Impact of CSR on Operating Financial Results: The Case of Companies from RESPECT Index

The impact of corporate social responsibility (CSR) on financial performance has been broadly studied by many researchers for more than two decades, but results are still not unequivocal. It has been mainly verified on globally recognized stock exchanges and data samples, limited number of studies analyzed similar relationships on Central and Eastern European markets, tackling short-term effects. The aim of this study is to extend existing literature by verifying the impact of CSR activities on long-term financial operating performance of companies included in sustainability index RESPECT on Warsaw Stock Exchange. Research question of this chapter has been stated as is it possible to recognize improvement or worsening of operating financial results of companies undertaking CSR activities. In this study inclusion in the sustainability index is used as approximation of CSR activities and return on assets—as a measurement of financial operating performance. Event study methodology has been applied to verify research hypothesis, sample consists of 22 companies that has been included into RESPECT index in years 2009–2014, their financial performance was analyzed in years 2007–2016. Results show that financial performance of companies improves significantly after inclusion in the sustainability index. Therefore, investors’ expectations of economic improvements of companies conducting CSR activities are met in the long run.