초록

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Abstract ▼ AI-Helper

The purpose of this study is to examine if there exists any systematic relation between corporate social responsibility(CSR) and financial performance. Based on the argument that CSR would play the role of mitigating conflicts between firms and society, we hypothesized that CSR would enhance the f...

The purpose of this study is to examine if there exists any systematic relation between corporate social responsibility(CSR) and financial performance. Based on the argument that CSR would play the role of mitigating conflicts between firms and society, we hypothesized that CSR would enhance the firms’financial performance. Specifically, the firms with higher CSR performance are predicted to have higher profitability, lower cost of capital, and higher firm values than those with lower CSR performance. These hypotheses were tested using 130 Korean firms over eight-year period(1998-2005). An index published by Korean Economic Justice Institute(KEJI) was used as the measure of CSR performance. Our empirical results suggest that the firms with higher CSR performance exhibit better financial performance as measured by return on asset (profitability) and Tobin’s Q(firm value). However, contrary to our prediction, CSR is positively related to the cost of capital. These results are robust across different measures of variables and testing methodologies.

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