The Impact of Corporate Social Responsibility on Financial Performance: The Case of United Kingdom’s Companies

Amara Tijani, Ncib Adel
International Journal of Economics and Business Administration, Volume X, Issue 3, 53-66, 2022
DOI: 10.35808/ijeba/776


Purpose: The purpose of this article is to look at how Corporate Social Responsibility affects financial performance. Design/methodology/approach: The information used comes from a database of 97 companies that spans the years 2012 through 2020 (873 observations). Multiple regressions is the statistical instrument, and management quality is employed as a control variable. A principal component analysis revealed that EFP is one-dimensional, whereas CSR has three dimensions: ERL (Economic-Legal Responsibility), ERR (Environmental Responsibility), and EPR (Environmental Policy Responsibility) (Ethical-Philanthropic Responsibility). The study demonstrates and evaluates CSR's favorable impact on EFP. Findings: According to the research results, the established evaluation model is used to comprehensively explore the effects of CSR on company performance. The experimental results show that in the 4 models selected, the CSR variable has a positive impact (0.084; 0.076; 0.055 and 0.29 respectively). However, it is statistically significant at the α < 0.01 level in the first two models only. In contrast, in models 5 and 6, the effect of CSR is not significant. In models 1 and 5 the capital structure variable has a negative effect (0.035 and 0.15) and is statistically significant at an α < 0.01 level. In models 2 and 6, the variables operationalizing the capital structure, namely DLT/TP and FP/TP, are both insignificant. The first variable has a negative effect in both models 2 and 6. And it is significant at the α < 0.01 level. Practical implications: The paper has guiding significance for the overall development of benefits, and also provides the scientific method for evaluating the effect of corporate social responsibility on financial performance. Originality/value: This study contributes modestly to the field of empirical research dealing with the CSR in Unied Kingdom firms. Indeed, the results of econometric tests confirm the theories theories reinforcing the impact of CSR on the financial performance of the company.

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