CORPORATE SOCIAL AND ENVIRONMENTAL RESPONSIBILITIES AND CORPORATE PERFORMANCE IN MANUFACTURING SECTOR: EVIDENCE FROM SAUDI ARABIA

Abstract

This study examines the associations of corporate social and environmental
responsibilities with corporate performance in Saudi Arabia for the period of 2007-
2011. A pooled OLS regression analysis is used to estimate the associations
proposed in the hypothesis. The final sample consists of 164 listed companies in
Tadawul. The study finds that corporate social and environmental responsibilities
are negatively associated with corporate performance in a form of return on equity.
Additionally, this study reports insignificant associations between corporate social
and environmental responsibilities and corporate performance in forms of Tobin's
Q and ROA. Importantly, the study suggests that regulators, especially Saudi stock
exchange, should mandate companies to disclose all relevant information related to
corporate social responsibility in a transparent and timely manner, and increase law
enforcement to enhance good corporate governance practices. For companies, this
study proposes that they should emphasize more on enhancing the role and the
quality of their social and environmental responsibilities, board of directors and the
audit committee members, as this enhancement may positively influence their
performance.
KEYWORDS: CSR, CS, Saudi Arabia