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STAKEHOLDER RATINGS AND CORPORATE FINANCIAL PERFORMANCE: SOCIALLY RESPONSIBLE FOR WHAT?

Daniela Venanzi

DOI: 10.22495/cocv10i4art8

Abstract

This paper aims at empirically supporting, in a cross-country and cross-industry analysis, the instrumental role of stakeholder management by adopting a disaggregated approach to the corporate social performance measurement. By using a sample of 250 European industrial listed firms, from 10 European countries, in the period 2001-2003, we find the following evidence: i) the firm is not socially responsible towards all stakeholders, but invests more in key-stakeholders, those who are (perceived as) more influential on its business and have a more valuable impact on its financial performance; ii) a null or weak significance of the relationship between corporate social performance (CSP) and corporate financial performance (CFP) in the whole sample hides highly significant opposite relationships in two separate sub-samples (i.e. firms with positive and negative relationship, respectively): the sign of the CSP-CFP link cannot be expected to be univocal, since the marginal reward-cost equilibrium of social investment is firm-specific.

Keywords: Instrumental Role of Stakeholders Management, Corporate Financial Performance, Corporate Social Performance, European Listed Firms

How to cite this paper: Venanzi, D. (2013). Stakeholder ratings and corporate financial performance: Socially responsible for what? Corporate Ownership & Control, 10(4), 94-116. http://doi.org/10.22495/cocv10i4art8

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