Socially responsible companies performance in baltic stock exchange

SOCIALLY RESPONSIBLE COMPANIES PERFORMANCE IN BALTIC STOCK EXCHANGE Guoda BUTKEVICIUTE Paper for the Master‘s degree Quality Management Master‘s Program Vilnius University, Faculty of Economics, Management Department Supervisor – prof. Juozas Ruževičius SUMMARY 83 pages, 20 charts, 12 pictures, 53 references The purpose of this research paper is to evaluate socially responsible companies’ performance in the Baltics region by Nasdaq OMX Baltic listed companies example. It was interesting to know the opinion of the listed companies about CSR management systems and to evaluate the financial results of companies that are socially responsible and determine if CSR companies could be distinguished from the general market. This paper consists of literature research to get familiar with CSR roots and purposes; the research of CSR benefits and weaknesses; auditable CRS certification systems analysis; opinion survey; the methodology how to create CSR portfolio in the Baltics Stock Exchange market; the methodology how to evaluate difference of the companies’ portfolios or indexes performance in various time periods by buy-and-hold strategy that was established in environmental management quality research by Sebastianelli et. al. (2013) Research design, methodology, and approach. Literature analysis revealed the purpose why companies should be willing to attain CSR practices in their daily work by showing pros and cons. Auditable CSR systems SA8000, ISO 14001, OHSAS 18001, ILO OSH 2011, ISO 45001 and EMAS analysis revealed the common aspects in each system that are the main benefits. Literature analysis and CRS systems analysis have been the background for the opinion survey. To perform empirical research market value financial ratio has been chosen, that is good indicator of companies current performance, its image and the expectations of companies future. To get the insight of CSR companies performance in Nasdaq OMX Baltic stock exchange CSR portfolio has been created. CSR portfolio includes only companies that are socially responsible by the developed methodology. The created CSR portfolio has been compared with OMX Baltic PI index containing all listed Nasdaq OMX Baltic companies by average monthly returns and standard deviations using buy-and-hold strategy in 10 years and 3 years rolling periods in different timelines. Research findings. Research revealed that companies ‘management opinion regarding better CSR companies’ image coincide, though it does not coincide regarding employees morale. The empirical research findings show that CSR portfolio usually outperforms the OMX Baltic PI index. In long term (10 years) from 2004 till 2016 valuation period CSR portfolio shows higher average monthly return results in every period. The more contra version findings have been found in crisis period as selling of portfolio in every month of 2007 – 2008 was more beneficial than the whole market index but in the following so called stagnation period the CRS portfolio value was less profitable. Though in recent times research (3 year buy-and-hold strategy in 2011 – 2016 period) by the same methodology CRS portfolio value is outperforming the general market OMX Baltic PI index until the last month of 2016. That could be identification of stagnation in the market or the CSR strategy competitive advantage significance decrease or influenced by other reasons