Does CSR Kill Profits?

business_ethics_highlights_2 This item reports on an academic study the conclusion of which is that CSR activities are negatively correlated with profits. Of course, it’s just a single study. 3 questions arise:
1) Is the finding robust? (i.e., is it likely true?)
2) Is the finding surprising?
3) Is the finding unwelcome?

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LINK: Is ‘doing good’ bad for a company’s bottom line? Yes, says study (by James-Hellegaard for Phys.org)

Companies that try to “do good” are likely to find that Corporate Social Responsibility (CSR) is bad for their bottom lines, according to a new study from Florida Atlantic University’s College of Business.

“We found that emphasizing Corporate Social Responsibility is not good for shareholders,” said David Javakhadze, Ph.D., assistant professor of finance, who investigated the relationship between CSR and efficiency with which firms allocate their capital resources. “If you’re an investor you should think twice before you invest in those firms that emphasize CSR.”

For the purpose of the study, CSR is defined as strategies that appear to foster some social good, including programs that benefit community engagement, diversity, the environment, human rights and employee relations. The study, published in the Journal of Corporate Finance, found that focusing on CSR strategies imposes costs on firms in the form of foregone investment opportunities that in the long run leads to losses for their shareholders….

What do you think?


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