings did not support that financial performance can be improved by firms’ social responsibility actions during economic downturn.
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