Does Corporate Social Responsibility Enhance Financial Performance? Evidence from Australia

Nguyen, Van Ha; Agbola, Frank W.; Choi, Bobae

doi:10.1111/auar.12347

Cited by 29 publications

(20 citation statements)

References 88 publications

(141 reference statements)

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Some researchers subscribe to Friedman's view on CSR and suggest that corporate social practices take away the managers' attention and corporate resources to maximize economic profits, hence decreasing financial performance (Friedman, 2007). Other researchers have argued that corporate social practices are aligning corporate practices with multiple stakeholders' expectations and will elicit stakeholders' positive responses, hence enhancing the likelihood CCSM 30,3 of gaining success in financial performance (G omez-Bezares et al, 2017;Nguyen et al, 2022;Rodriguez-Fernandez, 2016). Yet, some studies have reported null results between corporate social performance and corporate financial performance (Zhao and Murrell, 2016).…”

Section: Voluntary Sustainability Reporting and Financial Performancesmentioning

confidence: 99%

The cost of foreign ownership: Voluntary sustainability reporting and financial performance in an emerging economy

Liou

Ting

Chen

2023

CCSM

View full text Add to dashboard Cite

PurposeMany emerging economy firms are under foreign owners' pressure to embrace the challenges of addressing corporate social responsibility (CSR) and consider adopting sustainability initiatives. However, it is not clear how foreign ownership plays a role to enable or inhibit these emerging economy firms from translating sustainability initiatives into improved financial performance. Utilizing neo-institutional theory, the authors argue that emerging economy firms that voluntarily report sustainability gain legitimacy in the eyes of shareholders and improve stock market performance. However, emerging economy firms may not have the resources to reconcile the internal stakeholders' various legitimacy requirements to promote sustainability practices, resulting in a negative association with accounting performance. Foreign ownership attenuates the relationship between sustainability reporting and firm performance due to the different legitimacy requirements in foreign markets.Design/methodology/approachTo test the study’s hypotheses, the authors collected and analyzed a large sample of publicly listed firms between 2010 and 2016 in Taiwan where the types of foreign ownership include foreign trust funds, foreign financial institutions and other foreign legal entities. Regression analyses were conducted to investigate whether the firms that report their sustainable practices have better financial performance, including stock market performance and accounting performance. Additionally, a three-step procedure was employed to address the endogeneity issue with a binary explanatory variable.FindingsThe positive stock market reaction to the emerging economy firms' voluntary sustainability reporting supports legitimacy gained among investors. By contrast, sustainability reporting has a negative association with accounting performance due to the difficulty of reconciling different legitimacy requirements among various stakeholders in emerging economies. Further, foreign ownership, particularly the trust fund, exhibits a negative moderating effect on the relationship between sustainability reporting in aligning corporate practices with sustainable development goals (SDGs) and the company's stock market performance.Originality/valueBy examining the less tested contingent role played by foreign ownership in the emerging economy firms' sustainability reporting, the authors provide insights into the influence exerted by different types of foreign ownership on firms' financial performances beyond previous studies that focus on family ownership, state ownership, or managerial ownership in emerging economies. The findings shed light on corporate sustainability strategy and foreign direct investment policies for an emerging economy.

show abstract

Section: Voluntary Sustainability Reporting and Financial Performancesmentioning

confidence: 99%

The cost of foreign ownership: Voluntary sustainability reporting and financial performance in an emerging economy

Liou

Ting

Chen

2023

CCSM

View full text Add to dashboard Cite

show abstract

“…CSR disclosure can help to build an organisation's reputation for social responsibility (Ioannou and Serafeim 2016;Bianchi et al 2019;Nguyen et al 2021) and corporations can compete for capital (MacKey et al 2007) and for customers (Lee and Lee 2015;Bianchi et al 2019) based on their reputation for socially responsible activities. Lee and Lee (2015) distinguish between an organisation's minimal economic and legal standards (somewhat like meeting the minimum legitimacy threshold) and more exacting ethical and philanthropic standards.…”

Section: Corporate Culture/reputation Perspectivementioning

confidence: 99%

“…2019; Nguyen et al. 2021) and corporations can compete for capital (MacKey et al. 2007) and for customers (Lee and Lee 2015; Bianchi et al.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Corporate Tax Avoidance and Corporate Social Responsibility Disclosure Readability: Evidence from China

Wang

Cullinan

et al. 2022

Australian Accounting Review

View full text Add to dashboard Cite

Paying taxes to support the societies in which they operate is both a legal and ethical responsibility of business. Nevertheless, some companies work to avoid taxes, which could cause society to question the legitimacy of the organisation. Many companies provide reports on their corporate social responsibility (CSR) activities; more transparent CSR reports may help to restore the legitimacy loss associated with tax avoidance. We investigate the relationship between tax avoidance and CSR report readability among Chinese companies. We find a positive relationship between corporate tax avoidance and the readability of CSR reports. This relation is weaker among state-owned enterprises, which may have stronger pre-existing legitimacy owing to their relationship with the state. The relationship is also weaker among companies in less developed regions of China, which have less developed institutions to monitor organisational legitimacy. Overall, our results are consistent with the notion that CSR reporting represents an attempt to overcome legitimacy concerns arising from tax avoidance. Our findings indicate that tax avoidance and CSR reporting are alternative means of establishing legitimacy, rather than complementary reflections of an organisational culture that values (or devalues) CSR.Corporate social responsibility (CSR) refers to the actions designed by companies to improve their social and environmental conditions (Mackey et al. 2007). One aspect of CSR is a company's willingness to pay taxes to promote social welfare. If a company avoids paying its 'fair share' of taxes, the company can be considered a 'poor citizen' (Bankman 2004), and viewed as socially irresponsible (Huseynov and Klamm 2012). Avoiding taxes can therefore deviate from social expectations, reducing the trust of stakeholders and endangering corporate legitimacy (Lanis and Richardson 2013). CSR reporting may be a solution for managers to maintain (or regain) legitimacy among stakeholders (Bebbington et al. 2008;Chen et al. 2016) when they are avoiding taxes.Disclosure by management of CSR activities has drawn attention in both research and practice (i.e., Dhaliwal et al. 2011;Lys et al. 2015;Chen et al. 2018). CSR reporting can reduce information asymmetry and build stakeholder trust (Kim et al. 2012). More readable CSR reporting can help firms improve their communication with stakeholders about their legitimacy and compliance with social norms by using clear, plain and understandable language (Zhang et al. 2021). Zhang et al. (2021) also found that the reputational damage caused by financial restatements can be at least partially restored by more readable CSR reports. If the reputational damage from financial restatements can be offset by enhanced CSR readability, managers may perceive that the adverse effect of tax avoidance on corporate legitimacy can also be offset by more readable CSR reports. In this 'legitimacy gap' perspective, paying a fair share of taxes or providing transparent CSR disclosure could be alternative/substitute means for c...

show abstract

“…We should encourage industrial restructuring and energy structure optimization and further promote low-carbon city policies, which will benefit both shareholders and the whole society in the long term. 38,[50][51]…”

Section: Underlying Mechanismsmentioning

confidence: 99%

The impact of low-carbon policy on green manufacturing development

Liu

Liang

Chan

et al. 2022

Indoor and Built Environment

View full text Add to dashboard Cite

In September 2020, China announced its intentions to reach peak carbon emissions by 2030 and achieve carbon neutrality by 2060 (known as the ‘30–60’ greenhouse gas reduction goals). With a focus on China’s pilot low-carbon city initiative, this paper adopts the difference-in-differences approach to examine the effect of low-carbon policies on the green development of China’s manufacturing industry. The findings show that the implementation of low-carbon policies could significantly reduce pollutants and improve productivity. The results hold after a battery of robustness tests. Further analysis shows that the effect of low-carbon policies on the emissions reduction of larger taxpayers is more pronounced, suggesting that including low-carbon policies as a part of the government’s performance assessment weakens the opportunistic behaviour of local governments in pursuing economic growth at the expense of the environment. It also finds that manufacturing firms typically do not respond to the policy in a negative way (by limiting or reducing production) but instead achieve positive emissions reduction by increasing resource recycling. The findings of this paper provide empirical evidence and policy implications to support the government expanding its low-carbon policies to a national level to mitigate climate change and achieve green manufacturing development.

show abstract

Does Corporate Social Responsibility Enhance Financial Performance? Evidence from Australia

Cited by 29 publications

References 88 publications

The cost of foreign ownership: Voluntary sustainability reporting and financial performance in an emerging economy

The cost of foreign ownership: Voluntary sustainability reporting and financial performance in an emerging economy

Corporate Tax Avoidance and Corporate Social Responsibility Disclosure Readability: Evidence from China

The impact of low-carbon policy on green manufacturing development

Contact Info

Product

Resources

About