**4.2 Relationship between CSR and performance level**

The main results of the three linear regressions estimated, Eqs. (1)–(3), are presented in **Table 7**.

Regarding the coefficient of the independent variable *CSR*, it assumes positive values for all models, with statistical significance at 5%, suggesting that companies that pursue CSR-based policies have a higher financial performance compared to those that do not. This is most visible in model 3 as the coefficient has the highest value.

Regarding control variables, most have statistically significant coefficients at 1% except for the *Leverage* and *Financial Slack* variable in model 1 which is statistically significant at 5%; *Size* and *Financial Slack* in model 2, which is statistically significant only at 10% and 5%, respectively; and *Financial Slack* which has a statistically significant value at 5% in all models. The expected signal for all variables is also confirmed. Thus, the *Size* variable has a positive coefficient for all models, which means that assuming everything else remains constant, larger companies show higher financial performance. The *Leverage* variable has a negative coefficient in all models, which means that the higher the corporate indebtedness, the higher the


#### **Table 7.**

*Relation between CSR and financial performance.*

leverage level and consequently the lower the financial performance, confirming the studies of Waddock and Graves and Capon et al. [12, 48]. Given the industry in which companies operate and the impact they have on environmental and social levels, it can be stated that the *Low Impact* variable has a positive coefficient for all models and the *Medium Impact* and *High Impact* variables present negative coefficients also for all models.

Regarding the *Country* variable, it has a positive coefficient for all the models, suggesting that firms in the countries with the highest level of economic development have higher financial performance. Finally, the *Financial Slack* variable also has a positive coefficient for all models, meaning that companies with higher working capital values have a higher financial performance.

Based on R<sup>2</sup> values, the first model explains 13.0% of the total variation of the ROE, the second one 17.9% of the total variation of the ROA, and the third one 31.3% of the total variation of the Tobin's Q. The third model shows the highest value, which is in agreement with the study by [52].

Finally, the models are valid in the explanation of the ROE, ROA, and Tobin's Q measures because the p-value of the F-statistics is equal to 0.000 in all the models which means that the hypothesis of joint nullity of the independent variable coefficients can be rejected.

In conclusion, the results support our hypothesis that companies pursuing CSRbased policies have a higher financial performance compared to those that do not, both in the short-term (ROE and ROA) and in the long-term (Tobin's Q ).

#### **4.3 Impact of financial crisis in financial performance**

Given that most of the previous studies look at the relationship between CSR and financial performance in periods of nonfinancial crisis, it would be interesting to understand how this relationship works during periods of recession. In fact, the last economic and financial crisis (2009–2013) was considered by many as the worst *Social Responsibility and Financial Performance: The Case of STOXX Europe Index DOI: http://dx.doi.org/10.5772/intechopen.93573*


*Statistical significance at 10%.*

*\*\*Statistical significance at 5%.*

*\*\*\*Statistical significance at 1%.*

#### **Table 8.**

*Relation between CSR and financial performance: Impact of crisis.*

financial crisis since the Great Recession of 1930 with a huge impact on the lives of companies, notably on their financial performance [53].

According to [54], financial crisis affects negatively corporate financial performance. During these periods, investors are more concerned about financial performance and the disclosure of CSR information may minimize this concern [55].

In order to focus on the effects of crisis on the financial performance of companies pursuing CSR policies, a modification was made to the models, including the *Crisis* dummy variable and a *Crisis \* CSR* interaction variable. This modification makes the impact of the financial crisis on the relationship between CSR and the financial performance more clear [52].

**Table 8** presents the main results of this additional analysis. We chose not to present the results for the remaining variables to make it simpler.

There is statistical evidence that, in years of crisis, companies with SRSE have a higher financial performance compared to NRSE, since the coefficient of the interaction variable *Crisis* \* *CSR* is positive and statistically significant for the three models studied. Thus, keeping all other factors constant, in the years of financial crisis, it appears that the ROE for the SRSE is on average 0.072 higher than ROE for the NRSE, the ROA is 0.02 higher, and the Tobin's Q is 0.114 higher, on comparing to the NRSE. The *Crisis* variable has a negative and statistically significant coefficient in all models, suggesting that the NRSE in the years affected by the financial crisis showed a reduction in financial performance. During the years of financial crisis, the SRSE presented an average increase of 0.038 units (0.072–0.034) in model 1, an increase of 0.008 units (0.020–0.012) in model 2, and an increase of 0.004 units (0.114–0.110) in model 3.

Given that the financial performance of SRSE decreased less than the financial performance of the NRSE during the period of crisis, it was possible to conclude that during the period of financial crisis, the financial performance of companies adopting CSR-based policies suffered fewer negative impacts compared to the financial performance of companies that do not. These results are in line with [56], which concluded that with the onset of the subprime financial crisis, the positive relationship between financial performance and CSR was disappearing but that was inverted when companies began implementing CSR strategies.
