Previous empirical research has found mixed results for the impact of corporate social responsibility (CSR) investments on corporate financial performance (CFP). This paper contributes to the literature by exploring in a two stage investor decision-making model the relationship between a firm's innovation effort, CSR, and financial performance. We simultaneously examine the impact of CSR on both accounting-based (financial health) and market-based (Tobin's Q) financial performance measures. From a sample of top corporate citizens, we find that: (1) a firm's social responsibility commitment (CSR) contributes to its financial performance; (2) after controlling for investment in innovation activities, CSR continues to have a positive impact on a firm's financial performance; (3) the customer dimension of CSR has a positive effect on both CFP measures, whereas the employee dimension indicates a significant impact only on financial heath; and (4) the community relation dimension of CSR only affects the market-based CFP measure of firms with high innovation intensity. © 2013 Springer Science+Business Media Dordrecht.
CITATION STYLE
Rodgers, W., Choy, H. L., & Guiral, A. (2013). Do Investors Value a Firm’s Commitment to Social Activities? Journal of Business Ethics, 114(4), 607–623. https://doi.org/10.1007/s10551-013-1707-1
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