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Corporate Social Performance and Business Risk

In: Toward Integrative Corporate Citizenship

Author

Listed:
  • Marc Orlitzky

    (Pennsylvania State University Altoona)

  • Diane L. Swanson

    (Kansas State University)

Abstract

The previous chapter suggested that measures of corporate social performance (CSP), such as charitable donations, responsibility to environment, and fair treatment of employees, may be positively correlated with return measures of firm financial performance, such as return on assets (ROA) or stock appreciation. However, true economic performance manifests itself in both high financial return and low financial risk. The possibility that CSP might heighten financial variability and, thus, negate its positive implications for a firm’s level of economic performance has not been explored empirically in any breadth or depth. For example, Frooman (1997) meta-analyzed event studies to show how cases of irresponsible and illicit behaviors impact share price performance. Thus, Frooman’s (1997) study did not focus on risk, used one specific market indicator of corporate financial performance, and approached CSP from the perspective of its absence (and not various degrees of presence).

Suggested Citation

  • Marc Orlitzky & Diane L. Swanson, 2008. "Corporate Social Performance and Business Risk," Palgrave Macmillan Books, in: Toward Integrative Corporate Citizenship, chapter 5, pages 121-146, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-59470-8_6
    DOI: 10.1057/9780230594708_6
    as

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