Corporate social responsibility and firm performance: Modified social contribution value per share

Abstract

This study attempts to enhance the corporate social responsibility (CSR) performance measurement by introducing the concept of environmental contributions. As suggested by Xu and Zhu (2010), we modify the formula of social contribution value per share (SCVPS) developed by the Shanghai Stock Exchange (SSE) in 2008 by employing two environmental elements, namely, the audited environmental cost (AEC) and additional audited environmental cost (AddAEC). Using pooled least square regressions to examine the relationship between the two modified SCVPSs, under the accrual basis and the cash basis, and the performance of the listed firms in the SSE social responsibility index, we find that they have a positive relationship — a larger modified SCVPS corresponds to better CSR performance and firm performance. Our results for the two modified SCVPSs are relatively unaffected by the different ownership structures, state-owned (SO) and non-state-owned (NSO). Evidence also indicates that the influence on firm performance of the modified SCVPS under the accrual basis is more significant for SO firms than NSO firms. Companies are encouraged to increase their environmental contribution and SCVPS to go beyond the minimum environmental protection standards.