Abstract

Heba Ahmed Mohamed
TESTING THE MUTUAL RELATIONSHIP BETWEEN CORPORATE SCOIAL PERFORMANCE and FINANCIAL PERFORMANCE: CASE OF THE LISTED EGYPTIAN COMPANIES
Corporate social responsibility (CSR) is the way in which business associate their values and behaviors with the needs of all stakeholders not just customers and investors but also employees, suppliers, communities, and society as whole. It is a growing term that doesn’t have specific definition therefore it becomes a noticeable topic in the business. This study examines the mutual relationship of corporate social performance (CSP) and corporate financial performance (CFP) in order to determine if CSP can affect the firm financial performance. On the same time, to know whether good financial performance can lead companies to be socially responsible not? It also examines whether firm size sector type affects the relationship between CSP and CFP. This study advances the literature as it examines this relationship for companies in a developing country, Egypt, along with examining the impact of moderating variables on this relationship. Two models were developed: the first model was derived using slack resource theory and the second model was developed using the good management theory. The paper uses the technique of cross sectional data with a sample of 190 observations which includes Egyptian companies listed in the Egyptian corporate responsibility index from 2007 to 2011. Many statistical techniques were conducted first, descriptive statistics was used to describe the data, and then correlation analysis was used to find the relationship among variables of the study. and finally regression analysis was carried out using ordinary least square regression. The results of the study failed to find a positive significant relationship between CSP and CFP in either model, except for the negative significant relationship between CSP and Return On Assets (ROA) under slack resource theory. Further analysis, using the slack resource theory, did find that firm size had a significant moderating effect on the relationship between CSP and CFP. In addition to finding that the sector type had a moderating effect under both theories.