Does it pay to be socially responsible for construction companies?

Abstract

Within the built environment, the Engineering and Construction (E&C) companies are very natural resource-intensive in terms of their business operations. In this paper, we focus on publicly listed E&C companies and analyse the role of Corporate Social Responsibility (CSR) activities on their corporate financial performance. The analytical framework is built around the economic theory of private provision of public goods. A basic Capital Asset Pricing Model (CAPM) is used to empirically examine the testable hypothesis with a panel data comprising 17 major E&C companies with monthly data over 2000-13. The results indicate that CSR activities can influence financial performance significantly after controlling for the firm size variable. We make use of several measures of CSR activities to test robustness. The broad results are robust to a range of alternative model specifications.