The relationship between disclosures of corporate social performance and financial performance : Evidences from GRI reports in manufacturing industry

• Whether the corporate social performance affect the financial performance is still unclear in many manufacturing companies. We commonly expect, on one side, that profitable corporations have stronger incentives to reveal information on the social performance in order to improve their publicity; on the other hand, companies may face the fear of rising costs due to Corporate Social Responsibility (CSR) activities. With increasing concerns of CSR, it is timely to investigate the relationship between the disclosure of corporate social performance and the financial performance. In this paper with the above study objective, we use Global Reporting Initiative (GRI) reports of 75 sample companies, collect evidences by applying the method of structured content analysis of the cases and attempt to identify this relationship. The corporate social performance is measured by the indicators according to the GRI guidelines, i.e. within the categories of Labor practices and decent work, Human Rights, Society as well as Product responsibility. Financial performance is measured by return on equity, sales growth and cash flow/sales ratio. Using statistical evaluation methods, our results indicate that the categories of Human Rights, Society as well as Product responsibility display a significant and positive correlation with the return on equity. Same conclusion also holds for many CSR indicators. Nevertheless, when examining the CSR practices across different manufacturing sectors, we have not observed significant differences. The study results are important for understanding the development and implementation of CSR practices in the manufacturing industry.

Subject headings

TEKNIK OCH TEKNOLOGIER  -- Maskinteknik -- Produktionsteknik, arbetsvetenskap och ergonomi (hsv//swe)

ENGINEERING AND TECHNOLOGY  -- Mechanical Engineering -- Production Engineering, Human Work Science and Ergonomics (hsv//eng)

NATURVETENSKAP  -- Geovetenskap och miljövetenskap -- Annan geovetenskap och miljövetenskap (hsv//swe)

NATURAL SCIENCES  -- Earth and Related Environmental Sciences -- Other Earth and Related Environmental Sciences (hsv//eng)

Keyword

Corporate social responsibility

Disclosures of social performance

Financial performance

Global Reporting Initiative

Empirical research

Publication and Content Type

ref (subject category)

art (subject category)