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Corporate social responsibility, corporate financial performance and the confounding effects of economic fluctuations: A meta-analysis

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  • Huang, Kaixing
  • Sim, Nicholas
  • Zhao, Hong

Abstract

Due to public concerns and regulatory forces, managers are paying increasingly more attention to corporate social responsibility (CSR). Efforts to improve CSR are widely believed to be beneficial for increasing a firm's value; yet, evidence on how CSR affects corporate financial performance (CFP) has been mixed. To understand why the literature has been divided on the impact of CSR on CFP, we carry out a meta-analysis based on 437 primary studies. We discover that among various factors, much of the disagreement in the literature can be traced to the confounding influence of macro-level economic fluctuations, which were often overlooked by CSR-CFP studies. We show that if the primary studies are either unconfounded by economic fluctuations, or have addressed them econometrically, the non-consensus in the literature can be reconciled and the true positive effect of CSR on CFP can be observed.

Suggested Citation

  • Huang, Kaixing & Sim, Nicholas & Zhao, Hong, 2020. "Corporate social responsibility, corporate financial performance and the confounding effects of economic fluctuations: A meta-analysis," International Review of Financial Analysis, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:finana:v:70:y:2020:i:c:s1057521920301484
    DOI: 10.1016/j.irfa.2020.101504
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