The purpose of this paper is to investigate the relationship between corporate social responsibility (CSR) expenditures and firm financial performance in an emerging market.Design/methodology/approachThe authors examine the hypotheses by performing panel data analysis on a sample of 159 companies listed on the Tehran Stock Exchange during 2010–2015.FindingsThe findings suggest that the investment in CSR initiatives is significantly and positively associated with firm financial performance as proxied by changes in return on assets. Moreover, the findings confirm a positive and significant association between CSR expenditures and firm financial performance as proxied by both the future changes in return on assets and the future changes in operating cash flows scaled by total assets.Originality/valueThe present study has examined the relationship between CSR and firm financial performance in a country where, to the authors’ knowledge as in most other developing markets, such a relationship has not been a subject of empirical research. Besides, the use of a three-dimensional measure of financial performance, primarily considering research undertaken in an emerging market, as a valuable contribution may be observed.
EuroMed Journal of Business – Emerald Publishing
Published: Oct 30, 2018
Keywords: Financial performance; Corporate social responsibility; Tehran Stock Exchange; Developing market
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