Corporate Social Responsibility – Firm Performance – Corporate Social Responsibility Loop: The Role Of Assurance, Reputation And Industry Type
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Date
2018-07
Authors
Tanggamani, Vani
Journal Title
Journal ISSN
Volume Title
Publisher
Universiti Sains Malaysia
Abstract
This study explores the loop concept of corporate social responsiblity practices (CSR) of the previous year, firm financial performance of the current year and CSR practice in subsequent year. Based on two sources of theory, the Stakeholder Theory explains the relationship between previous CSR practices with current firm financial performance while Slack Resources explains the relationship between current firm financial performance with future CSR practices. This study employed a quantitative research method based on content analysis of the firms’ annual report for three years, 2013 (previous year), 2014 (current year) and 2015 (future year). A total of 200 firms listed in Bursa Malaysia was selected in this study using stratified random sampling technique. Data analysis was done with PLS-SEM using SmartPLS3.0 version to assess the measurement and structural models. Findings showed that previous CSR practices in environment, marketplace and community were significantly related to firm reputation. The relationships between marketplace and community with reputation were moderated by third-party assurance. CSR practices for marketplace, workplace and community were significantly related to firm financial performance. However, reputation did not mediate any of the relationships between CSR practices and financial firm performance. In addition, current firm financial performance did not have a significant effect on the disclosure of future CSR practices. Nevertheless, analysis using Return on Assets (ROA) indicated that the effect of current firm financial performance is significant towards disclosure of future CSR practices in environment.
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Keywords
Loop concept of corporate social responsiblity practices , firm financial performance of the current year