The Costs of Social Responsibility and its Impact on Strategic Financial Performance - From Analyst’s Point of View

The present study aims to confirm that companies that practice social and ethical investment are successful companies in the markets by evaluating the financial performance of companies that considered to have practices in social responsibility. Two types of companies have been approved: Companies with good financial performance and companies with poor financial performance, The evaluation is done through two measures, the first measuring the impact of liability activities on market value, and the second measuring the impact of activities on operational performance. The researcher has founded out a number of results, the most important one is that investing in social responsibility, on both measures, is expensive, but it does not reduce shareholder value, but rather contributes to maximizing wealth. As for the most important recommendations, it is necessary to pay attention to determining the procedures that contribute to corporate social responsibility, most importantly in determining corporate governance and the wages of the company’s chief executive officer.