BACKGROUND : Stakeholders are increasingly concerned whether the companies they are
involved with act in a socially responsible way. However, stakeholders like employees and
shareholders also have a direct financial interest in those companies and need to be assured
that company actions bring forth some financial benefit.
AIM : The research investigated one of the main questions surrounding the concept of corporate
socially responsibility, namely whether a company’s investment in and effort towards
corporate social responsibility results in improved financial performance. The purpose of this
study was to narrow the gap in the body of knowledge in relation to corporate social
responsibility and its relationship to financial performance.
SETTING : This research investigated whether there was a relationship between being listed on
the Johannesburg Stock Exchange (JSE) Socially Responsible Investment (SRI) Index and
financial performance. The unit of study comprises 885 company-years of companies listed on
the JSE over the period 2009–2014.
METHODS : Logistic regression was used to find evidence of a relationship between a listing on
the JSE SRI Index and financial performance.
RESULTS : It is evident that there was no real relationship between inclusion on the JSE SRI Index
and financial performance, but there was a direct relationship between the size of a company
and having a listing on the JSE SRI Index.
CONCLUSION : A listing on the JSE SRI Index does not have a clear and direct impact on financial
performance, but it appeared that larger companies are perhaps better able to invest in
corporate social activities and are, as a result, more likely to be listed on the JSE SRI Index.