The relationship between corporate social responsibility and financial performance: Empirical evidence from an emerging country

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Abstract

This study aims to investigate the impact of each component within corporate social responsibility (CSR) disclosure and CSR expenditure on the banks’ financial performance. The research collected data from listed banks from 2013 to 2022 to apply the generalized least squares (GLS) regression analysis method. The findings indicate that environmental responsibility disclosure and government responsibility expenditure positively impact corporate finances. Meanwhile, community responsibility disclosure and expenditure reduce financial efficiency. Employee responsibility disclosure and expenditure do not affect the financial situation. The study emphasizes the importance of environmental responsibility disclosure and recommends that banks fully comply with tax obligations which is a government responsibility expenditure. Banks should also consider investing and disclosing information about community responsibility as a long-term obligation rather than a short-term financial strategy. Government agencies and state banks are advised to develop social responsibility standards based on international standards such as ISO 26000 by the International Organization for Standardization (ISO), Business Social Compliance Initiative (BSCI), and Worldwide Responsible Accredited Production (WRAP) for the banking industry.

Keywords: Listed Banks, Financial Performance, Corporate Social Responsibility, CSR

Authors’ individual contribution: Conceptualization — M.T.P. and P.N.T.; Methodology — M.T.P. and D.T.N.; Validation — P.N.T.; Investigation — M.T.P. and D.T.N.; Resources — M.T.P.; Data Curation — M.T.P. and D.T.N.; Writing — Original Draft — M.T.P. and D.T.N.; Writing — Review & Editing — M.T.P.; Visualization — M.T.P. and D.T.N.; Supervision — M.T.P.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G3, G4, M2

Received: 28.08.2024
Accepted: 16.12.2024
Published online: 19.12.2024

How to cite this paper: Pham, M. T., Nguyen, D. T., & Thanh, P. N. (2024). The relationship between corporate social responsibility and financial performance: Empirical evidence from an emerging country. Corporate Governance and Organizational Behavior Review, 8(4), 28–42. https://doi.org/10.22495/cgobrv8i4p3