Corporate Social Performance, Financial Performance And Institutional Ownership In Canadian Firms

This study examines the relationship of corporate social performance (CSP) to financial performance (FP) and institutional ownership. We perform our empirical analyses on a large-sample of publicly held Canadian firms and use a novel independent measure of CSP. Based on tests utilizing four years of panel data, we found no significant relationship between a composite measure of firms\u27 CSP and FP. However, we found significant relationships between individual measures of firms\u27 CSP regarding environmental and international activities and FP. Our findings indicate a significant relationship between firms\u27 composite CSP measure and the number of institutions investing in firms\u27 stock. In addition, we found significant relationships between firms\u27 CSP ratings regarding their international activities and product quality and the number of institutions investing in firms\u27 stock. These findings, while subject to the limitations inherent in the use of specific CSP measures, provide mixed support for the business case for CSP. © 2007 Elsevier Ltd. All rights reserved