Impact of corporate social performance on financial performance of manufacturing companies (IMC) listed on the Tehran Stock Exchange

Abstract

Purpose This study aims to investigate the impact of corporate social performance (CSP) on financial performance of manufacturing companies listed on the Tehran Stock Exchange and thus contributes to understanding the significance of socially responsible investments for companies. Design/methodology/approach The CSP was measured by a questionnaire composed of 53 items related to customers’ social performance of the firm, workers and environmental and community dimensions. Besides, corporate financial performance was measured by two measures, return on equity (ROE) and return on assets (ROA). In this study, 74 observations were investigated from 2006 to 2012. The data were analyzed using the multiple regression method. Findings The results of the study revealed that customers’ social performance of the firm has a negative impact on ROA of the firm. Besides, social performance of the workers dimension of the firm has a positive impact on ROA. The results, also, showed that none of the CSP dimensions affected the ROE of the firms. Originality/value The present study is useful for managers to develop future social performance policies that may lead to better financial performance in the long-term. The paper, also, contributes to the corporate social responsibility literature, as it presents empirical evidence of the effects of CSP on the financial performance in the manufacturing sector of developing countries.

The Effect of Partnership and Community Development Program on Financial Performance and Firm Risk: Evidence from Indonesian State-Owned Enterprises

“…In other words, the greater the realization of corporate spending for community development program, the higher the company's financial performance. The results of this study are consistent with last researches in other countries conduceted by Sadeghi (2015) in Tehran Iran, Tuppura et al (2016) in U.S and Chourou and Triki (2017) in Turkey.…”

“…They found that sample size and statistical methods were an important source of variations in measuring the relationship between CSR and the financial performance of 51 publications reviewed. Sadeghi (2015) who took a sample of research on firms in Tehran Stock Exchange revealed that the company's social performance for customers had a negative effect on the firm's ROA; in the meantime, the social performance dimension for employees or workers has a positive influence on ROA. US research conducted by Tuppura et al (2016) for the food, energy, forest and clothing industries found that there is a two-way causal relationship between CSR performance and financial performance.…”

“…Partnership Program and Community Development Program are types of CSR program conducted by SOE. Several studies have linked CSR relationships with firm performance (Orlitzky and Benjamin, 2001;Kempf and Osthoff, 2007;Surroca et al 2010;Melo, 2012;Sadeghi, 2015;Tuppura, 2016;and Chrourou and Triki, 2017). Other studies also linked CSR to the risks facing the company.…”

Responsabilidad Social Empresarial y Desempeño Financiero en la Industria del Plástico en Ecuador

“…Precisamente Sadeghi et al (2016) determinaron que ninguna de las dimensiones del RSE afecta el ROE de las empresas manufactureras; no obstante, el desempeño social en términos de clientes y trabajadores genera un impacto positivo y significativo en el ROA.…”

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