Do Investors Value a Firm's Commitment to Social Activities?

Waymond Rodgers, Hiu Lam Choy, Andrés Guiral

Research output: Contribution to journalArticlepeer-review

105 Citations (Scopus)


Previous empirical research has found mixed results for the impact of corporate social responsibility (CSR) investments on corporate financial performance (CFP). This paper contributes to the literature by exploring in a two stage investor decision-making model the relationship between a firm's innovation effort, CSR, and financial performance. We simultaneously examine the impact of CSR on both accounting-based (financial health) and market-based (Tobin's Q) financial performance measures. From a sample of top corporate citizens, we find that: (1) a firm's social responsibility commitment (CSR) contributes to its financial performance; (2) after controlling for investment in innovation activities, CSR continues to have a positive impact on a firm's financial performance; (3) the customer dimension of CSR has a positive effect on both CFP measures, whereas the employee dimension indicates a significant impact only on financial heath; and (4) the community relation dimension of CSR only affects the market-based CFP measure of firms with high innovation intensity.

Original languageEnglish
Pages (from-to)607-623
Number of pages17
JournalJournal of Business Ethics
Issue number4
Publication statusPublished - 2013 Jun

Bibliographical note

Funding Information:
Acknowledgments We would like to thank Daniel Korschun, Anthony Curatola, Cristina Abad, Emiliano Ruiz, Jose A. Gonzalo and participants at the 14th Ethics Symposium, 31st Annual Congress of the European Accounting Association, 2009 Annual Meeting of the American Accounting Association, and the 3rd World Business-Ethics Forum for their helpful discussions and suggestions. We are also grateful to the judge panel of the Social and Environmental Accounting Section of the 31st Annual Congress of European Accounting Association for granting us the Best Paper Award, the 14th Ethics Symposium of 2009 American Accounting Association Annual Conference for the honorable mention, and for the Special Research Mention at the 2010 Spanish Accounting Professors Association Meeting. This study was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2012-S1A3A2-2012S1A3A2033412). Andrés Guiral acknowledges financial contribution from the Spanish Ministry of Innovation and Science (research projects SEJ2004-00791ECON, SEJ2007-62215/ ECON/FEDER, SEJ 2006-14021, ECO2010-17463 ECON-FEDER).

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Business, Management and Accounting(all)
  • Arts and Humanities (miscellaneous)
  • Economics and Econometrics
  • Law


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