1. Corporate Social Responsability and Firm Financial Performance
MCGUIRE, Jean B. SUNDGREN, Alison. SCHNEEWEIS, Thomas. Corporate social responsibility and firm financial performance. Academy of management journal.
1988, Vol. 31, No. 4, p
Presented by: Melanie Hurlimann
Course: Research Methods
Date:
Abstract:
Using Fortune magazine's ratings of corporate reputations, we analyzed the relationships between perceptions of firms' corporate social responsibility and measures of their financial performance. Results show that a firm's prior performance, assessed by both stock-market returns and accounting-based measures, is more closely related to corporate social responsibility than is subsequent performance. Results also show that measures of risk are more closely associated with social responsibility than previous studies have suggested.

2. Context Research was conducted in various industries
Context Research Question Literature Review Methodology Findings
Context
Research was conducted in various industries
“Various arguments have been made regarding the relationship between firms’ social responsibility and their financial performance”
Firms face trade-offs
Firms benefit in terms of employee morale and productivity
Firms reduce costs
Firms invest in their reputation
1/5

3. Research Objective & Question
Context Research Question Literature Review Methodology Findings
Research Objective & Question
Research Objective
Measure the relationship between a firm’s financial performance and its corporate social responsibility as well as extending previous research.
Research Question
The correlation between a firm’s CSR and its financial performance is negative, positive or not significant in terms costs, reputation and risk.
2/5

4. Context Research Question Literature Review Methodology Findings
“Moskowitz (1972) ranked 67 selected firms in terms of his evaluation of their level of social responsibility and reported higher than average stock returns for highly ranked firms”
Reference: MOSKOWITZ, M. Choosing socially responsible stocks.
Business and society. Vol. 1, p.71-75
“Bowman and Haire (1975) have suggested that stakeholder and stock- and bondholders may see corporate social responsibility as indicating management skill”
Reference: BOWMEN, E. HAIRE, M. A strategic posture towards CSR. California Management Review. 1978, Vol. 18, No. 2, p
3/5

5. Methodology Source of data Fortune magazine’s annual survey
Context Research Question Literature Review Methodology Findings
Methodology
Source of data
Fortune magazine’s annual survey
COMPUSTAT data base for data on accounting- and
stock-market-based measures
Descriptive Statistics
Regression and correlation analysis
Hypothesis testing
Corporate social responsibility and ROA are not correlated
Corporate social responsibility and ROA are correlated
4/5

6. Context Research Question Literature Review Methodology Findings
“Rather than looking for increased profitability from socially responsible actions, managers and those interested in the financial impact of social responsibility might look toward reduced risk.”
“Our data [...] suggests that firms low in social responsibility also experience lower ROA and stock-market returns than do firms high in social responsibility.”
“[...] most interesting is that prior performance is generally a better predictor of corporate social responsibility than subsequent performance. Thus, associations found between concurrent social responsibility and performance may partially be artefacts of previous high financial performance.”
5/5