The Impact of Corporate Social Responsibility on Corporate Financial Performance: Evidence from Russian and Dutch Companies (O. Volkova, A.Y. Kuznetsova, сетевое издание "Электронный журнал "Корпоративные финансы" Journal of Corporate Finance Research", N 2, 2022 г.)

Volkova O., Kuznetsova A.Y. The Impact of Corporate Social Responsibility on Corporate Financial Performance: Evidence from Russian and Dutch Companies

O. Volkova - PhD, Professor, Department of Finance, Saint Petersburg School of Economics and Management, National Research University Higher School of Economics, Saint Petersburg, Russia

A.Y. Kuznetsova - Sustainability Intern, NewCold B.V., Breda, Netherlands

This paper studies the impact of Corporate Social Responsibility (CSR) reporting on the Corporate Financial Performance (CFP) of Russian and Dutch companies. Using the theoretical framework of stakeholder theory, we apply regression analysis to obtain quantitative evidence on CSR-CFP relations. The companies' CSR involvement is measured by their reputation index provided by CSRhub - transparent data platform developing consensus ratings of companies' ESG performance all around the world. The return on equity ratio is used as a measure of corporate financial performance. The sample consists of 45 Russian and 55 Dutch companies from the CSRhub list (2017 data.) We study all companies rated by CS-Rhub from two European countries - Russia as an emerging economy and the Netherlands as the developed country with a coordinated market economy. Our findings demonstrate a weak positive correlation between CSR and the companies' ROE. The CSR has a higher impact on the financial performance of Russian companies than on their Dutch counterparts. The proposed explanations relate to the different levels of business risk and trust in these countries, the dissimilar nature (mandatory and voluntary) of non-financial reporting, and the transparency of national businesses for investors. Different perceptions of business risk by investors as well as different levels of company transparency may explain the lower CSR effect on the performance of Dutch companies in comparison to the Russian case. These results may be used by corporate management for assessing financial returns from CSR strategies.

Keywords: corporate social responsibility, sustainability, return on equity, corporate financial performance, regression analysis, Russian companies, Dutch companies