The Impact of Social Responsibility on the Performance of European Listed Companies
Abstract
:1. Introduction
2. Literature Review
2.1. The Evolution of Social Responsibility
2.2. Influence of SR on Business Performance
2.3. The Positive, Negative, and Neutral Effect of Social Responsibility
2.4. Importance of Social Disclosure and Its Standardization
3. Material and Methods
3.1. Sample
3.2. Variables’ Measurement
3.2.1. Dependent Variables
3.2.2. ESG and GC Scores
3.3. Additional Control Variables
3.4. Hypotheses
3.5. Regression Models
- Firm size: measured as the natural logarithm of real total firm assets (LogSize).
- Sector of activity: represented by eleven dummy variables, each corresponding to a specific sector. Each firm’s sector is assigned a value of 1 or 0. The sectors considered are Consumer Goods, Discretionary Consumer, Energy, Finance, Real Estate, Industry, Materials, Health, Information Technology, Communication, and Utilities.
- Age: measured as the number of years from the firm’s foundation to the observation year.
4. Results
4.1. Statistical Tests
4.2. Discussion
- In the environment dimension, a score less than 60% (1st quartile) is considered worse and a score greater than 70% (3rd quartile) is considered better.
- In the social dimension, a score lower than 55% (1st quartile) is considered worse and a score higher than 65% (3rd quartile) is considered better.
- In the governance dimension, a score lower than 35% (1st quartile) is considered worse and a score higher than 70% is considered better (for this variable, the third quartile value was 60%, but considering the 70% score improved the model results).
- The variable LogSize, in the first two regression equations, is statistically significant at least at 0.1%, and in the last equation at 1%.
- The Age variable is statistically significant at least at the 1% level when the dependent variable is ROA and 0.1% when the dependent variable is Tobin’s Q.
- When the dependent variable is ROA and Tobin’s Q, the Utilities sector is statistically significant at least at the 5% and 10% level, respectively.
- The Health Care and Technology sectors are statistically significant at the 5% level when the dependent variable is Tobin’s Q. When the dependent variable is ROA, the Energy sector is statistically significant at least at the 10% level.
5. Conclusions
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
References
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Dependent Variable | p-Value | |||
---|---|---|---|---|
F-Test | Breush-Pagan | Haussman | ||
Model I (ESG—Direct relation) | ROA | 1.139 × 10−13 | 1.903 × 10−9 | 1.047 × 10−9 |
Tobin’s Q | <2.2 × 10−16 | <2.2 × 10−16 | 4.474 × 10−12 | |
ROE | <2.2 × 10−16 | <2.2 × 10−16 | 0.000456 | |
Model II (GC—Direct relation) | ROA | 1.181 × 10−14 | 6.573 × 10−10 | 6.474 × 10−11 |
Tobin’s Q | <2.2 × 10−16 | <2.2 × 10−16 | 8.949 × 10−9 | |
ROE | <2.2 × 10−16 | <2.2 × 10−16 | 1.044 × 10−7 | |
Model III (Best and Worst ESG) | ROA | 1.084 × 10−12 | 1.022 × 10−09 | 3.058 × 10−7 |
Tobin´s Q | <2.2 × 10−16 | <2.2 × 10−16 | <2.2 × 10−16 | |
ROE | <2.2 × 10−16 | <2.2 × 10−16 | 0.00114 | |
Model IV (Best and Worst GC) | ROA | 1.286 × 10−13 | 4.02 × 10−10 | 2.923 × 10−8 |
Tobin´s Q | <2.2 × 10−16 | <2.2 × 10−16 | 9.591 × 10−9 | |
ROE | <2.2 × 10−16 | <2.2 × 10−16 | 0.0002454 | |
Model V (Best and Worst ESG Dimensions) | ROA | 3.232 × 10−15 | 6.106 × 10−10 | 2.637 × 10−10 |
Tobin´s Q | <2.2 × 10−16 | <2.2 × 10−16 | 1.576 × 10−8 | |
ROE | <2.2 × 10−16 | <2.2 × 10−16 | 1.737 × 10−7 | |
Model VI (GC Dimensions) | ROA | 1.437 × 10−13 | 2.457 × 10−08 | 1.734 × 10−10 |
Tobin´s Q | <2.2 × 10−16 | <2.2 × 10−16 | 2.637 × 10−5 | |
ROE | <2.2 × 10−16 | <2.2 × 10−16 | 2.534 × 10−7 | |
Model VII (ESG*Age) | ROA | 6.328 × 10−15 | 4.356 × 10−10 | 1.466 × 10−10 |
ROE | <2.2 × 10−16 | <2.2 × 10−16 | 9.351 × 10−5 | |
Model VIII (GC*Age) | ROA | <2.2 × 10−16 | 9.962 × 10−11 | <2.2 × 10−16 |
ROE | <2.2 × 10−16 | <2.2 × 10−16 | 3.082 × 10−8 | |
Model IX (ESG*Size) | ROA | <2.2 × 10−16 | 1.056 × 10−10 | <2.2 × 10−16 |
ROE | <2.2 × 10−16 | <2.2 × 10−16 | 1.515 × 10−13 | |
Model X (GC*Size) | ROA | <2.2 × 10−16 | 2.128 × 10−07 | <2.2 × 10−16 |
ROE | <2.2 × 10−16 | <2.2 × 10−16 | <2.2 × 10−16 |
Dependent Variable | Model I | ||
---|---|---|---|
ROA | Tobin´s Q | ROE | |
(Intercept) | 56.6850 (35.3542) | −102.0110 (123.8263) | 94.9243 * (47.4151) |
ESG | −0.5298 *** (0.1350) | 1.1801 ** (0.4328) | −0.2904 (0.2029) |
LogSize | −13.5375 *** (2.6388) | −32.8235 *** (8.4502) | −12.2805 ** (3.9665) |
Age | 1.1849 *** (0.3493) | 4.8769 *** (1.1184) | 0.5883 (0.5250) |
Communications | 44.8720 (30.5345) | 193.1312 (123.3742) | 18.4098 (28.4757) |
Discretionary Consumer | 17.2946 (23.8982) | 102.7982 (101.7762) | 4.1714 (16.1214) |
Energy | 54.6479˙ (29.1671) | 186.7155 (117.2823) | 25.4302 (27.7558) |
Financial | 37.8169˙ (21.3231) | 55.1876 (88.8265) | 28.2434˙ (16.9835) |
Real Estate | 80.3482 (49.7674) | 314.7512 (201.2277) | 32.7161 (46.2695) |
Industry | 17.9012 (21.8046) | 96.3245 (92.3830) | 6.0264 (15.3812) |
Materials | 17.1660 (22.9892) | 96.6927 (97.8568) | 5.7203 (15.5779) |
Health | 17.9463 (24.1481) | 268.6576 ** (103.5142) | 17.4696 (15.2822) |
Technology | 47.6893 (31.0592) | 314.0329 * (123.7365) | 6.4870 (30.6473) |
Utilities | 64.9141 * (31.3108) | 203.7387 (124.3850) | 36.7744 (31.2203) |
Dependent Variable | Model II | ||
---|---|---|---|
ROA | Tobin´s Q | ROE | |
(Intercept) | 57.1423˙ (34.3489) | −4.7509 (122.8456) | 121.7688 ** (46.1777) |
GC | −0.7182 *** (0.1532) | −0.0132 (0.4944) | −0.8302 *** (0.2296) |
LogSize | −11.6821 *** (2.6054) | −35.9915 *** (8.4114) | −11.0023 ** (3.9060) |
Age | 1.1253 ** (0.3481) | 4.9057 *** (1.1237) | 0.5275 (0.5218) |
Communications | 43.3392 (29.4106) | 191.6631 (123.7006) | 16.2484 (27.8473) |
Discretionary Consumer | 15.8547 (22.7791) | 100.3521 (102.0192) | 1.8521 (15.3881) |
Energy | 51.1334˙ (28.1217) | 188.2435 (117.6029) | 21.7984 (27.1780) |
Financial | 34.4318˙ (20.4152) | 58.2617 (89.0431) | 25.1791 (16.4424) |
Real Estate | 78.4639 (47.9294) | 307.1653 (201.7597) | 28.4946 (45.2416) |
Industry | 16.9234 (20.8019) | 97.3427 (92.5961) | 5.1764 (14.7338) |
Materials | 17.7666 (21.9117) | 99.1242 (98.0830) | 7.0696 (14.8654) |
Health | 19.1517 (22.9789) | 266.4072 * (103.7435) | 18.2480 (14.4603) |
Technology | 46.9970 (29.9921) | 311.9650 * (124.0692) | 5.1306 (30.0506) |
Utilities | 62.2473 * (30.2462) | 207.8913˙ (124.7107) | 34.8285 (30.6178) |
Dependent Variable | Model III | ||
---|---|---|---|
ROA | Tobin´s Q | ROE | |
(Intercept) | 25.4677 (33.3778) | −65.2301 (122.9641) | 78.5097˙ (44.7991) |
Best_ESG | −5.7485 ** (1.8950) | 22.6326 *** (6.0188) | −5.2034˙ (2.8341) |
Worst_ESG | −0.4642 (1.7136) | −6.5064 (5.4427) | −2.9070 (2.5628) |
LogSize | −12.4194 *** (2.6343) | −33.8288 *** (8.3669) | −11.4910 ** (3.9397) |
Age | 1.0834 ** (0.3520) | 5.2947 *** (1.1180) | 0.5134 (0.5264) |
Communications | 41.2441 (28.9145) | 211.1546 (131.0249) | 15.6861 (27.8769) |
Discretionary Consumer | 17.3157 (22.1718) | 107.0221 (109.1107) | 4.5415 (15.1782) |
Energy | 50.3620˙ (27.6533) | 204.0253 (124.4084) | 22.2954 (27.1842) |
Financial | 35.9464˙ (19.9420) | 59.4542 (94.8259) | 26.8366 (16.3193) |
Real Estate | 76.5860 (47.1238) | 341.7755 (213.7552) | 30.0397 (45.3060) |
Industry | 16.7269 (20.2658) | 101.2146 (98.9399) | 5.4430 (14.5649) |
Materials | 15.1838 (21.3260) | 103.1289 (104.8858) | 4.4524 (14.6551) |
Health | 17.6587 (22.3418) | 272.6021 * (111.0946) | 17.1711 (14.2195) |
Technology | 43.6776 (29.5651) | 334.8863 * (131.0653) | 3.5718 (30.1482) |
Utilities | 58.8781 * (29.8051) | 225.3619˙ (131.6125) | 32.2937 (30.6722) |
Dependent Variable | Model IV | ||
---|---|---|---|
ROA | Tobin´s Q | ROE | |
(Intercept) | 4.2688 (34.4523) | −0.7624 (119.1825) | 68.0488 (44.8250) |
Best_GC | 0.4448 (1.5574) | −1.3215 (5.0034) | −0.4556 (2.3395) |
Worst_GC | 7.2873 *** (1.9790) | −2.1575 (6.3575) | 3.4467 (2.9727) |
LogSize | −12.1977 *** (2.6261) | −35.8136 *** (8.4364) | −11.4498 ** (3.9447) |
Age | 1.2681 *** (0.3538) | 4.8413 *** (1.1367) | 0.6061 (0.5315) |
Communications | 49.7883 (32.1831) | 188.8763 (122.8293) | 19.9095 (28.8412) |
Discretionary Consumer | 19.0678 (25.4825) | 99.5246 (100.9910) | 4.7173 (16.3721) |
Energy | 57.3168˙ (30.7036) | 185.7538 (116.7827) | 25.7765 (28.0915) |
Financial | 36.7175 (22.6061) | 57.5403 (82.2144) | 27.2433 (17.1685) |
Real Estate | 90.3023˙ (52.4873) | 302.3842 (200.3971) | 36.0392 (46.9275) |
Industry | 18.8434 (23.2168) | 96.4384 (916834,) | 6.1583 (15.5933) |
Materials | 17.3833 (24.4977) | 98.6364 (97.0714) | 5.7009 (15.7747) |
Health | 20.5831 (25.7871) | 265.5477 ** (102.6737) | 18.5830 (15.5290) |
Technology | 52.9767 (32.6243) | 309.0968 * (123.2648) | 8.1592 (30.9946) |
Utilities | 68.1234 * (32.8812) | 204.6540˙ (123.9672) | 37.1732 (31.6011) |
Dependent Variable | Model V | ||
---|---|---|---|
ROA | Tobin´s Q | ROE | |
(Intercept) | 30.0137 (32.5927) | −33.9364 (122.5424) | 88.4181 * (43.9611) |
Best_Env | −3.5957 * (1.4995) | −0.6359 (4.9055) | −4.2539˙ (2.2623) |
Worst_Env | 2.9824 (2.9895) | −1.5049 (9.7799) | 3.7681 (4.5103) |
Best_Soc | −2.6973˙ (1.4626) | 9.1115˙ (4.7849) | −3.9687˙ (2.2067) |
Worst_Soc | 6.1360 ** (1.8846) | −0.9396 (6.1655) | 7.0687 * (2.8434) |
Best_Gov | −17.4641 *** (3.1917) | 20.6839 * (10.4414) | −18.9519 *** (4.8154) |
Worst_Gov | 0.9694 (1.6599) | −0.4061 (5.4302) | −2.9699 (2.5043) |
LogSize | −12.5375 *** (2.6035) | −36.1656 *** (8.5173) | −11.0552 ** (3.9280) |
Age | 1.0561 ** (0.3499) | 5.1818 *** (1.1446) | 0.3821 (0.5279) |
Communications | 39.8719 (28.3366) | 205.6913 (129.6186) | 8.9162 (27.1195) |
Discretionary Consumer | 16.0835 (21.6174) | 105.2875 (107.3724) | 1.2879 (13.9641) |
Energy | 48.2089˙ (27.1118) | 202.1909 (123.1348) | 14.7930 (26.4997) |
Financial | 34.7587˙ (19.4897) | 63.8061 (93.5167) | 23.0921 (15.5492) |
Real Estate | 71.6216 (46.1870) | 331.6589 (211.4639) | 15.6712 (44.0798) |
Industry | 15.6708 (19.7651) | 102.1279 (97.4000) | 2.4972 (13.5320) |
Materials | 14.8590 (20.7700) | 102.7417 (103.1677) | 2.7098 (13.4122) |
Health | 17.1489 (21.7520) | 270.8463 * (109.2250) | 15.5432 (12.7747) |
Technology | 42.4919 (28.9570) | 326.2290 * (129.7329) | −3.2068 (29.3777) |
Utilities | 58.1542 * (29.2750) | 222.6474˙ (130.4945) | 25.7619 (30.0866) |
Dependent Variable | Model VI | ||
---|---|---|---|
ROA | Tobin´s Q | ROE | |
(Intercept) | 54.8000 (34.1714) | −1.7901 (124.5119) | 116.0716 * (46.3439) |
AC | 0.1187 (0.1365) | −0.7691˙ (0.4623) | 0.0023 (0.2049) |
HR | −0.6389 ** (0.2063) | 0.5214 (0.6655) | −0.9672 ** (0.3084) |
ENV | −0.3379 * (0.1373) | 0.2563 (0.4451) | −0.3116 (0.2062) |
LR | 0.2310 (0.2047) | −0.2090 (0.6635) | 0.5545˙ (0.3075) |
LogSize | −11.2944 *** (2.5974) | −36.9243 *** (8.4191) | −10.5772 ** (3.9013) |
Age | 1.0861 ** (0.3472) | 5.0304 *** (1.1253) | 0.5114 (0.5214) |
Communications | 40.3138 (28.7069) | 198.9143 (126.2443) | 13.8654 (27.6502) |
Discretionary Consumer | 14.4340 (22.0702) | 103.0411 (104.4375) | 0.1386 (15.1107) |
Energy | 48.5755˙ (27.4653) | 194.8564 (119.9835) | 19.7636 (26.9965) |
Financial | 31.4390 (19.8631) | 62.9150 (91.0837) | 20.9118 (16.3071) |
Real Estate | 71.1137 (46.8194) | 324.1796 (206.0159) | 22.1528 (45.0149) |
Industry | 14.6811 (20.1798) | 101.8910 (94.7862) | 2.8401 (14.5288) |
Materials | 16.6173 (21.2374) | 101.9393 (100.4193) | 5.9662 (14.6206) |
Health | 16.7443 (22.2534) | 269.0575 * (106.2685) | 14.6071 (14.1940) |
Technology | 43.9828 (29.3256) | 319.4327 * (126.5060) | 2.8600 (29.8715) |
Utilities | 59.4909 * (29.5927) | 215.3915˙ (127.1578) | 32.7002 (30.4600) |
Dependent Variable | Model VII | Model VIII | ||
---|---|---|---|---|
ROA | ROE | ROA | ROE | |
(Intercept) | 17.1288 (35.7997) | 29.9940 (48.6963) | 11.5713 (33.3677) | 72.5952 (46.9258) |
ESG | 0.1134 (0.2054) | 0.7653 * (0.3082) | ||
GC | 0.2724 (0.2301) | 0.2387 (0.3481) | ||
Age | 1.6215 *** (0.3618) | 1.3050 * (0.5428) | 1.7931 *** (0.3614) | 1.2481 * (0.5467) |
ESG*Age | −0.0093 *** (0.0023) | −0.0153 *** (0.0034) | ||
GC*Age | −0.0147 *** (0.0026) | −0.0159 *** (0.0039) | ||
LogSize | −12.1204 *** (2.6366) | −9.9545 * (3.9555) | −10.7674 *** (2.5636) | −10.0152 ** (3.8783) |
Communications | 39.4215 (28.7309) | 9.4632 (26.8562) | 30.1799 (25.3046) | 2.0488 (26.2017) |
Discretionary Consumer | 15.0079 (22.0954) | 0.4179 (13.9582) | 12.0967 (18.5047) | −2.2029 (12.8129) |
Energy | 48.0322˙ (27.5013) | 14.5708 (26.3043) | 38.9267 (24.2939) | 8.6268 (25.6583) |
Financial | 31.4784 (19.9129) | 17.8390 (15.6306) | 29.3689˙ (17.0042) | 19.7159 (14.7501) |
Real Estate | 75.1030 (46.7856) | 24.1063 (43.5379) | 61.6716 (41.1450) | 10.3748 (42.3945) |
Industry | 15.7211 (20.1956) | 2.4477 (13.5348) | 12.6058 (17.0034) | 0.5175 (12.5744) |
Materials | 14.1959 (21.2641) | 0.8450 (13.5300) | 13.2376 (17.8155) | 2.1825 (12.4263) |
Health | 15.1098 (22.2799) | 12.8136 (12.8969) | 14.9835 (18.5235) | 13.7504 (11.5587) |
Technology | 41.9149 (29.3479) | −2.9915 (29.1629) | 33.7954 (26.1184) | −9.1146 (28.5588) |
Utilities | 56.6500˙ (29.6437) | 23.2091 (29.8287) | 47.4489˙ (26.4257) | 18.8603 (29.1986) |
Dependent Variable | Model IX | Model X | ||
---|---|---|---|---|
ROA | ROE | ROA | ROE | |
(Intercept) | 378.6380 *** (51.7652) | 497.8850 *** (73.4000) | 415.8267 *** (49.6044) | 514.2321 *** (70.1674) |
ESG | −6.5303 *** (0.6980) | −7.8007 *** (1.0635) | ||
GC | −7.2911 *** (0.6418) | −8.0221 *** (0.9909) | ||
ESG*LogSize | 0.6070 *** (0.0694) | 0.7597 *** (0.1057) | ||
GC*LogSize | 0.6656 *** (0.0633) | 0.7283 *** (0.0978) | ||
LogSize | −48.6457 *** (4.7433) | −56.2225 *** (7.2273) | −51.7429 *** (4.5325) | −54.8357 *** (6.9978) |
Age | 1.4610 *** (0.3362) | 0.9339˙ (0.5123) | 1.5145 *** (0.3297) | 0.9533˙ (0.5091) |
Communications | 59.7874˙ (35.4758) | 37.0782 (32.3465) | 57.2864 (36.4946) | 31.5091 (32.4877) |
Discretionary Consumer | 23.6657 (29.0286) | 12.1455 (21.5562) | 21.9692 (30.1397) | 8.5425 (21.9051) |
Energy | 63.0479˙ (33.7224) | 35.9438 (31.1931) | 65.2342˙ (34.6924) | 37.2272 (31.3864) |
Financial | 45.9411˙ (25.4196) | 38.4118˙ (20.7517) | 34.9555 (26.2815) | 25.7520 (20.9278) |
Real Estate | 100.1484˙ (57.8338) | 57.4983 (52.5717) | 106.6371˙ (59.5465) | 59.3210 (52.9209) |
Industry | 23.0322 (26.3657) | 12.4484 (20.0350) | 24.1593 (27.3548) | 13.0938 (20.3378) |
Materials | 21.6080 (27.9083) | 11.2800 (20.7615) | 25.0276 (28.9793) | 15.0144 (21.1097) |
Health | 22.3720 (29.4940) | 23.0089 (21.2246) | 23.9703 (30.6536) | 23.5205 (21.6058) |
Technology | 58.8328˙ (35.6352) | 20.4343 (33.9523) | 65.4083˙ (36.6017) | 25.2757 (34.1272) |
Utilities | 77.3022 * (35.8422) | 52.2795 (34.4544) | 79.9815 * (36.7835) | 54.2329 (34.5902) |
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Rocha, R.; Bandeira, A.; Ramos, P. The Impact of Social Responsibility on the Performance of European Listed Companies. Sustainability 2024, 16, 7658. https://doi.org/10.3390/su16177658
Rocha R, Bandeira A, Ramos P. The Impact of Social Responsibility on the Performance of European Listed Companies. Sustainability. 2024; 16(17):7658. https://doi.org/10.3390/su16177658
Chicago/Turabian StyleRocha, Roberto, Ana Bandeira, and Patrícia Ramos. 2024. "The Impact of Social Responsibility on the Performance of European Listed Companies" Sustainability 16, no. 17: 7658. https://doi.org/10.3390/su16177658