Corporate Social Responsibility and Corporate Financial Performance in Cultural and Entertainment Industry: Evidence from Chinese Listed Companies

Abstract

Cultural and entertainment industry has entered a phase of rapid development in China, and with it comes some problems on regulating its derivatives and also raising social concern about Corporate Social Responsibility (CSR) in Chinese cultural and entertainment industry. In addition, CSR has drawn more and more attention in developing countries even though its development lags behind developed countries at current stage. Meanwhile, as many studies stated, poor performance in CSR will have negative effects on Corporate Financial Performance (CFP). Therefore, the purpose of this study is to study on the relationship between CSR and CFP in Chinese cultural and entertainment industry. The study adopts an empirical study to examine the correlation between CSR and CFP. There will be two regression models used to examine the linkage between the overall CSR performance and CFP, and the relationship between specific CSR elements and CFP, respectively. Five CSR elements: shareholder responsibility, employee responsibility, supplier, customer and consumer responsibility, environmental responsibility and social responsibility are used as independent variables, and five financial indicators: ROE, ROA, EPS, the growth rate of main operating, the expansion rate of total assets are adopted as dependent variables to measure companies’ profitability and growth ability. After doing the analysis of the results, the author finds there is a significant positive relationship between CSR and companies’ profitability, however, CSR has no significant effects on companies’ growth ability. Even though the study is limited by the size of sample, it is the first study that examines the relationship between CSR and CFP in Chinese cultural and entertainment industry. It may help increase the understanding of the relationship between CSR and financial performance in Chinese cultural and entertainment industry.