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The relationship between current financial slack resources and future CSR performance.: A quantitative study of public companies in the Nordic Markets
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
2017 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Companies are expected to be good corporate citizens and fulfil expectations of both shareholders and stakeholders. Depending on their corporate objectives, companies undertake different CSR activities using their preferred financial resources. The relationship between these two notions is interesting to investigate in the Nordic context since companies in this geographical area are the global leaders in sustainability. We formulate the following research question as:

What is the relationship between financial slack and the CSR performance in Nordic countries?

As such, the purpose of this thesis is to investigate the underpinnings of whether companies choose to allocate their financial slack resources towards improving performance of CSR, or so called value creation. Doing so, we investigate the relationship between financial slack resources and CSR score.

In adopting a regulatory position on the development of society, we conduct our research in accordance with the functionalist research paradigm, namely through commitment to the objectivist ontic and positivist epistemic research philosophies. We answer the research question using the deductive approach. Our research design is framed with an explanatory purpose relying on archival strategy to perform a quantitative study.

The theoretical underpinnings for analysis comes in the form of legitimacy theory, the institutional differences hypothesis, Resource-based theory, slack resources theory, stakeholder and shareholder theory. We use multiple linear regressions to analyse cross-sectional data for the period between 2005 and 2015 collected from Thomson Reuters DataStream.

Our result indicates that the relationship between financial slack and CSR performance in the following year is mixed with both positive and negative relationships being present. Our most important finding is a pattern indicating that during the year 2008 the relationship changed from being positive to negative. This implies that the more funds a company has at its discretion, the less likely it is for them to invest it in developing their CSR performance the following year. This could have severe negative implications on shareholders, stakeholders and society.

Place, publisher, year, edition, pages
2017. , 129 p.
Keyword [en]
CSR, ESG, legitimacy theory, institutional differences hypothesis, Resource-based view, slack resources theory, stakeholder theory, shareholder theory, agency theory, stewardship theory, Nordic countries
National Category
Business Administration
Identifiers
URN: urn:nbn:se:umu:diva-137563OAI: oai:DiVA.org:umu-137563DiVA: diva2:1119894
Educational program
Master's Programme in Finance
Supervisors
Examiners
Available from: 2017-07-05 Created: 2017-07-05 Last updated: 2017-07-05Bibliographically approved

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