Equal gains and pains? Analyzing corporate financial performance for industrial corporate social performance leaders and laggards

The literature has discussed how corporate social performance (CSP) may influence corporate financial performance (CFP). However, it is unclear whether stakeholder expectancy and subsequent stakeholder (dis)satisfaction may influence the CSP-CFP link. Using industrial average CSP as the proxy of stakeholder expectancy, we distinguish firms into industry CSP leaders (i.e., firms with CSP superior to industrial average CSP) and laggards (i.e., firms with CSP inferior to industrial average CSP). We ask whether industry CSP leaders and laggards experience asymmetric gains (i.e., increases in CFP) or pains (i.e., decreases in CFP) when having symmetric deviations from the industrial average CSP. We then theoretically draw on stakeholder theory and expectancy disconfirmation theory (EDT), and empirically conduct a series of analyses based on a longitudinal dataset. The findings show asymmetric CSP-CFP relationships for industry CSP leaders and laggards. The contributions and implications of this study are discussed.