Publication Type

Journal Article

Version

acceptedVersion

Publication Date

8-2018

Abstract

Purpose: This paper aims to investigate whether corporate social responsibility (CSR), as evidenced in annual financial reports, is associated with a firm’s financial performance in New Zealand. Design/methodology/approach: A word count approach of several key CSR indicators found in the audited financial reports of NZX50 constituent firms is used. Several variables are constructed that measure the presence of CSR within the annual report such as sustainability, responsibility, social, environment, diversity, employee and community, and eight other variables within the annual report that measure the penetration of stakeholder engagement. Control variables and alternative measures of CSR are also included. Descriptive statistics and results of both univariate and multivariate tests are provided. Findings: The findings establish a positive connection between CSR and financial performance. It is shown that firms that are unable to focus their attention on key stakeholders, but instead waste managerial capital on vague social policies and activities, are associated with weaker performance. Firms that consider the protected indigenous peoples as key stakeholders are associated with superior performance, especially when the firm is seeking regulatory approval. Social implications: Evidence is provided that CSR and Maori stakeholder engagement is implied by financial reports that have a significant association with corporate financial performance. Originality/value: The results provide one of the first analyses linking the interplay between CSR, Maori and corporate financial performance using information publicly observable in annual financial reports. Evidence of an association between firms that indicate awareness of their community and higher levels of return on assets (ROA) is provided.

Keywords

Corporate financial performance, Corporate governance, Corporate social responsibility, Maori, Pasifika, Stakeholder

Discipline

Business Law, Public Responsibility, and Ethics | Corporate Finance

Research Areas

Finance

Publication

Pacific Accounting Review

Volume

30

Issue

3

First Page

318

Last Page

333

ISSN

0114-0582

Identifier

10.1108/PAR-07-2017-0048

Publisher

Emerald

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1108/PAR-07-2017-0048

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