Lee, Graves, and Waddock (2017)

Lee, Jegoo, Sam Graves, and Sandra Waddock. “Doing Good Does Not Preclude Doing Well: Corporate Responsibility and Financial Performance.” Social Responsibility Journal, forthcoming (October 2017).

From the authors’ abstract: “This paper proposes and tests a modified interpretation of long-standing issues on the corporate responsibility (CR)-corporate financial performance (CFP) relationship: companies involved in CR are in general no better and no worse in their level of financial performance than are companies without such engagement, due to trade-off between benefit and cost at firm level and imbalance between supply and demand at industry (market) level… The present study’s findings support neutrality between CR and CFP at the firm and industry levels, implying that a firm’s CR involvement neither penalizes nor improves its CFP.

“Research Limitations/Implications: CR activities may provide windows of opportunity for companies, but does not systematically improve financial performance.”

LK Comment: Uses MSCI ESG (formerly KLD STATS) database for ESG data. Empirical analysis covers 1991-2005 time period.

Link: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3168075