University of Oulu

The effect of corporate social responsibility disclosure on corporate financial performance : evidence from Vietnamese large listed firms

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Author: Thi Thu Thao, Duong1
Organizations: 1University of Oulu, Oulu Business School, Department of Accounting, Accounting
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 1.8 MB)
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Language: English
Published: Oulu : D. Thi Thu Thao, 2018
Publish Date: 2018-06-07
Thesis type: Master's thesis
Tutor: Middleton, Alexandra
Reviewer: Moilanen, Sinikka
Middleton, Alexandra
Corporate social responsibility (CSR) is gradually turning into a critical issue in business management. Over the decades, both theoretical and empirical literatures were concentrated on studying the effect of CSR on corporate financial performance. However, the results have been ambiguous and inconsistent. The purpose of this master thesis is to examine the relationship between CSR disclosure and Corporate Financial Performance in Vietnamese large listed firms, both on short-term and long-term profitability for a period of three years, from 2014 to 2016. Focusing the study in Vietnam helps to enrich the existing literature and bridge the research gap in a geographic sense. For the study purpose, different CSR theories such as economic agency, legitimacy and stakeholder theories are reviewed to provide extensive understanding towards CSR approaches. In addition, an overview of the general CSR application in developing countries is put forward to explain the differences between CSR in emerging markets and its manifestation in developed world. Current status of CSR practice in Vietnam and PESTEL analysis are also included to provide a macro analysis of Vietnamese market based on Political, Economic, Social, Technological, Environmental and Legal aspects. In this study, we performed linear regressions on the sample data in order to investigate the effect of CSR disclosure on corporate financial performance. CSR disclosure is measured by using a disclosure index which consists of environmental, social, economic and legal aspects. Content of annual reports and stand-alone CSR reports of each firm is examined and disclosure scoring scale is constructed for the purpose of measuring the level of CSR disclosures. For corporate financial performance, Return on Assets (ROA) and Tobin’s Q ratio were employed as measures of short-term and long-term profitability respectively. The results indicate that, in the short run, there is no significant relationship between CSR disclosure and corporate financial performance. However, in the long run, the study found a positively significant relationship between CSR disclosure and firms’ financial performance. The results are encouraging since it provides an empirical evidence that Vietnamese firms can be both socially responsible and financially successful. It is expected to make Vietnamese firms become more aware of the significance and importance of CSR practice. At the same time, strategic managers and socially responsible investors can take into account the reported results for sustainability and investment decision making processes.
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