In this correlational study, I examined the relationship between market recognition of corporate social responsibility (CSR) and market performance. The percentage of a firm’s outstanding stock held in large CSR mutual funds served as a proxy for market recognition of CSR. The Price/Earnings ratio and Market/Book Value per Share served as the measures of market performance. The sample included the largest companies in the world as named by Fortune Magazine in 2007, which I reviewed for the four years 2005–2008. An additional criterion was that the firms reported their financial statements under either U.S. generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS). The tests included Pearson correlations between the variables and independent-measures t-tests on the market performance metrics. I also performed regression analysis and ANOVA tests on the data. Finally, I performed regression analysis of the returns of the stocks held in CSR funds for each year compared to the previous year (year-on-year). With the exception of the year-on-year returns for 2008, the results of the study did not reveal any statistically significant relationship between the variables that indicated CSR initiatives increase a firm’s market value. The conclusion is that business strategies should focus on profitability and sustainability, which might contemplate CSR, but that pursuit of CSR as a strategy itself absent of profitability and sustainability considerations does not add market value to the firm.
|School:||University of Phoenix|
|School Location:||United States -- Arizona|
|Source:||DAI-A 73/07(E), Dissertation Abstracts International|
|Subjects:||Management, Environmental management, Public policy, Sustainability|
|Keywords:||CSR, Corporate social responsibility, Environmental management, Labor relations, UN Global Compact|
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