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Corporate social responsibility and corporate financial performance: Evidence from Korea

Author

Listed:
  • Jong-Seo Choi

    (College of Business, Pusan National University, South Korea)

  • Young-Min Kwak

    (College of Business, Pusan National University, South Korea)

  • Chongwoo Choe

    (Department of Economics, Monash University, Australia, Chongwoo.Choe@buseco.monash.edu.au)

Abstract

This paper studies the empirical relation between corporate social responsibility (CSR) and corporate financial performance in Korea using a sample of 1222 firm-years during 2002—2008. We measure corporate social responsibility by both an equal-weighted CSR index and a stakeholder-weighted CSR index suggested by Akpinar et al. (2008). Corporate financial performance is measured by return on equity, return on assets, and Tobin’s Q. We find a positive and significant relationship between corporate financial performance and the stakeholder-weighted CSR index, but not the equal-weighted CSR index. This finding is robust to alternative model specifications and several additional tests, providing evidence in support of instrumental stakeholder theory.

Suggested Citation

  • Jong-Seo Choi & Young-Min Kwak & Chongwoo Choe, 2010. "Corporate social responsibility and corporate financial performance: Evidence from Korea," Australian Journal of Management, Australian School of Business, vol. 35(3), pages 291-311, December.
    • Handle: RePEc:sae:ausman:v:35:y:2010:i:3:p:291-311
    DOI: 10.1177/0312896210384681
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    More about this item

    Keywords

    corporate financial performance; corporate social responsibility; instrumental stakeholder theory; KEJI index;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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