Quantifying Corporate Social Responsibility by Sector in Relation to Financial Performance
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As the demand for more socially responsible businesses continues to grow, companies are forced to implement corporate policies and think about the bottom line as well as their overall impact to society. The term socially responsible and words associated with it are used but loosely defined. Similarly, they do not communicate to the public or investors to what extent a company is socially responsible. This study focuses on three elements to help offer more transparency in the CSR and FP relationship. First, to understand the field, defining CSR is necessary. Second, to quantify CSR, an analysis has been constructed in order determine the total amount of CSR present in the selected companies' annual reports in relation to FP. Lastly, an empirical study will help determine if the results are consistent in relation to size of a company, industry, and sector. The current findings showed that the large-cap companies dedicated the most words to CSR in their annual reports while having the highest profitability ratios. It was also concluded that the sectors of CSR companies primarily focused on in their annual reports were corporate governance and human resources.