The curvilinear relationship between corporate social performance and corporate financial performance : Evidence from the international construction industry

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

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Detail(s)

Original languageEnglish
Pages (from-to)1313-1322
Journal / PublicationJournal of Cleaner Production
Volume137
Publication statusPublished - 20 Nov 2016

Abstract

The intellectual debate concerning the nexus between corporate social performance (CSP) and corporate financial performance (CFP) is incessant. In recent years, the debate has explored more dynamic links, one of which is the curvilinear relationship between the two constructs. It argues that the relationship between CSP and CFP can be better captured by a U-Shape: at a low level of CSP, companies are not able to cultivate social activities to achieve tangible financial benefits but, after passing an inflection point, CSP will gradually turn into financial benefits that can offset the costs involved. This research empirically tests the curvilinear relationship between CSP and CFP in the context of the international construction industry. Using a panel data set of 30 international construction companies and 210 firm-year observations over the sample period from 2007 to 2013, the curvilinear relationship of CSP on return on assets and earnings per share, as specific CFP measures, is strongly supported. This empirical finding demonstrates an opportunity for executives of international construction companies to capitalize on their social responsibility efforts and create a win-win situation between CSP and CFP.

Research Area(s)

  • Corporate financial performance, Corporate social performance, Corporate social responsibility, Curvilinear relationship, International construction

Citation Format(s)

The curvilinear relationship between corporate social performance and corporate financial performance : Evidence from the international construction industry. / Wang, Hongdi; Lu, Weisheng; Ye, Meng; Chau, K. W.; Zhang, Xiaoling.

In: Journal of Cleaner Production, Vol. 137, 20.11.2016, p. 1313-1322.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal