The relationship between corporate social responsibility and financial performance : a survey of South African JSE listed companies

Abstract

The relationship between Corporate Social Responsibility (CSR) and Corporate Financial Performance (CFP) has become an important global matter, to an extent that some local companies have established CSR departments (directorates) to take care of social activities. The question still remains as to whether it pays to be socially responsible more importantly, whether further efforts on social activities lead to increased financial returns. This research study seeks to investigate the relationship between the two variables from a South African setting. The study is quantitative in nature with Social Responsibility Index (SRI) of the Johannesburg Security Exchange (JSE) chosen as a measure of CSR, and selected financial ratios (ROA, ROE, P/E, DY and SV) as measures of CFP. The Mean, Median, ANOVA and Kruskal-Wallis tests were all used to analyse the data. On the basis of the Mean, GRP 3 companies reported the highest values on variables ROA, ROE and DY. The Median results were consistent with those of the Mean. Both the ANOVA and Kruskal-Wallis tests reported significant differences on variables ROA, P/E and DY