企业社会责任与财务绩效的关系

2018/19

Essex Business School

BE936 Accounting Project

Corporate Social Responsibility and Financial Performance:

A Comparative Study of China and the UK

17065

Presented for BSc. Accounting & Finance

This project is entirely the original work of student registration number 17065. Where material is obtained from published or unpublished works, this has been fully acknowledged by citation in the main text and inclusion in the list of references. Word Count: 4950 words

Abstract

This project studies the relationship between corporate social responsibility (CSR) and financial performance. Specifically, 51 British media listed companies and 51 Chinese media listed companies were selected as research samples, and ROA and Tobinq were selected to represent the financial performance of enterprises for comparative study. The results show that CSR in China and the UK has a significant positive correlation with ROA, but no significant correlation with Tobinq. Meanwhile, there is no significant relationship between CSR and financial performance of listed media companies in China and the UK. Therefore, this project concludes that corporate social responsibility can significantly improve its financial performance in the short term and will not harm corporate financial performance in the long term. Secondly, although there is a significant gap in the development time of CSR between China and the UK, there may be no obvious difference between the two countries due to the requirements of Chinese society and stakeholders for enterprises to fulfill their social responsibility.

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Acknowledgement

I would like to express deep gratitude to my supervisor, Prof. Musa Mangena. From the topic selection to the final completion of the project, he gave me careful guidance and unremitting support. I am also very grateful to Ms. Ai Gooch for her help when I encountered difficulties in data collection. Last but not least, I would like to thank my parents and friends who have been around to give me help and support in the completion of the project.

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Contents

1. Introduction .................................................................................................................... 1 2. Literature Review ........................................................................................................... 2 3. Methodology .................................................................................................................... 5 3.1 Data ............................................................................................................................ 5 3.2 Measurement of CSR .................................................................................................. 6 3.3 Measurement of CFP and Control Variables ............................................................... 6 3.4 Models ....................................................................................................................... 7 4. Result & Discussion ......................................................................................................... 8 4.1 Descriptive Statistics .................................................................................................. 8 4.2 Correlation Analysis ................................................................................................... 9 4.3 Significance Test of Difference ................................................................................. 10 4.4 Regression Result ..................................................................................................... 11 4.5 Discussion ................................................................................................................ 15 5. Conclusion ..................................................................................................................... 16 References ..................................................................................................................... 18

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1. Introduction

The rise of corporate social responsibility (CSR) has stemmed from the great changes in the world economy and culture since the 1960s. For example, civil rights, opposition to the Vietnam war, environmental protection, energy crisis, opposition to apartheid in South Africa, sustainable development and other issues have promoted the attention and research on social sustainable development, and the development of corporate social responsibility (Gjølberg, 2009). However, there are still some managers who still believe that the fulfilment of social responsibility would increase the burden and reduce the financial performance level of the companies (Chetty, 2015), instead of incorporating CSR into the strategic system of enterprises from the perspective of long-term sustainable development. For example, Enron and Lehman brothers excessively pursued short-term interests and economic interests while ignoring the rights and interests of stakeholders, which seriously violated the concepts of integrity and social ethics (Saleh et al., 2011).

Meanwhile, both the government and the society attach great importance to the issue of corporate social responsibility, and many studies try to find the relationship between corporate social responsibility and corporate financial performance, for example, Flammer (2013) find that adopting CSR recommendations led to superior accounting results and the researches of Park & Oh (2015) and Cho et al. (2019) are conducted on the listed companies in South Korea. From the perspective of enterprises themselves, the pursuit of profit or financial performance is the fundamental goal of enterprise development. However, with people's requirements on quality, environmental protection, social welfare and other comprehensive factors, enterprises should consider various social responsibilities while pursuing profits (Trang & Yekini, 2014). The question that arises is whether investments in corporate social responsibility affect corporate financial performance. Therefore, this project researches the relationship between corporate social responsibility and financial performance. The main reason is that the disclosure of social responsibility report would make the internal operation of enterprises more open. Companies would have greater motivation to improve market performance according to their own development, laws and regulations and other comprehensive factors. Meanwhile, the disclosure of CSR also would help to improve the corporate reputation so as to promote the growth of corporate profits.

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In addition, different from previous studies, the project will choose the same industry in the UK and China for comparative analysis, in an attempt to find out the similarities and differences between developed countries and developing countries in the implementation of corporate social responsibility. As one of the most influential industries in the society, media companies should not only meet the interest needs of the public, but also meet the financial expectations of shareholders (Hou & Reber, 2011), which is one of the industries that could best reflect the relationship between corporate social responsibility and financial performance. Therefore, the project will study the relationship between corporate social responsibility and financial performance of media companies in the UK and China through the following aspects. Firstly, the literature review will summarize the research conclusions on the relationship between CSR and financial performance in recent years, and find the deficiencies of existing studies. Secondly, the methodology part will explain the project research method and the source and basis of research data and variables. Finally, the project will analyse and discuss the results of the study.

2. Literature Review

Before the 1980s, the supremacy of shareholders and the sanctity of private property was the golden rule of market emergency, and shareholders had the unique and supreme status of corporate governance (Stout, 2012). At this time, the concept of corporate social

responsibility was still relatively weak. Therefore, managers serve shareholders, and the goal of managers is to pursue the maximization of shareholders' interests (Godfrey, 2009). Although the theory has promoted the rapid development of some enterprises, it gradually revealed some limitations. Some companies have come to realize that their employees also bear the risks associated with their business performance. Therefore, human capital is an important resource for enterprise value increment as well. On the other side, due to the change of business environment, the interests of more and more individuals and groups are affected by the performance of enterprises, and enterprises are increasingly evolving into \"social enterprises\" (Stout, 2012). Hence, the theory of shareholder primacy may not be in line with the trend of the times.

Meanwhile, the stakeholder theory, which is more consistent with corporate social

responsibility, was put forward by Freeman (1984), and since the early 1990s, the stakeholder theory has brought a strong impact on the shareholder primacy theory. Instead of maximizing

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the interests of shareholders, it maximizes the wealth of shareholders by establishing relationships among stakeholders such as customers, employees and shareholders. It is also used to describe the relationship between CSR and performance (Adeneye & Ahmed, 2015). Adeneye & Ahmed (2015) explain that the fulfilment of social responsibility by enterprises may increase costs to some extent, but it would also bring better reputation to enterprises. These increased costs can be offset by other cost reductions due to the practice of social responsibility. Lee (2008) also suggest that the cost of corporate social responsibility is small, but the benefits are large. If the company can implement policies to improve the relationship between employees and improve the working environment of employees, though the cost is small, it could improve staff's morale and work efficiency. Thus, the comparative advantage of enterprises could be greatly improved. Therefore, under the stakeholder theory, CSR can also promote the progress of corporate financial performance.

On the basis of stakeholder theory, many scholars further study the relationship between corporate social responsibility and financial performance with the method of empirical research. Although such studies have been carried out relatively early, there is no unified conclusion. The main points focus on two aspects. The first is that there is a positive correlation between CSR and financial performance. Bragdon & Marlin (1972) are the earliest researchers (Griffin & Mahon, 1997). However, due to the limitations of social development level and conditions at that time, the research on the relationship between CSR and financial performance is not very deep. For example, Bowman & Haire (1975) only use the financial ratio of the enterprise to measure the performance of the enterprise, and they use the qualitative method to describe the relationship between the two in a simple way. Obviously, this kind of measurement method is relatively simple, and to some extent, it has low accuracy and credibility. On the basis of the former, Simpson & Kohers (2002) use two regression equations to construct the functional relationship between corporate social responsibility and financial performance, and use the internal rate of return and loan loss rate as independent variables to reflect the level of corporate financial performance. Meanwhile, CSR rating is adopted as the dependent variable to measure corporate social responsibility. Through a series of research and analysis, it is found that the social responsibility of 385 American Banks is positively correlated with their financial performance. Maqbool & Zameer (2018) also study the banking industry. Using Panel Regression Model and the analysis method of least square method, they conduct an empirical study on 28 Banks (including public and private banks) in Mumbai, India, and find that the social responsibility

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of these Banks is positively related to their financial performance. Another study with Spanish listed companies as samples finds that under good corporate governance, corporate social responsibility and financial performance promote each other. In other words, it is profitable for enterprises to fulfil their social responsibilities, while the profits of enterprises are also social, and a virtuous cycle is generated between them (Rodriguez-Fernandez, 2016). In addition, Waworuntu et al. (2014), Trang & Yekini (2014), Sayekti (2015) and Sila & Cek (2017) reach the same conclusion in their respective studies.

Secondly, there are also studies that suggest that CSR is negatively correlated or not correlated with financial performance. Brammer et al. (2006) use the stock rate of return to test the correlation between corporate social responsibility and financial performance and find that there is a negative correlation between them. The main explanation is that enterprises bear too much cost of social responsibility. Furthermore, Nollet et al. (2016) use the method of linear regression equation and nonlinear model to respectively study the relationship between corporate social responsibility and corporate financial performance. The linear model shows that there is a significant negative correlation between them, but the non-linear model shows that their relationship is u-shaped. However, some scholars believe that there is no relationship between CSR and financial performance. Brine et al. (2007) take 277 enterprises in Australia's 300ASK index as samples, and analyse corporate social responsibility and financial performance in Australia with return on assets and return on sales. The results show that there is no significant correlation between the two. Surroca et al. (2010) use empirical research to prove that there is no relationship between CSR and financial performance. They consider intangible assets to be an important part of a corporate financial performance, including innovation, human capital, reputation and culture. In addition, Chetty et al. (2015) also use empirical research, and they focus on the relationship between corporate social responsibility and financial performance in the short term. They analyse South African companies from 2004 to 2013, using the JSE SRI index as a basis for CSR. At the same time, ROA, ROE and EPS are used to represent the financial performance of enterprises to conduct multiple regression equation analysis, and the conclusion that there is no significant relationship between corporate social responsibility and financial

performance is obtained by the ordinary least square analysis method. Aras (2010) and Soana (2011) also find that CSR has no relationship with financial performance.

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Finally, in addition to two main ideas, there are some studies with different findings. For instance, Lankoski (2000) consider that the relationship between corporate social

responsibility and corporate financial performance is not a simple linear relationship, but an inverted u-shaped relationship. There is an optimal social responsibility. However, Saeidi et al. (2015) believe that there is no direct relationship between CSR and financial performance, but there is an indirect impact through intermediaries. Their empirical study on 205 Iranian manufacturing and consumer product enterprises shows that corporate reputation and competitive advantage are two mediating factors affecting the relationship between corporate social responsibility and financial performance, and the findings support that CSR indirectly drives financial performance by enhancing corporate reputation and competitive advantage.

Although these studies contribute to our understanding of when and how corporate social responsibility activities maintain financial performance (Godfrey, 2009), the diversity of conclusions also indicates that the sample selection and research methods are still not perfect (Surroca et al., 2010; Chetty et al., 2015; Saeidi et al., 2015). Moreover, Brammer et al. (2006) suggests that there may be big differences between different industries, and in the short term or medium and long term, CSR may have different effects on financial

performancemost of the research (Mackey et al., 2007; Chetty et al., 2015). But most studies use global data as samples, or only study a certain country. Such research may be difficult to distinguish the difference of the relationship between CSR and CFP in different industries or the difference in the different development periods of corporate social responsibility. There are few studies comparing developed and developing countries. Therefore, this paper will take listed media companies in the UK and China as research objects to compare and analyse their similarities and differences in the relationship between corporate social responsibility and financial performance. Compared with the development of corporate social responsibility in the UK in the past 50 years, the awareness of corporate social responsibility in China has only received attention in the past 10 years. The CSR development of the two countries is quite different, and the research conclusions are more representative.

3. Methodology 3.1 Data

This project selects British and Chinese media companies as research samples. The data are collected from 51 listed media companies in each of the UK and China over a period of 2015-

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2017. This means a total of 206 firm-year observations for the two countries. Since the annual report is the main source of CSR information and easy to collect (Saleh et al., 2011; Maqbool & Zameer, 2018), the information of CSR in the project are mainly collected through the annual reports and non-financial data reports of the companies, while the financial data such as ROA, Tobinq, firm size, financial leverage, asset liability ratio and capital intensity are mostly collected, collated and calculated by Datastream, and some missing financial data in Datastream are made up through the companies’ annual reports.

3.2 Measurement of CSR

This project uses the disclosure level of CSR to represent the CSR performance level of enterprises, while the measurement of CSR lacks consensus (Chetty, 2015). In order to maximize the credibility of this project, the collection of CSR information follows the guidance for media industry information disclosure prepared by Global Reporting Initiative (GRI). According to the guidance, corporate social responsibility information disclosure of media industry can be divided into three aspects: environment, society and governance and total 25 small items. When the company discloses an item, it would be recorded as 1, otherwise it would be recorded as 0. Thus, the CSR index can be calculated by the following formula:

𝐶𝑆𝑅󰀤𝐼𝑛𝑑𝑒𝑥=

3.3 Measurement of CFP and Control Variables

In previous studies, financial performance is principally measured by accounting-based method and market-based method. Accounting-based method is based on the analysis of financial statements issued by listed companies to measure the corporate financial performance, which mainly reflects the short-term performance of the company, such as Return on Total Assets (ROA), Return on Common Stockholders’ Equity (ROE) and Earnings Per Share (EPS) (Aras et al., 2010; Maqbool & Zameer, 2018). The market-based method is to evaluate the financial performance of an enterprise by using market analysis, especially the operation analysis of the capital market, which is mainly based on the value evaluation of the enterprise by market investors, and Tobinq is often used in research to reflect the long-term financial performance (Gherghina et al., 2015). A single market indicator or accounting indicator may not fully reflect the financial performance level of a

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𝑁𝑢𝑚𝑏𝑒𝑟󰀤𝑜𝑓󰀤𝐶𝑆𝑅󰀤𝐼𝑡𝑒𝑚𝑠󰀤𝑎𝑑𝑜𝑝𝑡𝑒𝑑󰀤𝑏𝑦󰀤𝑎󰀤𝑐𝑜𝑚𝑝𝑎𝑛𝑦

𝑇𝑜𝑡𝑎𝑙󰀤𝑁𝑢𝑚𝑏𝑒𝑟󰀤𝑜𝑓󰀤𝐶𝑆𝑅󰀤𝐼𝑡𝑒𝑚𝑠

company (Aras et al., 2010). Therefore, the project used the measurement method of Saleh et al. (2011) for reference and integrated the market-based method and accounting-based method to measure financial performance, namely, ROA and Tobinq are used to represent corporate financial performance.

In addition, in order to more accurately and systematically investigate the relationship between corporate social responsibility and financial performance, this project adds five common control variables, which respectively are firm size, financial leverage, asset liability ratio and capital intensity. Aras et al. (2010) and Chetty (2015) explain that the financial performance is subject to the influence and restriction of firm size. The larger the companies, the more social resources it may have. Therefore, the project uses the natural logarithm of total assets of the enterprise to represent the size of the company. Secondly, the financial leverage of a company can be used to indicate the current degree of risk of the enterprise. It is expressed as a ratio of total debt to total equity, which is supported by Maqbool & Zameer (2018). Similarly, the asset liability ratio affects the financing cost of a company, which is obtained by dividing total liabilities by total assets. Gherghina et al. (2015) believe that the financing capacity of an enterprise has a positive impact on its financial performance. Finally, capital intensity is measured by the ratio of fixed assets to total assets. Gürbüz et al. (2010) believe that capital intensity showed the difference of capital structure of enterprises and is negatively correlated with the financial performance of enterprises.

3.4 Model

Therefore, the project takes ROA and Tobinq as dependent variables, CSR as independent variables and four control variables to build the panel model:

roait=ait+b1csrit+b2sizeit+b3levit+b4alrit+b5capit+eit (1) tobinqit=ait+b1csrit+b2sizeit+b3levit+b4alrit+b5capit+eit (2)

In addition, the interaction between the country dummy variable and CSR will be added into the model for analysis to explore whether the relationship between CSR and corporate financial performance of the two countries is different.

roait=ait+b1csrit+b2sizeit+b3levit+b4alrit+b5capit+b6dummyit+b7dummyit*csrit+eit (3)

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tobinqit=ait+b1csrit+b2sizeit+b3levit+b4alrit+b5capit++b6dummyit+b7dummyit*csrit+eit (4)

Where, i and t in the following table of variables respectively represent the data of the ith individual in the year t. ait is the intercept of the ith cross-sectional individual to be evaluated at the t phase, while bi is the marginal value, which is the coefficient corresponding to the explanatory variable to be estimated, and eit is the random error term.

4. Results & Discussion

4.1 Descriptive Statistics

Table 1 Descriptive statistics

Country

Variable roa tobinq csr

China

lnsize lev alr cap roa tobinq csr

UK

lnsize lev alr cap

Obs 153 153 153 153 153 153 153 153 153 153 153 153 153 153

Mean 0.0687 1.4790 0.2005 12.6761 0.7263 0.3507 0.3211 0.0597 1.9077 0.2759 11.7378 1.1326 0.44 0.5910

Std. Dev. 0.0519 1.5939 0.0518 1.3810 0.7841 0.17 0.1911 0.1142 1.5823 0.0777 1.8730 1.3390 0.1750 0.2221

Min -0.1338 -0.3800 0.0000 10.1148 0.0500 0.0500 0.0100 -0.43 0.1048 0.0142 8.1450 0.1357 0.1195 0.0633

Max 0.2268 12.9300 0.3000 15.3944 5.3500 0.8400 0.8000 0.3361 8.9868 0.7683 16.4050 12.5986 0.9265 0.9175

From the perspective of a single variable, ROA variable is selected in this project to measure the short-term financial performance of the company. The sample mean of ROA in China is 0.0687, the standard deviation is 0.0519, the minimum value is -0.1338, and the maximum value is 0.2268. Compared with its long-term performance variable Tobinq, the sample short-term performance mean is small, and there is no significant change in the sample short-term performance, while the overall long-term performance of the enterprise fluctuates greatly. Similarly, UK long-term performance fluctuates more than short-term performance. However, the standard deviation of its ROA is much larger than that of China, that is, compared with China, the change in Britain's short-term performance is more

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pronounced. In addition, the standard deviation of Tobinq in the UK is 1.5823, with a minimum value of 0.1048 and a maximum value of 8.9869. Compared with China, long-term performance in the UK is relatively flat.

4.2 Correlation Analysis

As the project data are all numerical data, Pearson correlation coefficient can be used to measure the degree of correlation between variables. If the correlation between explained variables and explanatory variables is high, it is meaningful to study the model. If the correlation between explanatory variables is too high, there may be serious multicollinearity between variables, which would affect the results of the model.

Table 2 Correlation matrix. (China)

roa tobinq csr size lev alr cap

roa 1.0000 0.0963 0.23 0.59*** 0.0000

tobinq 1.0000 0.1132 0.1636

csr 1.0000 -0.2432*** 0.0024 -0.3419*** 0.0000 -0.3308*** 0.0000 0.1044 0.1990

lnsize 1.0000 0.1070 0.1882 0.1244 0.1255 0.3696*** 0.0000

lev 1.0000 0.31*** 0.0000 -0.1718** 0.0337

alr 1.0000 -0.1147 0.1579

cap 1.0000

-0.3319*** -0.3387*** 0.0000 -0.3155*** 0.0001

0.0000 -0.1052 0.1958

-0.2128*** -0.2408*** 0.0083 -0.0962 0.2366

0.0027 0.0816 0.3163

*p<0.1; **p<0.05; ***p<0.01.

Table 3 Correlation matrix. (UK)

roa tobinq

roa 1.0000 0.5532*** 0.0000

tobinq 1.0000

csr

lnsize

lev

alr

cap

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csr size lev alr cap

0.4525*** 0.0000 0.1112 0.1710 0.0350 0.6678 0.0284 0.7278 -0.0388 0.6344

0.1378* 0.04 -0.0525 0.5195 -0.1731** 0.0324 -0.1907** 0.0182 -0.1420* 0.0800

1.0000 -0.2534*** 0.0016 0.2923*** 0.0002 0.2086*** 0.0097 -0.1578* 0.0515

1.0000 0.3736*** 0.0000 0.3537*** 0.0000 0.4234*** 0.0000

1.0000 0.76*** 0.0000 0.0631 0.4387

1.0000 0.1296 0.1103

1.0000

*p<0.1; **p<0.05; ***p<0.01.

From the correlation analysis in table 2 and table 3, It can be found that there is a strong correlation between the asset-liability ratio and financial leverage in the two models (the correlation coefficient is greater than 0.8), so the model may have a high possibility of multicollinearity. In table 4, variance inflation factor (VIF test) is used to verify the collinearity of the model.

Table 4 VIF test

Variable lev alr size cap csr Mean VIF

China

VIF 5.12 5.00 1.29 1.26 1.22 2.78

1/VIF 0.195272 0.199869 0.775808 0.794513 0.817457

VIF 6.04 5.37 1.67 1.33 1.27 3.14

UK

1/VIF 0.1695 0.186075 0.600221 0.750683 0.788692

Since the VIF values of both independent variables and control variables in the two countries' models are less than 10, the multicollinearity of the model is low. Therefore, it will not have a great impact on the results of the model.

4.3 Significance Test of Difference

Table 5 ROA significance test of difference（t-test）

Group China UK combined diff

Obs 153 153 306

Mean 0.0691 0.0608 0.09 0.0084

Std. Err. 0.0041 0.00 0.0049 0.0098

Std. Dev. 0.0502 0.1097 0.0853

T 0.8573

P 0.3919

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Table 6 Tobinq significance test of difference（t-test）

Group China UK combined diff

Obs 153 153 306

Mean 1.4392 1.9017 1.6704 -0.4625

Std. Err. 0.1099 0.1259 0.0844 0.1671

Std. Dev. 1.3594 1.5567 1.4773

T -2.7683

P 0.0060

It can be seen more intuitively from table 5 and table 6 that at the significance level of 0.01, there is no significant difference in ROA between the two countries, but Tobinq in China is far smaller than that in the UK.

4.4 Regression Results

The relationship between corporate social responsibility and ROA and Tobinq in China can be obtained from table 7.

Table 7 regression results (China)

VARIABLES

csr size lev alr cap Constant

Observations R-squared Number of id

F Wald chi2

*p<0.1; **p<0.05; ***p<0.01.

(1)fe roa 0.450*** (0.119) -0.0265*** (0.00653) -0.0379* (0.0192) 0.108 (0.0663) -0.0465 (0.0430) 0.319*** (0.0939) 153 0.278 51 7.46***

(1)re roa 0.490*** (0.0816) -0.0105*** (0.00321) -0.0352*** (0.0117) 0.129*** (0.0459) -0.0224 (0.0230) 0.0909* (0.0479) 153 0.233 51 75.18***

(2)fe tobinq -1.087 (3.330) -1.222*** (0.183) 0.762 (0.538) -4.666** (1.857) 3.169*** (1.205) 17.22*** (2.628) 153 0.412 51 13.58***

(2)re tobinq -1.638 (2.505) -0.683*** (0.101) 1.068*** (0.3) -4.766*** (1.407) 3.094*** (0.717) 10.34*** (1.499) 153 0.387 51 63.15***

The results show that in the sample of model 1, whether the fixed effects model or the random effects model, corporate social responsibility index coefficient is significant at the 1% level, suggesting that corporate social responsibility will be on short-term active effects

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of corporate financial performance. This analysis result is also similar to the research result of Sayekti (2015) and Maqbool & Zameer (2018). However, the regression analysis of corporate social responsibility and tobinq shows that the CSR coefficient is not significant. Therefore, the CSR of Chinese media companies may not have a significant impact on their long-term financial performance.

From the perspective of other control variables, the firm size has a significant negative correlation with the short-term and long-term financial performance of the enterprise. Indicating that the larger the company is, it may have an opposite impact on the financial performance of the enterprise. Similarly, through the analysis of random effects model, the financial leverage of a company is negatively correlated with its short-term performance and positively correlated with its long-term performance, which means that financial leverage would affect its financial performance. In addition, under the random effects model, the asset liability ratio shows a significant positive correlation to ROA and a significant negative correlation to Tobinq. Finally, the capital intensity has a significant positive impact on the long-term performance of companies, but has no significant impact on the short-term effect of enterprises.

On the whole, when the explained variable is ROA (model 1), the fitting degree of the fixed effects model is 27.8%, while that of the random effects model is 23.3%, indicating that the fitting effect of the model is good. Similarly, when Tobinq represents the long-term financial performance of the enterprise (model 2), both effect- and random effects models are very good fitting (r squared is about 0.4).

Table 8 shows the regression analysis results of British media enterprises.

Table 8 regression results (UK)

VARIABLES

csr size lev

(1)fe roa 0.863*** (0.153) 0.0527** (0.0228) -0.0508** (0.0214)

(1)re roa 0.940*** (0.121) 0.0274*** (0.00697) -0.0480*** (0.0176)

(2)fe tobinq -0.717 (1.5) -0.103 (0.231) -0.292 (0.216)

(2)re tobinq 0.212 (1.405) 0.0231 (0.109) -0.292 (0.201)

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alr cap Constant

Observations R-squared Number of id

F Wald chi2

*p<0.1; **p<0.05; ***p<0.01.

0.0766 (0.132) -0.117 (0.0819) -0.704** (0.278) 153 0.338 51 9.90***

0.0840 (0.102) -0.0696 (0.0487) -0.4*** (0.0941) 153 0.326 51 71.20***

0.771 (1.329) -0.878 (0.827) 3.801 (2.803) 153 0.044 51 0.

0.5 (1.203) -0.9 (0.655) 2.211 (1.400) 153 0.037 51 6.20

According to the regression results, under both effect models, CSR has a significant impact on ROA at the significance level of 0.01, and there is a significant positive impact. Therefore, CSR index will have a positive impact on corporate financial performance in the short term, and corporate financial performance may rise with the enhancement of corporate social responsibility. However, in the long run, the CSR index has no significant impact on Tobinq, so the CSR of British media companies may not have a positive or negative impact on their long-term financial performance.

Secondly, the regression analysis results of control variables are quite different from those of Chinese media enterprises. In the fixed effects model, firm size has a significant positive correlation with ROA at the significance level of 0.05, while in the random effects model, firm size has a significant positive impact on ROA at the significance level of 0.01. Therefore, there may be a significant positive correlation between the size of British media companies and their short-term financial performance, that is, the larger the size of the company, the better the short-term performance of the company. However, in the long run, enterprise size may not have a significant impact on its performance. In addition, financial leverage also has a significant impact on the short-term financial performance of enterprises. Such influence is negatively correlated, namely, the financial performance of enterprises may decrease with the rise of financial leverage of enterprises.

From the perspective of the model, in the fixed effects model analysis of model 1, R squared is 0.338, that is, the fitting degree of the model is 33.8%, while the fitting degree of the random effects model is 32.6%. Therefore, in the analysis of the relationship between the

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CSR index and ROA, the fitting effect of the model is very good. Meanwhile, in the fixed effects model, F value is 9.9, while in the random effects model, F value is 71.2. Both reject the null hypothesis that the whole model is not significant at the significance level of 0.01, that is, the whole model is significant. However, although model 2 has a very good model fitting degree, the model is not significant.

By comparing the regression analysis results of China and the UK, it can be found that there is a significant positive correlation between China and the UK in model 1. In the fixed effects model, the CSR coefficient of China is 0.450, that is, every 1 percentage point increase of its CSR index will promote the increase of ROA by 45%. Under the same effects model, the CSR coefficient of British media enterprises is 0.863, that is, ROA will increase by 86.3% with the growth of CSR index by 1 percentage point. As can be seen from the random effects model, the CSR coefficient of Chinese media companies is 0.490, while that of the UK is 0.940. In model 2, both China and the UK reached the conclusion that the independent variable CSR is not significant, in which the Chinese model is significant, but the British model is not significant. Therefore, it can be concluded that the CSR of Chinese media companies does not affect their long-term corporate performance, while the CSR of British media enterprises has no obvious relationship with their long-term corporate performance.

In the research result of model 1 and model 2, the CSR coefficient of Britain is larger than that of China. Therefore, model 3 and 4 can more accurately reflect whether there is a difference between the two countries after the interaction terms of country dummy variable and CSR are added (table 9).

Table 9 regression result of interaction

VARIABLES

csr d dcsr size

(3) roa 0.5*** (0.0939) 0.0957** (0.0373) -0.247 (0.155) 0.0125*** (0.00306)

(4) tobinq 2.807 (1.834) 0.1 (0.729) -2.412 (3.031) -0.100* (0.0598)

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lev alr cap Constant

Observations R-squared Adj R-squared

F

*p<0.1; **p<0.05; ***p<0.01. -0.0380*** (0.0107) 0.115** (0.0523) -0.0505** (0.0225) -0.313*** (0.0487) 306 0.293 0.276 17.61***

0.306 (0.208) -3.029*** (1.023) 0.144 (0.440) 3.236*** (0.952) 306 0.101 0.080 4.76***

Similar to the results of model 1 and model 2, CSR in model 3 presents a significant positive correlation, while CSR in model 4 presents an insignificant correlation. On the other hand, the interactive variable d*csr is not significant in model 3 and model 4. Therefore, there may be no obvious correlation between the UK and China about the relationship of CSR and financial performance.

4.5 Discussion

On the whole, media companies, especially listed media companies, could improve their financial performance to some extent by fulfilling their social responsibilities. It could be found from the above research results that although CSR has no obvious impact on long-term financial performance of enterprises, it still has a significant impact on short-term financial performance. It could be seen that the fulfillment of social responsibility by media companies would not squeeze their profits or adversely affect their development. This is also supported by the theory of Nollet et al. (2016) that companies could create additional value for their products by using CSR as part of their strategic planning. While fulfilling corporate social responsibility, enterprises could, to a certain extent, attract socially conscious consumers, investors and other stakeholders, which increases their willingness to buy their products and invest in them. In other words, although it would increase the cost for enterprises to fulfill CSR and disclose information, under the background of increasing public awareness of responsibility, companies that actively undertake CSR could obtain high rewards from the public's positive and responsive behavior of responsibility.

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However, Saleh et al. (2011) believe that the number of companies in the energy market that continuously disclose CSR activities in annual reports is still limited. Therefore, CSR has no impact on financial performance in the long run. On the other hand, considering the particularity of the media industry, such as the authenticity and timeliness of information, as well as the specific requirements for privacy protection (GRI, 2018), the attraction generated by CSR may be short-lived, so it would not have an obvious impact on the financial performance of enterprises in the long run.

In addition, there is no significant relationship between the interaction terms in model 3 and model 4, which may also mean that there is no significant difference between media enterprises in developing countries and developed countries in the impact of CSR on financial statements, although the coefficient of CSR in the UK is greater than that in China in the respective analysis. Therefore, China only began to attach importance to the development of corporate social responsibility in recent years, but its impact on financial performance would not be worse than that of the UK, where CSR has been developing for nearly 100 years. It may also be because though developing countries do not have perfect standards and systems for the disclosure of corporate social responsibility, the demand of the general public and stakeholders for enterprises to fulfill social responsibility still exists.

5. Conclusion

The relationship between corporate social responsibility and corporate financial performance has always been a topic of concern. The development of CSR, especially in developed countries, has a long history. However, previous studies on this issue have reached a variety of conclusions. For example, Rodriguez-Fernandez (2016) and Maqbool & Zameer (2018) believe that there is a positive relationship between the CSR and CFP, while Brammer et al. (2006), Surroca et al. (2010) and Chetty et al. (2015) suggest that there is a negative correlation or even no correlation between the two. Therefore, further research on this topic is still meaningful.

The project uses panel data to study the relationship between CSR and financial

performance of media enterprises in China and the UK respectively, as well as the interactive relationship between Chinese and British enterprises on this issue. In addition, the project measures financial performance based on accounting and marketing methods, namely ROA

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and Tobinq. Meanwhile, CSR index is collected according to GRI guidelines on social responsibility disclosure in the media industry. The control variables of the project include firm size, financial leverage, asset liability ratio and capital intensity. The sample included data from 51 listed media companies in China and the UK respectively in 2015-2017. Moreover, the panel regression model shows that there is a significant positive correlation between CSR and ROA in both countries, while there is no significant relationship between CSR and Tobinq in both countries. This also means that the short-term financial performance of an enterprise may increase with the fulfillment of social responsibilities, while the long-term financial performance will not be significantly affected, which indicates to a certain extent that corporate social responsibility fulfillment will have a positive impact on its financial performance as well. In addition, according to the analysis results of the interaction model between China and the UK, there is no interactive relationship between the influence of CSR index on financial performance in China and the UK. This may be because effective CSR strategies can attract consumers and investors to some extent in both developing and developed countries, but such attraction will not last long.

Although the project has carried out comparative analysis of two countries at different stages of development, it only considers the possibility of linear regression and does not carry out analysis of the nonlinear model. In recent years, many studies have also suggested that there is a non-linear relationship between CSR and financial performance (Lankoski, 2000; Nollet et al., 2016). In addition, the sample of this project only covers 51 listed companies in the same industry, and the sample size is small, while the relationship between CSR and financial performance of other industries or non-listed enterprises may be different. These are the directions that we can continue to study in the future.

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