IJCATR Volume 7 Issue 2

Examining Financial Performance, Firm Size, Leverage and Corporate Social Responsibility

Dr. Fraser Nega , Dr. Ify Diala-Nettles
10.7753/IJCATR0702.1007
keywords : Financial Performance, Firm Size, Leverage, Corporate Social Responsibility, Bloomberg

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Approximately $25.2 trillion in total assets under management is involved in some strategy of socially responsible and sustainable investing. Grounded in the stakeholder theory, the purpose of this correlational study was to examine the relationship between financial performance, firm size, leverage, and corporate social responsibility. A random sample included 119 large companies in the United States from the population of companies listed in the Russell 1000 index. The data were collected via Bloomberg Terminal. Multiple linear regression analysis was used to predict Environmental, Social & Governance (ESG) activity scores. The 3 predictor variables accounted for approximately 7% of the variance in ESG activity scores and the result was statistically significant, F (3,115) = 2.83, p < .04, R2 = .07. Although the p value was significant, the R2 was low, thus representing a poor model fit. In the final analysis, total revenue was a significant predictor and was negatively correlated with ESG activity scores. However, return on equity and leverage were not significant predictors of ESG activity scores. This suggested the potential need to transfer some corporate social initiatives from business leaders to government policy makers. Future researchers should consider incorporating additional variables to make the model more useful. The results of this study are expected to identify fiscal incentives for corporate social programs that would benefit stakeholders such as employees, suppliers, customers, communities, and the environment.
@artical{d722018ijcatr07021007,
Title = "Examining Financial Performance, Firm Size, Leverage and Corporate Social Responsibility",
Journal ="International Journal of Computer Applications Technology and Research(IJCATR)",
Volume = "7",
Issue ="2",
Pages ="35 - 108",
Year = "2018",
Authors ="Dr. Fraser Nega , Dr. Ify Diala-Nettles"}
  • The paper proposes that CSR is a vital competitive strategy for all organizations
  • The idea is that financial performance firm size and leverage may influence CSR
  • Implementation of CSR can transform a company’s image to a more positive outlook
  • Good knowledge management process means better investment in CSR activities.