Empirical Study towards Corporate Social Responsibility Practices and Company Financial Performance. Evidence for Companies Listed on the Bucharest Stock Exchange

The present paper empirically examines the relation between corporate social responsibility (CSR) practices and company financial performance (CFP) for firms listed on the Bucharest Stock Exchange. Likewise, the paper analyzes the CSR policies adopted by the companies as CSR practices towards six types of stakeholders that influence the CFP. Using principal component analysis, we developed a CSR index and several specific indices for CSR practices. By estimating cross-sectional regression models, our study provides support for a positive link between CSR and CFP, when companies implement CSR policies regarding employees, environmental protection, and ethics as social practices. Further, empirical findings show that companies responsive to the CSR concept and those considering international standards and regulations for quality products and services in their business strategy enhance CFP.