The Impact of Corporate Social Responsibility and Irresponsibility on Corporate Financial Performance: An Event Study of Korean Conglomerates

Abstract

Corporate Social Responsibility (CSR) is regarded as an integral part of management and is particularly important for corporate sustainability. Although CSR is performed in the context of corporate survival, Corporate Social Irresponsibility (CSI) occurs at the same time. Furthermore, both CSR and CSI influence Corporate Financial Performance (CFP) either directly or indirectly. Thus, in this study, I wanted to research the impact of CSR and CSI on CFP through an event study. Empirical data were collected from three years of news articles for affiliates of Korean conglomerates. The sample data consisted of 1,254 CSR news items and 267 CSI news items. As a result, I found that CSR has a positive impact on CFP, whereas CSI does not. More specifically, philanthropic CSR showed a strongly positive relationship with CFP, whereas economic, legal, and ethical CSR presented no significant relationship. Regardless of whether CSI is intentional or unintentional, it has no effect on CFP.