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Well-Governed Sustainability and Financial Performance: A New Integrative Approach

Author

Listed:
  • Marian Siminica

    (Department of Finance, Banking and Economic Analysis, Faculty of Economics and Business Administration, University of Craiova, 13 A I Cuza Street, 200585 Craiova, Romania)

  • Mirela Cristea

    (Department of Finance, Banking and Economic Analysis, Faculty of Economics and Business Administration, University of Craiova, 13 A I Cuza Street, 200585 Craiova, Romania)

  • Mirela Sichigea

    (Department of Finance, Banking and Economic Analysis, Faculty of Economics and Business Administration, University of Craiova, 13 A I Cuza Street, 200585 Craiova, Romania)

  • Gratiela Georgiana Noja

    (Department of Marketing and International Economic Relations, Faculty of Economics and Business Administration, West University of Timisoara, East European Center for Research in Economics and Business, 16 Pestalozzi Street, 300115 Timisoara, Romania)

  • Ion Anghel

    (Department of Financial and Economic Analysis, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, 6 Piata Romana, 010374 Bucharest, Romania)

Abstract

This study investigates the interlinkages between the dimensions of corporate social responsibility (CSR-economic, environmental, social), financial performance (ROA, ROE), and corporate governance (CG), by applying the structural equation modeling technique (SEM). It is based on a sample of 614 large companies from the European Economic Area, covering specific indicators published by the Thomson Reuters database, for the years 2013–2017. The equation models are structured starting from isolated dependencies between variables, up to the global ones (direct, indirect, and total dependencies). The mixed results obtained imply that the nature and heterogenous content of CSR lead to different statistical dependencies for each of the two financial performance indicators. ROA is positively influenced by the economic dimension of CSR, but, the level of this rate does not necessarily contribute to an increase in the involvement of the company in this type of CSR actions. At the same time, ROA is influenced and affects in a negative way the environmental and social dimensions of CSR. In the case of ROE, it is influenced and impacts the economic and social dimensions in a positive way. The environmental dimension of CSR influences ROE positively, but it is negatively affected by this profitability rate. Corporate governance exerts a positive impact on all of the model’s variables, both as a direct and indirect factor of influence.

Suggested Citation

  • Marian Siminica & Mirela Cristea & Mirela Sichigea & Gratiela Georgiana Noja & Ion Anghel, 2019. "Well-Governed Sustainability and Financial Performance: A New Integrative Approach," Sustainability, MDPI, vol. 11(17), pages 1-21, August.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:17:p:4562-:d:259941
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    References listed on IDEAS

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    Cited by:

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    2. Loredana-Georgia Nițu (Ivan), 2024. "Evaluating the Interplay between ESG Practices and Corporate Financial Performance in America: The Industrial Sector," Journal of Financial Studies, Institute of Financial Studies, vol. 16(9), pages 194-204, May.
    3. Gratiela Georgiana Noja & Mirela Cristea & Cecilia Nicoleta Jurcut & Alexandru Buglea & Ion Lala Popa, 2020. "Management Financial Incentives and Firm Performance in a Sustainable Development Framework: Empirical Evidence from European Companies," Sustainability, MDPI, vol. 12(18), pages 1-22, September.
    4. Arthur J. Lin & Hai-Yen Chang & Brian Hung, 2022. "Identifying Key Financial, Environmental, Social, Governance (ESG), Bond, and COVID-19 Factors Affecting Global Shipping Companies—A Hybrid Multiple-Criteria Decision-Making Method," Sustainability, MDPI, vol. 14(9), pages 1-29, April.
    5. Elena Ionașcu & Marilena Mironiuc & Ion Anghel & Maria Carmen Huian, 2020. "The Involvement of Real Estate Companies in Sustainable Development—An Analysis from the SDGs Reporting Perspective," Sustainability, MDPI, vol. 12(3), pages 1-24, January.
    6. Andrea Lučić, 2020. "Measuring Sustainable Marketing Orientation—Scale Development Process," Sustainability, MDPI, vol. 12(5), pages 1-22, February.
    7. Ovidiu-Constantin Bunget & Dorel Mateș & Alin-Constantin Dumitrescu & Oana Bogdan & Valentin Burcă, 2020. "The Link between Board Structure, Audit, and Performance for Corporate Sustainability," Sustainability, MDPI, vol. 12(20), pages 1-27, October.

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