Corporate Social Responsibility and Financial Performance in the Australian Context

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Corporate social responsibility and financial performance in the Australian context
Matthew Brine, Rebecca Brown and Greg Hackett 1

The concept of social responsibility of corporations has engendered considerable interest in Australia in recent years. While previous research on the relationship between corporate social responsibility and financial performance has largely been based on international data, this paper examines the relationship between the adoption of corporate social responsibility and the financial performance of companies within Australia. A number of economic drivers for corporate social responsibility have been identified that may explain its voluntary adoption by companies. Our preliminary results revealed no statistically significant relationship between corporate social responsibility and financial performance; however, a number of opportunities for refining the research were identified.

1

The authors are from Corporations and Financial Services Division, the Australian Treasury. This article has benefited from comments and suggestions provided by Geoff Miller and Jim Murphy. The views in this article are those of the authors and not necessarily those of the Australian Treasury. 47

Corporate social responsibility and financial performance in the Australian context

Introduction
There is currently a debate on the extent to which company directors and managers should consider social and environmental factors in commercial decision making. An approach to decision making that routinely encompasses these factors may be described as corporate social responsibility. A view is emerging that corporate social responsibility can contribute to the financial performance of a company. This approach, which has been described as the ‘enlightened shareholder approach’, suggests that corporate decision-makers must consider a range of social and environmental matters if they are to maximise long-term financial returns. This paper presents some



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