The impact of corporate social responsibility and internal controls on stakeholders’ view of the firm and financial performance
Sustainability Accounting, Management and Policy Journal
ISSN: 2040-8021
Article publication date: 3 July 2017
Abstract
Purpose
The purpose of this study is to empirically examine whether two major stakeholder groups – customers and employees – consider third party-reviewed corporate social responsibility (CSR) reports and assurance on the quality of internal controls as value determinant in their decisions, and how their decisions influence financial performance through the halo effect of these reports.
Design/methodology/approach
Using Compustat North America and Global Reporting Initiative data, the authors used first-order autoregressive models over the period from 2006 to 2012.
Findings
The results indicate that the impacts of customers and employees on financial performance are influenced by third party-reviewed CSR reports and effective internal control. Moreover, it is found that the third party-reviewed CSR reports and effective internal control enable the persistence of financial performance.
Social implications
The findings have implications for stakeholders in terms of third party-reviewed CSR reports and effective internal control. The findings are important due to the influence that these stakeholders (customers and employees) have on the financial performance of firms and the impact that CSR actions can have on society as a whole.
Originality/value
To the authors' knowledge, this is the first study that contributes to the literature by demonstrating that information about third party-reviewed CSR reports and internal control reviews may influence the perceptions of firms by two primary stakeholders – customers and employees.
Keywords
Acknowledgements
The authors are grateful to Nikolaos Artavanis, Christopher F. Baum, Süleyman Özmucur, three anonymous reviewers and the editor of the Journal for their valuable comments and suggestions.
Citation
Akisik, O. and Gal, G. (2017), "The impact of corporate social responsibility and internal controls on stakeholders’ view of the firm and financial performance", Sustainability Accounting, Management and Policy Journal, Vol. 8 No. 3, pp. 246-280. https://doi.org/10.1108/SAMPJ-06-2015-0044
Publisher
:Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited