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Are Firms that Contribute to Sustainable Development Better Financially?

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Listed:
  • Carmen Pilar Marti
  • M. Rosa Rovira‐Val
  • Lisa G. J. Drescher

Abstract

The aim of this study is to analyze the effect exerted by corporate social strategies on (short‐term and long‐term) corporate financial performance (CFP). To this end, we use data on firms listed in the Stoxx Europe 600 index and Stoxx Europe Sustainability index from 2007 to 2010. On the sample data, we implement random and fixed effects panel data methodology corrected by heteroskedasticity, serial correlation, and/or cross‐sectional dependence. The results obtained show that the implementation of corporate social responsibility (CSR) strategy, the level of economic development of the country and firm size determine CFP. In addition, the investment in research and development influences the return on assets while the company's financial slack affects the Tobin's Q. So, companies that contribute to sustainable development incur higher CFP. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.

Suggested Citation

  • Carmen Pilar Marti & M. Rosa Rovira‐Val & Lisa G. J. Drescher, 2015. "Are Firms that Contribute to Sustainable Development Better Financially?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 22(5), pages 305-319, September.
    • Handle: RePEc:wly:corsem:v:22:y:2015:i:5:p:305-319
    DOI: 10.1002/csr.1347
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