Study On The Correlation Between Corporate Social Responsibility And Corporate Financial Performance Of Electric Power Listed Companies

There has been a varied study on the correlation between corporate social responsibilities(CSR)and corporate financial performance(CFP).Through these researches there have been different reasons why companies do no perform social responsibilities and the situation seems to be higher in developing nations as compared to the western world who are more advanced in the concept of social responsibility(CR).This study looks to analyze and determine the correlation between corporate social responsibility and corporate financial performance.The concept of CSR is not widely advanced and performed in China as compared to the western world.The study thus is carried out on listed power companies in China in order for it to serve as a basis for other developing countries new to the concept to learn and adopt.The correlation between CSR and CFP was examined through correlation and regression analysis.The results confirmed that CSR performance has positive correlation with CFP.These results are partly consistent with those of previous studies reporting a positive correlation between CSR and CFP.The paper adopted the use of Economic Value Added(EVA)as measuring model for the financial performance instead of the use of the traditional models like Return on assets(ROA),Earnings per share and the Tobin’s Q.This is because the EVA provides a true reflection of the company’s financial performance.The study goes one step further to verify if there is a lag effects between the two concepts.The results from this study are important value additions to the ongoing debate and prove that corporate social responsibility can increase firm’s financial performance and also a reference for companies in developing countries to fulfill its social responsibility.