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Are investments in material corporate social responsibility issues a key driver of financial performance?
Author(s) -
Badía Guillermo,
GómezBezares Fernando,
Ferruz Luis
Publication year - 2022
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12912
Subject(s) - corporate social responsibility , accounting , business , materiality (auditing) , european union , stock market , stock (firearms) , social responsibility , finance , public relations , economic policy , political science , engineering , paleontology , philosophy , horse , biology , aesthetics , mechanical engineering
In this study, we address a lesser‐studied aspect of corporate social responsibility (CSR): distinguishing between investments in material versus immaterial CSR issues. The financial performance of stock portfolios formed according to material and general CSR issues is examined over the period 2007 to 2018 in the European Union and the United States. We find that materiality is relevant to finding the best and worst firms both in terms of CSR and financial performance, more significantly in the EU than in the US market. However, general CSR scores, including material and immaterial issues, do not discriminate the best firms.