An Empirical Research About The Effects Of Financial Performance On The Fulfillment Of Corporate Social Responsibility

In recent years, Corporate Social Responsibility is a hot research topic at home and abroad, especially the past two consecutive years occurred in China tainted milk, waste oils and so on.leading to more and more attention to corporate social responsibility. Nowadays, China also released a number of provisions related to corporate social responsibility, the most prominent of which is issued by Shenzhen Stock Exchange in 2006,<the Shenzhen Stock Exchange guidelines on corporate social responsibility>, the guidelines mentioned in detail in the business to shareholders, creditors, employees, customers, public and other parties to the social responsibility, the same year, National Grid Co., Ltd. also announced the first Chinese enterprise social responsibility report, corporate social responsibility report released more and more follow the company.Until April 30,2010,471 companies have announced social responsibility report, shows that the number of social responsibility reports have increased significantly.But studies show that information quality is not high of the voluntary disclosure reports on social responsibility, reflected in the less quantitative information, and more descriptive information, the most important is that the majority of these reports lack of third-party review of certification.As the domestic corporate social responsibility report does not form a unified and standardized information disclosure, if the research are based on corporate social responsibility report, the empirical study is not credible, therefore this study is based on financial reports. Although the majority of domestic and international research finding corporate social responsibility performance is conducive to the fulfillment of corporate performance improvement, but I believe that the domestic situation is not suitable for studies of corporate social responsibility to fulfill the impact on performance, as investors don't focus on the degree of corporate social responsibility information. Furthermore in view of the domestic performance of corporate social responsibility is not good in recent years, It's more meaningful of financial performance research impact on corporate social responsibility performance.The key is that financial performance is the basis of social responsibility, without good financial performance to support,enterprises could not take the interests of various stakeholders into account.by all means, even with strong assets, companies also may not be actively fulfill their social responsibilities. Therefore, through this research will be able to see the degree of financial performance impact on corporate social responsibility. I draw on stakeholder theory, from the results we can know corporates how to deal with different business stakeholders,and the dergree of difference.This study combines the normative theoretical research and empirical analysis, theoretical research, including, corporate social responsibility intention, situation analysis, stakeholder theory, the integration of social responsibility and the stakeholder analysis. For the correlation research of financial performance and social responsibility fulfill,the paper uses empirical research method, results showed that:the current period financial perfrmance has an effect on corporate social responsibility fulfillment,and most of stakeholders are positive correlation. At the same time,the influence lasts longer. But the interests of ordinary workers and customers are easily overlooked.Analysis showed the financial performance is the basis of corporate social responsibility fulfillment, so the better the current period of financial performance,the better their corporate social responsibility fulfillment, but enterprises overlook the the responsibilities of some stakeholders in consider of cost.However,significant increase in corporate donations in 2008 also shows that domestic corporate social responsibility fulfillment has been better, as follows:(1) Current financial performance has great effect on earnings per share,but he real return of cash dividend payout is nominal.After analysis we know that,the number of companies which distribute cash dividends are maintained at 50%,and the average dividend payout rate is not high.This led to the correlation between company's financial performance and dividend payout ratio is not significant.(2) Current financial performance has great effect on corporate social responsibility fulfillment for the creditors,if the financial perfrmance is better, it can fulfill the responsibilities for creditors better.(3) Current financial performance has great effect on corporate social responsibility fulfillment for the staff,especially the effect on the executives average wage is significant, but the effct on all employees is not significant,because the data of two years did not pass the test of significance,and negative correlation occurred in 2009,this all show that companies pay more attention to the interests of the executives,but the iterests of ordinary workers are neglected.what is more,it shows that companies lack clear incentives for ordinary workers.(4) Current financial performance has great effect on corporate social responsibility fulfillment for government, it is because that tax rate is relatively fixed for spscific business,for this reason,the correlation of them is positive and significant.(5) The correlation of current financial performance and corporate social responsibility fulfillment for suppliers is positive in two years,but only one year pass the significant test.so current financial performance has little effect on corporate social responsibility fulfillment for suppliers.It shows the social responsibility fulfillment for suppliers should be improved.(6) The correlation of current financial performance and corporate social responsibility fulfillment for customers is negative,that is because the indicator of customer is the rate of oprating cost,and the indicator shows the degree of profit sharing to customers,the less financial performance always lead to less profit sharing.(7) The correlation of current financial performance and corporate social responsibility fulfillment for public is positive,but only in 2008 and 2009 the data pass significant test,and the degree of siginificance of 2008 is higher than 2009.it shws that financial performance has an effect on charitable donation.bacause the higher rate of donation in 2008 WEN CHUAN earthquake,the degree of significance has been improved.(8) Ownership did not pass the test of significance mostly, even the correlation is negative.The executives average wages and the ratio of charitable donation passed the test of significance,also the correlation is negative. Through analysis we know that the correlation between financial performance and Ownership is negative,that is because state-owned companies' financial performance is lower, this lead to the most negative correlation. The correlation between asset size and social responsibility fulfillment for the major stakeholders is positive,but the correlation is negative,it shows that the larger asset size lead to lower rate of tax.The reason for early financial performance'impact on later period social responsibility is because following points:(1) The early good financial performance is the primitive accumulation for later period social responsibility fulfillment, this lead to early financial performance has significant effect on later period social responsibility fulfillment. (2) The early financial performance has effect on later period financial performance,that is early good financial performance lead to better later period financial performance,and early bad financial performance lead to worse later period financial performance.So there is correlation between early financial performance and later period social responsibility fulfillment,but the impact on financial performance will get smaller,and also the impact on later period social responsibility fulfillment will get smaller.According to this paper, I believe that, in order to enhance the performance of corporate social responsibility and the research of corporate social responsibility,we should do much work.. For the government, it should strengthen the management of listed companies firstly, urged them distribute cash dividends, I think the company which financial performance has got the certain level should distribute cash dividends forcibly,but also should consider it's cash and finance capacity and executive'incresed wage,take all of this into its dividends distribution standard. Secondly we should improve the social responsibility information disclosure,and then improve the identification of third-party review system.the last and the most important is to establish social responsibility evaluation system.For the non-governmental organizations, labor unions should paly an important role in the relationship of enterprises and employees,and to be a good platform for their consultations and negotiations.We should also strengthen the publicity of corporate social responsibility, establish some relevant departments in order to disclose the companies which fulfill social responsibility well and which fulfill social responsibility badly,and promote social responsibility conception,improve the customer conception,guide the investment of investors,through this way to promote companies to fulfill their social responsibility willingly.In short,the fulfillment of social responsibility has a long way to through,we need government and society together and the improvement of social responsibility conception.In this paper, the indicator for corporate social responsibility fulfillment is not very reasonable,there is not enough information of corporate social responsibility in financial report, the indicator can only represent certain information of corporate social responsibility. So that is the biggest regret of this paper. The control variables also have limitations,the influnce factors on corporate social responsibility fulfillment are complex,but due to the limited level of author, there some other factors could not be considered into the paper. Three consecutive years of data is not enough for the research of the lag impact, if we can use more data of longer period, the lag impact research may have better explanation and proof.In view of the results of this paper of financial'impact on the fulfillment of social responsibility,the prospect of relevant research are as follows:(1) As the number of companies which disclose corporate social responsibility reports getting more and more,and the quality of this reports getting better and better. We should make full use of finance reports and social responsibility to research the the relationship of financial performance and corporate social responsibility. (2) Research the fulfillment of corporate social responsibility at different life-cycle,because the capacity and willingness to fulfill social responsibility is different in different life-cycle.