Original title: The Impact of Corporate Social Responsibility Disclosure on Financial Performance: Evidence from the GCC Islamic Banking Sector
The study looks at Islamic banks in the Gulf Cooperation Council region from 2000 to 2014. Researchers read the banks’ annual reports and measured how much they disclosed about corporate social responsibility, or CSR—their stated responsibilities to society. Banks with more CSR disclosure tended to have stronger financial performance, including future performance. But when the researchers examined separate parts of CSR disclosure, only some were linked to performance.
Imagine choosing a restaurant by reading its yearly report card. It is hard to tell whether a long report about how it treats people goes along with better business, or whether every section matters equally. In this paper, the report card is the banks’ annual reports, and the connection between what they disclose and how they perform is the relationship the researchers measure.
For customers, investors, and bank leaders, the findings connect what banks report about social responsibility with how they perform financially. The connection appears in future performance too, though the study does not show that every type of CSR disclosure has the same relationship.
The abstract reports relationships, not proof that CSR disclosure causes better financial performance. The findings cover Islamic banks in the GCC over 2000–2014, so they do not establish whether the same relationships hold for other banks, regions, or periods. Most individual CSR disclosure dimensions were not significantly related to current performance.
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The Impact of Corporate Social Responsibility Disclosure on Financial Performance: Evidence from the GCC Islamic Banking Sector — Elena Platonova, Mehmet Asutay, Rob Dixon et al. — Journal of Business Ethics — doi:10.1007/s10551-016-3229-0
Abstract licence: CC BY
Explanation generated by Synthesis from the abstract — it is not the original paper.