Empirical analysis of the relationship between the costs of corporate social responsibility policy implementation and Russian companies’ financial performance

Analysis of the current body of scientific knowledge on the problems of economic efficiency of corporate social responsibility (CSR) policy displays highly controversial results. The paper focuses on empirical analysis of the relationship between the level of social responsibility, as proxied by CSR policy implementation costs, and financial performance of Russian companies. The research methodology includes the conceptual framework of the instrumental approach to the corporate social responsibility theory. Accumulated knowledge and empirical results systematized in the article serve as the basis for statistical analysis of panel data. The authors employ random effects and fixed effects models. The sample comprises data covering the period of 2012–2018 for 22 Russian publicly traded companies. The value multiplier Market-to-Book Ratio (MBR) and the accounting indicator of profitability EBITDA margin are used as dependent variables. Estimates of the random effects model confirm a positive relationship between the value multiplier MBR and CSR policy implementation costs. However, the fixed effects model analysis failed to confirm any statistically significant relationship between the value multiplier MBR and CSR costs, which supports the conclusion that decisions on CSR policy implementation in Russia are mainly due to individual characteristics of companies related to unobservable effects. Both models did not reveal a statistically significant relationship between the chosen CSR proxy variable and the accounting indicator of financial performance. The empirical results generally confirm that socially responsible behavior can act as a driver of raising funds even in the context of imperfect market; however, managerial decisions in this field are largely determined by individual characteristics of companies.