The impact of corporate social responsibility on financial performance of food industry

Abstract

In recent years, corporate social responsibility (CSR) has received increasing attention from companies and the community because it is an important factor for sustainable development. For this reason, it is very essential for firms to know the CSR strategy that they can follow and the improvements that can be made in order to have better performance in any industry. As a result, research into CSR is inevitable for social responsibility activities, and it can create benefits for the financial performance of the firms, which might lead to an increase in investor numbers. The purpose of this study is to investigate the impact of CSR on the financial performance of firms in the food industry in EMEA countries. There were many previous studies analyzing the relationship between CSR and financial performance that gave mixed results. In this study, the financial performance is measured with accounting-based measures, such as the return on assets (ROA) and return on equity (ROE), which show the profitability of the firms, and also market-based measures, such as market capitalization (MCAP). Two control variables are added to the model: leverage and size. The sample contains data from firms in the food industry from twenty of the EMEA countries that were published on the Refinitiv database. Through the total ESG scores, the CSR performance of the firms is measured. To test the hypothesis, three regression models are used, and the regression is conducted with the help of the STATA program. The results suggest that there is no significant impact of CSR on ROA, ROE, and MCAP for the companies in the food industry, where ROA, ROE, and MCAP were used as measures of the financial performance of the firms.