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Looking for evidence of the relationship between corporate social responsibility and corporate financial performance in an emerging market

Looking for evidence of the relationship between corporate social responsibility and corporate... Purpose – The purpose of this paper is to examine the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) of Malaysian public listed companies (PLCs) as an emerging market setting. Design/methodology/approach – A longitudinal data analysis with a large‐sample testing was carried out from 200 Malaysian PLCs by using panel data analysis during a seven‐years period. The statistical power with fixed effect and random effect model was utilized. Findings – Results of earlier estimations indicate that there are positive and significant related of the CSR on CFP. Two of the CSR dimensions, namely employee relations and community involvement, were found to be positively related to financial performance. This proves that CSR practices can be considered as effort to enhance the financial performance of PLCs in Malaysia. The results also reveal that there is limited evidence of the relationship between CSR and CFP in the longterm. Practical implications – These findings suggest that Malaysian PLCs should be involved consistently in their CSR practices because CSR has a significant impact on improving financial performance in Malaysian PLCs. Originality/value – The majority of studies on CSR in Malaysia pertain to the analysis of such reporting and motivations of managers toward CSR practices. This study conducts a comprehensive empirical research on the relationship between CSR and CFP in Malaysian PLCs. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asia‐Pacific Journal of Business Administration Emerald Publishing

Looking for evidence of the relationship between corporate social responsibility and corporate financial performance in an emerging market

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1757-4323
DOI
10.1108/17574321111169849
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to examine the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) of Malaysian public listed companies (PLCs) as an emerging market setting. Design/methodology/approach – A longitudinal data analysis with a large‐sample testing was carried out from 200 Malaysian PLCs by using panel data analysis during a seven‐years period. The statistical power with fixed effect and random effect model was utilized. Findings – Results of earlier estimations indicate that there are positive and significant related of the CSR on CFP. Two of the CSR dimensions, namely employee relations and community involvement, were found to be positively related to financial performance. This proves that CSR practices can be considered as effort to enhance the financial performance of PLCs in Malaysia. The results also reveal that there is limited evidence of the relationship between CSR and CFP in the longterm. Practical implications – These findings suggest that Malaysian PLCs should be involved consistently in their CSR practices because CSR has a significant impact on improving financial performance in Malaysian PLCs. Originality/value – The majority of studies on CSR in Malaysia pertain to the analysis of such reporting and motivations of managers toward CSR practices. This study conducts a comprehensive empirical research on the relationship between CSR and CFP in Malaysian PLCs.

Journal

Asia‐Pacific Journal of Business AdministrationEmerald Publishing

Published: Sep 27, 2011

Keywords: Malaysia; Corporate social responsibility; Disclosure; Corporate finances; Financial performance; Fixed effect; Random effect; Bursa Malaysia

References