BIBM788 Professional Project: Analysis on the Variables CSR

Introduction and Research Methods

The given research report will highlight data analysis on the variables CSR and financial performance of 15 selected industry companies. The analysis have been done based on 15 companies. Independent and dependent variables are taken as CSR disclosure index rating and Average Stock Price.  The lower the rank, the better is the company. The analysis will be done with the help of Correlation and regression methods using excel.  The total Assets figure is displayed in millions.  The details of stock prices have been taken from New Zealand stock exchange and Bloomberg.

Key Findings

The selected 15 companies are as follows:-

The key findings from 15 companies regarding their average stock price and CSR disclosure can be further evaluated with the following tables:-

Analysis of Other companies

Analysis

From the above analysis, it can be inferred that Air Australia ranks 1^st in CSR index. The correlation between total assets and CSR disclosure is 0.9 and correlation between CSR disclosure and Stock performance is 0.82. It can be deduced that the relationship between the variables is positive as lower the CSR index rank, the better is for the firm and total assets have also increased over the years. However, it stock price has decreased in 2017 in comparison with 2016. Moreover, P value is also greater than 0.05. Therefore, the hypothesis that CSR has an impact on financial performance is rejected in this case.

In addition to this, it can be inferred that the correlation between average stock price of last 5 years and count of CSR disclosures is positive. For example, Kiwi Bank, Goodman Property, A2 Milk Company, Fletcher building has a positive correlation between stock price and CSR disclosures. It has been also observed that the CSR disclosures have improved over the last 5 years. The stock prices of most of the organizations have increased, though there are few exceptions like in case of New World Company and the Warehouse Group. In case of total assets, almost all the organizations have successfully increased their total assets and thus have a positive Return on Assets (ROA) over the years. However, there are few exceptions are there in this case as well, like Fonterra Group and Warehouse Group. However, the correlation between total assets and CSR disclosure is not always positive for all the individual companies. For example, the correlation of total assets and CSR disclosure for New World Company is -0.70. This suggests there is a negative correlation between the two variables. However, P-value is less than 0.05. Therefore, null hypothesis can be rejected in this case. However, in case of most the organizations P-value is more than 0.05, which further suggests that there are no significant changes or the result is not very much significant. For example, Fletcher Group, Z Energy, Fonterra Group P value is more than 0.05. This further shows that the relationship between CSR and financial performance is not very much significant.  This further draws to the conclusion that any particular industry moderates the relationship between CSR disclosures and financial performance. It can be inferred that industry risks and exposures plays a key role for a company to perform their CSR activities.  If industry risks and stakeholders engagement is high, then, it will affect the CSR activities for that particular company in the given industry.  This is further inferred in this analysis that not all the organizations have significant relationship between CSR and financial performance. Only few like New World, Kiwi Bank, Goodman Property have significant relationship between CSR and financial performance as their P-value is less than 0.05 and null hypothesis can be rejected easily in their case and not in case of other companies.  An organization like Air New Zealand, which is ranked no 1 in CSR disclosure for the last few years is showing no relationship between its stock price and CSR disclosures as their average  stock price has declined in 2017 from 3.08 to 2.11 in comparison with 2016. Due to this reason, its p-value is more than 0.05.  Therefore, based on the given results, the hypothesis of these variables is rejected. Hypothesis is only valid in case of few selected industries.

Conclusions and Recommendations

From the above analysis, it can be concluded that there is no significance between CSR disclosure and financial performance, apart from few industries. These further reflects that there are several other factors which makes CSR disclosures affect financial performance. These factors can be in the form of industry risk and exposure and level of stakeholder engagement. However, positive correlation between stock performance and CSR disclosures have been seen in many of the organizations. In addition to this, many industries have also witnessed positive correlation between CSR disclosures and total assets. However, based on the analysis, few recommendations can be given for future research purpose.  These are as follows:-

• Analysis must be done upon the different other factors which classifies how different organizations operate and how it can influence the relationship between CSR and financial performance
• Variables like industry size and risk can also be taken into consideration.

These are the recommendations that can be useful for future research purpose.

Bibliography

Air New Zealand’s corporate reputation flying high | Colmar Brunton. (2018). Retrieved from https://www.colmarbrunton.co.nz/air-new-zealands-corporate-reputation-flying-high/

Bloomberg.com. (2018). Retrieved from https://www.bloomberg.com

Christopher. (2016). Societal Needs- Responsibility of Government or Company. Retrieved from

https://www.forbes.com/sites/christopherskroupa/2016/05/18/meeting-the-needs-of-society-whose-job-is-it-corporations-or-government/#2ade5d946de8

Comparative Economic Research. (2016c). The relationship between Corporate Social Responsibility and Corporate Financial Performance- evidence from empirical studies. Retrieved from https://www.degruyter.com/downloadpdf/j/cer.2016.19.issue-4/cer-2016-0030/cer-2016-0030.pdf

NZX - New Zealand Stock Exchange. (2018). Retrieved from https://www.nzx.com