Relevant RelatedLiterature and HypothesesFollowing previous research such as: Branco and Rodrigues (2006);Platonova et al. (2016);Galant & Cadez (2017)CSR has been defined in several ways and over time,its contents are also evolving. For example, Dahsrud (2008) in Galant& Cadez (2017)recognized 37 diverse definitions of CSR. However, we use the widelyacceptable pyramid definitions of Carroll (1999). Carroll (1999, p. 289) identifies four differentareas that make up a CSR aslegal, economic, ethical and philanthropic. The minimumlevel of definitions requires the company to behave with business ethics and,on the other hand, the top level includes proactivity suggesting that companiesmust adopt sustainability initiatives.

Theavailable accounting literature argues that there is a link between CSR and FP.This link can be negative or positive or neutral relationship. More recently, Tijani etal. (2017), using the United Bank of Africa (UBA) a sample of Nigerian banks examined the impact ofvoluntary CSR disclosure on financial performance in the Nigerian bankingindustry, covering 22 years (199-2014). The study showed an insignificant evidence of linkage between CSR activities and FP. Tosupport the negative viewpoint, we highlight some studies, Bae, Kang and Wang (2011),using ”100 Best Companies to Work For” as a sample of US companies, coveringthe period of five years from 2003 to 2007, to examined the relationshipbetween Corporates’ Financial Performance (CFP) and CSR. The outcome providedempirical evidence that CSR is negative and statistically related with CFP inUS sample over the scope of analysis. A number of theempirical studies support the viewpoint of a positive association between FPand CSR.

According to the proponents argues that this association is theorizedby the stakeholder theory (Freeman,1984; Surroca etal., 2010; Soana, 2011; Choi et al., 2010; Arshad et al., 2012; Wu and Shen, 2013; Rodriguez-Fernandez, 2016; Hanet el., 2016; Kvasi?, Cerovi? and Drazenovi?, 2016; Al-Smadi, 2016;Platonova et al., 2016).

This theory support the idea that the companiesthat adopt socially responsible practices are building their reputation in thesociety, increasing their profitability and attracting more investors to investin the company and consequently reducing the operational costs. In contrast,the companies that do not invest in CSR policies their operational costs couldbe higher and hence decrease their FP. Shedding light on some researchers in the literaturethat associates positively with CSR and FP such as Choi et al. (2010), using a sample of 1222 Korean companies extracted from the KEJIIndex over 2002 to 2008. Examinedwhether firms use CSRactivity as a strategy toachieve better profitability, using two types of statistical analysis(”Stakeholder-weighted CSR Index” and “Equal-weighted CSR Index”). Theyprovide a positive relationship between CSR and FP using the first index. Arshad et al.

(2012), used17 Malaysian Islamic Bank data, during the period from 2008 to 2010. Based oncontent analysis of annual reports, investigated the relationship between CSRand FP. The results provided, expected hypotheses, showing a significant andpositive linkage between CSR disclosed index and the respective FP. Rodriguez-Fernandez(2016), using a sample of 107 firm-year observations, listed on the Madrid StockExchange, over 2009 showed, in both directions, a positive and significantbidirectional relationship between CSR and FP. Moreover, he proved, aspredicted, that CSR behavior transforms into higher FP and a higher degree ofprofitability transform into CSR policies. The research of Wu and Shen (2013), across-countries study, using the database from Bank and Ethical InvestmentResearch Service databank covering a sample of 162 banks in 22 differentcountries, examined the effect of CSR on FP over seven years (2003 to 2009).The outcome indicates that CSR is positive related to FP.

Hence, the bankmanagers have used CSR as a key to improving FP. While in another article, the researchof Platonova et al. (2016), reachedthe same conclusion, using a sample of 222 firm-year observations for Gulf Cooperation Council (GCC)Islamic cross-country, for the period 2000 to 2014, applyingtwo different models to examine the hypotheses. It was concluded that there isa positive significant relationship between CSR disclosure and the FP,suggesting that the existent CSR policies conceded by the banks might have along-term impact on their profitability. However, the result showed theinsignificant relationship between FP and the composite measure of the CSRdisclosure index such as “employees”, “community”, “zakah” and “debtors”.

Additionally, the findings provide a significant and positive relationshipbetween the “mission & vision” and future FP.Based on available literature, researchers have predominantlyfocused on the positive relationship between CSR and FP so we   hypothesisas follow:Ø H1: There isa positive relationship between Corporate Social Responsibilityreporting and Financial Performance in the MozambicanBanking sector. (Model 1);Ø  H1a:a higher degree of CSR practices influence greater firms’ profitability of the Mozambican Banking sector(Model 1).

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