Proceedings of the International Association for Business and Society

Volume 7, 1996

Proceedings of the Seventh Annual Meeting

An Empirical Investigation of the Relationship Between Corporate Social Performance and Financial Performance

Stakeholder theory provides the framework for investigating the relationship between corporate social performance (CSP) and corporate financial performance. This relationship is investigated by examining how CSP and change in CSP is related to financial accounting measures and market measures. The findings provide support for a tenet in stakeholder theory which asserts that shareholders benefit when management meets the demands of multiple stakeholders. The findings indicate the importance of attending to the needs of multiple stakeholders.