Corporate social performance and financial performance
Griffith University, School of Accounting, Banking and Finance
Place of Publication
Faculty of Business and Law
School of Accounting, Finance and Economics
The debate on whether corporate social performance and financial performance are substitutes or complements has been long and unresolved. The evidence presented in this paper demonstrates that there are clear associations between measures of corporate environmental, social and governance performance and financial characteristics and, moreover, that they are sensitive to industry classification. There is no evidence of trade-offs between environmental, social and governance performance and shareholder wealth, in terms of either risk or return. For firms in the banking, diversified financials, insurance and telecommunications industries high governance performance is strongly related to superior financial performance.