Princeton University Library Catalog

CORPORATE SOCIAL PERFORMANCE AND ITS EFFECTS ON THE FINANCIAL PERFORMANCE OF ENERGY COMPANIES IN THE S&P 500

Author/​Artist:
Kim, Sooyeon [Browse]
Format:
Senior thesis
Language:
English
Advisor(s):
Brunnermeier, Smita B. [Browse]
Department:
Princeton University. Department of Economics [Browse]
Class year:
2015
Description:
100 pages
Summary note:
This thesis empirically examines the effects of corporate social performance (CSP) on corporate financial performance (CFP) in energy companies in the S&P 500. Corporate social responsibility (CSR) is a burgeoning area of discussion in the business management and financial rhetoric, with its increasing salience and priority in social, economic, and political discourse. However, despite the growing attention, there remains much disagreement on whether or not sound CSP adds value, leads to an improvement in CFP, or is worthwhile for firms to incorporate into their business models. Building from and refining on existing literature, this thesis utilizes a two-step least squares regression and instrumental variables to examine how different categories of CSP influence CFP among energy companies in the S&P 500. The analysis finds that, although CSP negatively affects internal and relatively short term financial metrics (ROA) while positively affecting market-facing financials (Tobin’s Q), there are varying results across CSR categories on their impact on CFP. The results suggest that resource-constrained energy companies should focus on CSR activities that address broader external social enhancement, as they are more beneficial to CFP than are their firm-based, internally social enhancing counterparts.