Does corporate social responsibility influence performance persistence? A signal extraction approach with evidence from Fortune 500 companies

• Published in: Technological forecasting & social change Vol. 200; p. 123154
• Main Authors: Hsu, Bo-Xiang, Chen, Yi-Min
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01-03-2024
• Subjects: Competitive advantage; CSR/ESG; Performance persistence; ROA; Signal extraction; CSR/ESG; Competitive advantage; Performance persistence; Signal extraction; ROA
• ISSN: 0040-1625; 1873-5509
• DOI: 10.1016/j.techfore.2023.123154

The study seeks to enhance the current understanding of how corporate social responsibility (CSR) and environmental, social, and governance (ESG) factors influence firm performance. We establish a theoretical framework and provide empirical data on the influence of CSR/ESG on the sustained financial performance of publicly traded Fortune 500 companies between 2018 and 2021. Our model explains the way CSR/ESG activities affect a firm's ongoing financial success by revealing valuable signals to stakeholders. We employed quantile regression analysis to assess the connection, and found that a firm's CSR/ESG initiatives have both immediate and lasting long-term effects. Our findings contribute to and expand the literature on firm performance and sustainable competitive advantage. Companies adopting CSR/ESG can enhance a firm's performance and attain a sustainable competitive advantage.
•Study links CSR/ESG to firm performance persistence among Fortune 500 from 2018 to 2021.•CSR/ESG signals to stakeholders can predict long-term financial success in firms.•Quantile regression shows CSR/ESG's immediate and enduring impact on profitability.•Research debates CSR cost vs. benefit; this study suggests a positive long-term effect.•The study offers new insights on CSR/ESG's role in sustaining competitive advantage.