The impact of the level of corporate social responsibility on financial performance: Evidence from insurance firms in the Czech Republic
-
Author(s)Simona ČinčalováLink to ORCID Index: https://orcid.org/0000-0003-0830-233X
-
DOIhttp://dx.doi.org/10.21511/ins.12(1).2021.06
-
Article InfoVolume 12 2021, Issue #1, pp. 64-71
- Cited by
- 655 Views
-
135 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The topic of Corporate Social Responsibility (CSR) has gained considerable popularity among researchers in recent decades in the Czech Republic. However, given this, no detailed study has been demonstrated on whether Czech insurance firms benefit from this. The paper uses an extensive content analysis method to investigate the impact of CSR on financial performance in 23 Czech insurance companies. These companies are included in the Czech Association of Insurance Companies, over the past years 2019 and 2020. Further, the GRI CSR Disclosure Index and correlation analysis are used. The results indicate a significant relationship between CSR disclosure and financial results. There is a linear positive relationship between CSR and ROE, and between CSR and ROA, even a significant one between CSR and ROE. The study suggests that insurance companies in the Czech Republic ought to make continuous efforts so that their CSR activities have a positive effect on their future development.
- Keywords
-
JEL Classification (Paper profile tab)M14, G22
-
References51
-
Tables2
-
Figures0
-
- Table 1. Evaluation of the insurance companies
- Table 2. Correlation analysis
-
- Abdelmoneim, Z., & Elghazaly, M. (2021). COVID-19 implications for corporate social responsibility, corporate governance and profitability in banks: The case of Egypt. Banks and Bank Systems, 16(4), 149-168.
- Abou Fayad, A., Ayoub, R., & Ayoub, M. (2017). Causal relationship between CSR and FB in banks. Arab Economic and Business Journal, 12(2), 93-98.
- Ahen, F., & Zettinig, P. (2015). Critical perspectives on strategic CSR: what is sustainable value co-creation orientation? Critical Perspectives on International Business, 11(1), 92-109.
- Anderson Jr, J. W. (1989). Corporate Social Responsibility: Guidelines for Top Management: Guidelines for Top Management. ABC-CLIO.
- Bahta, D., Yun, J., Islam, M. R., & Bikanyi, K. J. (2021). How does CSR enhance the financial performance of SMEs? The mediating role of firm reputation. Economic Research-Ekonomska Istraživanja, 34(1), 1428-1451.
- Baranovsky, A., Tkachenko, N., Glonti, V., Levchenko, V., Bogatyrova, K., Beridze, Z., Belinskaja, L., & Zelenitsa, I. (2020). Non-price criteria for the evaluation of the tender offers in public procurement of Ukraine. International Journal of Financial Studies, 8(3), 44.
- Bebbington, J., & Unerman, J. (2018). Achieving the United Nations Sustainable Development Goals: an enabling role for accounting research. Accounting, Auditing & Accountability Journal, 31(1), 2-24.
- Brown, J. A., & Forster, W. R. (2013). CSR and stakeholder theory: A tale of Adam Smith. Journal of Business Ethics, 112(2), 301-312.
- Buckler, S. (2021). CSR, Local Content and Taking Control: Do Shifts in Rhetoric Echo Shifts in Power from the Centre to the Periphery? In S. Vertigans & S. Idowu (Eds.), Global Challenges to CSR and Sustainable Development (pp. 87-104).
- Cahyono, B. (2011). Influence of Corporate Social Responsibility Performance Against Company with Foreign Ownership as Moderating Variable (Empirical Study on Manufacturing Company Listed in Indonesia Stock Exchange). Semarang: Faculty of Economics, University of Diponegoro.
- Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4), 39-48.
- Carroll, A. B. (2000). Ethical challenges for business in the new millennium: Corporate social responsibility and models of management morality. Business Ethics Quarterly, 10(1), 33-42.
- Carroll, A. B. (2015). Corporate social responsibility: The centerpiece of competing and complementary frameworks. Organizational Dynamics, 44(2), 87-96.
- Cho, S. J., Chung, C. Y., & Young, J. (2019). Study on the Relationship between CSR and Financial Performance. Sustainability, 11(2), 343.
- Dashwood, H. S. (2012). CSR norms and organizational learning in the mining sector. Corporate Governance,12(1), 118-138.
- Filizöz, B., & Fişne, M. (2011). Corporate social responsibility: A study of striking corporate social responsibility practices in sport management. Procedia-Social and Behavioral Sciences, 24, 1405-1417.
- Glonti, V., Trynchuk, V., Khovrak, I., Mokhonko, G., Shkrobot, M., & Manvelidze, L. (2020). Socialization of organization sustainable development based on the principles of corporate social responsibility. Montenegrin Journal of Economics, 16(1), 169-182.
- Grzebyk, M., & Stec, M. (2015). Sustainable Development in EU Countries: Concept and Rating of Levels of Development. Sustainable Development, 23(2), 110-123.
- Haski-Leventhal, D., Kach, A., & Pournader, M. (2019). Employee need satisfaction and positive workplace outcomes: The role of corporate volunteering. Nonprofit and Voluntary Sector Quarterly, 48(3), 593-615.
- Husnan, A. (2013). Influence of corporate social responsibility disclosure against financial performance. Semarang: University of Dipenogoro, Faculty of Economics and Business.
- Jawahar, I. M., & McLaughlin, G. L. (2001). Toward a descriptive stakeholder theory: An organizational life cycle approach. Academy of Management Review, 26(3), 397-414.
- Kamatra, N., & Kartikaningdyah, E. (2015). Effect of corporate social responsibility on financial performance. International Journal of Economics and Financial Issues, 5(1), 157-164.
- Kang, K. H., Lee, S., & Huh, C. (2010). Impacts of positive and negative corporate social responsibility activities on company performance in the hospitality industry. International Journal of Hospitality Management, 29(1), 72-82.
- Khovrak, I. (2019). The impact of universities on sustainable regional development: Ukrainian context. Ideology and Politics Journal, 2(13), 15-65. (In Ukrainian).
- Kiselakova, D., Stec, M., Grzebyk, M., & Sofrankova, B. (2020). A multidimensional evaluation of the sustainable development of European union countries – An empirical study. Journal of Competitiveness, 12(4), 56-73.
- Kooperativa. (2021). Kooperativa Vienna Insurance group.
- Koval, V., Mikhno, I., Udovychenko, I., Gordiichuk, Y., & Kalina, I. (2021). Sustainable natural resource management to ensure strategic environmental development. TEM Journal, 10(3), 1022-1030.
- Lee, M. D. P. (2008). A review of the theories of corporate social responsibility: Its evolutionary path and the road ahead. International Journal of Management Reviews, 10(1), 53-73.
- Malik, M., & Nadeem, M. (2014). Impact of corporate social responsibility on the financial performance of banks in Pakistan. International Letters of Social and Humanistic Sciences, 21, 9-19.
- Manokaran, K., Ramakrishnan, S., Hishan, S., & Soehod, K. (2018). The impact of corporate social responsibility on financial performance: Evidence from insurance firms. Management Science Letters, 8(9), 913-932.
- Mio, C., Panfilo, S., & Blundo, B. (2020). Sustainable development goals and the strategic role of business: A systematic literature review. Business Strategy and the Environment, 29(8), 3220-3245.
- Moon, J. (2014). Corporate social responsibility: A very short introduction. OUP Oxford.
- Nicolau, J. L. (2008). Corporate Social Responsibility, Worth-Creating Activities. Annals of Tourism Research, 35(4), 990-1006.
- Olowokudejo, F., Aduloju, S. A., & Oke, S. A. (2011). Corporate social responsibility and organizational effectiveness of insurance companies in Nigeria. The Journal of Risk Finance, 12(3), 156-167.
- Qureshi, M. I., Khan, A., & Zaman, K. (2012). Structural investigation of service quality in conventional and Islamic banking in Pakistan. International Review of Management and Marketing, 2(2), 99-105.
- Schreck, P. (2009). The business case for corporate social responsibility. Physica-Verlag.
- Signitzer, B., & Prexl, A. (2007). Corporate sustainability communications: Aspects of theory and professionalization. Journal of Public Relations Research, 20(1), 1-19.
- Stockall, N., & Dennis, L. R. (2015). Seven basic steps to solving ethical dilemmas in special education: A decision-making framework. Education and Treatment of Children, 38(3), 329-344.
- Suchánek, P., Richter, J., & Králová, M. (2017). Customer satisfaction with quality of products of food business. Prague Economic Papers, 26(1), 19-35.
- Tetrevova, L., & Patak, M. (2019). Web-based communication of socially responsible activities by gambling operators. Journal of Gambling Studies, 35(4), 1441-1455.
- Tetrevova, L., Vavra, J., & Munzarova, S. (2021). Communication of Socially-Responsible Activities by Higher Education Institutions. Sustainability, 13(2), 483.
- Titisari, K. H., Moeljadi, M., Ratnawati, K., & Indrawati, N. K. (2019). The roles of cost of capital, corporate governance, and corporate social responsibility in improving firm value: evidence from Indonesia. Investment Management and Financial Innovations, 16(4), 28-36.
- Trunina, I., & Khovrak, I. (2019). Harmonization of the interests of employers and institutions of higher education as a basis for the sustainable regional development. IEEE International Conference on Modern Electrical and Energy Systems (MEES).
- Trynchuk, V., Khovrak, I., Dankiewicz, R., Ostrowska-Dankiewicz, A., & Chushak-Holoborodko, A. (2019). The role of universities in disseminating the social responsibility practices of insurance companies. Problems and Perspectives in Management, 17(2), 449-461.
- Uadiale, O. M., & Fagbemi, T. O. (2012). Corporate social responsibility and financial performance in developing economies: The Nigerian experienceю Journal of Economics and Sustainable Development, 3(4), 44-54.
- Ullmann, A. A. (1985). Data in search of a theory: A critical examination of the relationships among social performance, social disclosure, and economic performance of US firms. Academy of Management Review, 10(3), 540-557.
- Velinov, E., & Cincalova, S. (2021). Corporate Social Responsibility and Internationalization of Czech Transport Enterprises. Hradec Economic Days, 11(1), 842-848.
- Vertigans, S., & Idowu, S. O. (2017). Corporate social responsibility: academic insights and impacts. Springer.
- Wahyuni, S., Pujiharto, Azizah, S. N., & Zulfikar, Z. (2021). Impact of the COVID-19 pandemic and New Normal implementation on credit risk and profitability of Indonesian banking institutions. Banks and Bank Systems, 16(3), 104-112.
- White, M. A. (2013). Sustainability: I know it when I see it. Ecological Economics, 86, 213-217.
- Yakymchuk, A., Valyukh, A., Irtyshcheva, I., Hryshyna, N., & Ishchenko, O. (2021). Economic Diagnostics and Management of Eco-Innovations: Conceptual Model of Taxonomic Analysis. In D. Russo, T. Ahram, W. Karwowski, G. Di Bucchianico, & R. Taiar (Eds.), Intelligent Human Systems Integration 2021 (pp. 573-579). Springer, Cham.
-
Positive contribution of the good corporate governance rating to stability and performance: evidence from Indonesia
RR. Iramani , Muazaroh Muazaroh , Abdul Mongid
doi: http://dx.doi.org/10.21511/ppm.16(2).2018.01
Problems and Perspectives in Management Volume 16, 2018 Issue #2 pp. 1-11 Views: 3142 Downloads: 303 TO CITE АНОТАЦІЯThis paper aims to examine the impact of Good Corporate Governance (GCG) practice on bank stability and performance. Governance is measured using the GCG rating that covers eleven aspects. The authors apply instrumental regression to link governance to performance and stability. The study covers a sample of 150 banks. The result shows that bank stability can mediate bank governance and bank performance. On the determinant of bank performance, it can be concluded that the GCG rating is positive and directly influences bank performance. Bank stability is also positive for bank performance indicating the indirect contribution of the GCG rating to bank performance. NPL, LDR, CAR and bank’s size (LASSET) are all negative and significant. The aim of this paper is to provide strong empirical evidence on the importance of governance and stability for performance. The limitations of this paper are the size of the sample and that it only covers public banks which are theoretically required to apply better governance in all aspects of their business by the Capital Market Authority.
-
The impact of political instability, macroeconomic and bank-specific factors on the profitability of Islamic banks: an empirical evidence
Ali T. Yahya , Asif Akhtar , Mosab I. Tabash
doi: http://dx.doi.org/10.21511/imfi.14(4).2017.04
Investment Management and Financial Innovations Volume 14, 2017 Issue #4 pp. 30-39 Views: 2282 Downloads: 406 TO CITE АНОТАЦІЯThis study investigates the impact of political instability, macroeconomic and bank-specific factors on the profitability of Islamic banks in the context of Yemen. The study used two common measures of profitability, namely, Return on Assets (ROA) and Return on Equity (ROE) as dependent variables. Seven key independent (internal and external) variables are also used. There are five fully-fledged Islamic banks (IBs) working in Yemen. The study selected only three out of five IBs due to the availability of data for the period ranging from 2010 to 2014. The descriptive and multiple regression analyses were done. The results of the study indicate that operating efficiency and financial risk have negative and significant relationships with ROA and ROE. The findings also show that capital adequacy has a negative and insignificant relationship with ROA and ROE. Furthermore, the study reveals that assets size (LogA), assets management, liquidity and deposits have a significant and positive impact on banks’ profitability. GDP, Inflation rate (IR) and Political instability have positive and significant impact on Yemeni banks’ profitability. Based on the best knowledge of the authors, this study is considered one of the first and pioneering studies that determine the factors affecting the profitability of Islamic banks of Yemen. Therefore, the study gives good insights for the policy makers, regulators and interested parties for enhancing the profitability of Islamic banks in Yemen.
-
Liquidity, leverage, and solvency: What affects profitability of industrial enterprises the most?
Maha D. Ayoush ,
Ahmad A. Toumeh ,
Khaled I. Shabaneh
doi: http://dx.doi.org/10.21511/imfi.18(3).2021.22
Investment Management and Financial Innovations Volume 18, 2021 Issue #3 pp. 249-259 Views: 2032 Downloads: 1058 TO CITE АНОТАЦІЯThe purpose of this paper is to show the relative impact of liquidity, leverage, and solvency on profitability of industrial enterprises listed on the Amman Stock Exchange to ascertain which of them has the most effect on profitability. To reach the objectives of this study, 44 Jordanian industrial companies are examined from 2012 to 2018. Return on assets (ROA) and return on equity (ROE) are examined as measures of performance, current ratio and quick ratio as measures of liquidity, debt ratio and debt to equity ratio as measures of leverage, and the interest coverage ratio as a measure of financial solvency. Multiple regression analysis was used to check the hypotheses. A negative and statistically significant impact was found at the 1% level between financial leverage and profitability. At the same time, findings did not show the same for the effect of liquidity and solvency on profitability. In addition, leverage has the highest relative impact among independent variables on profitability, followed by solvency and then liquidity. Moreover, it is indicated that company size is a control variable of the effect between liquidity, leverage, and solvency on performance. Thus, it is concluded that management of industrial companies should reduce dependence on debt to finance companies to achieve the highest possible returns; it is recommended to maintain an acceptable level of liquidity to ensure the continuity of companies and attention to the level of solvency within companies to maintain a high financial performance.
