An Empirical Study of Corporate Financial Performance and Corporate Social Responsibility: Evidence from the Service Industry of Zhejiang Province

After decades of rapid development in China, the social awareness of corporate social responsibility (CSR) has been gradually improved in recent years. Nevertheless, there still remains a protracted debate about the role of the firm in society and disagreement as to whether wealthy maximization should be the sole goal of a corporation. The main purpose of this study is to explore and test the relationship between corporate social responsibility and corporate financial performance. This paper extends earlier research with focusing on a particular industry, the service industry. By establishing a set of CSR measures which are suited to Chinese companies and employing the method of content analysis, this study investigates 32 service companies of Zhejiang province listed in Shanghai Stock Exchange. The results indicate that CSR is positively correlated with corporate financial performance, but not very strongly. Finally, some reasons for the weak relationship are discussed.