Conclusions

Corporate Social Responsibility (CSR) has gained increasing attention in recent years. Firms spent high amounts of money in CSR activities, however it is not certain that these activities improve their financial performance. Many researchers have tried to investigate the impact of CSR on financial performance. The results vary from a positive impact, a neutral impact and even a negative impact of CSR on a firms financial performance. The impact of CSR on financial performance has been less examined for European countries. This led to the first research question; does CSR affect the financial performance of Dutch listed firms? Secondly, the moderating impact of board characteristics has not been examined by many researches. Therefore, a second research question was formulated; do board characteristics moderate the impact of CSR on financial performance for Dutch listed firms? This thesis contributes by investigating the impact of CSR on financial performance for Dutch listed firms. Secondly, the study investigated whether board characteristics moderate the impact of CSR on financial performance.

Based on a literature review and previous studies, five hypothesises were developed. The stakeholder theory, legitimacy theory and resource-based theory expect a positive impact of CSR on financial performance. The institutional theory misses a direct link between CSR and financial performance. Based on the agency theory both a positive and negative impact of CSR on financial performance can be expected. Furthermore, most previous studies found a positive impact of CSR on financial performance. Therefore, this thesis expected a positive relation between CSR and financial performance. Based on previous research, the study expected the board characteristics board size, board independence, gender diversity and age diversity to strengthen the impact of CSR on financial performance.

To test the five hypothesis, an (OLS) regression was performed. The CSR performance scores were measured by performing a content analysis and using the transparency benchmark. The financial data was retrieved from the ORBIS database and annual reports. To examine financial

performance, accounting-based (ROE and ROA) and market-based (Tobin’s Q and RET)

measurements were used. The board characteristics were found by searching annual reports. Furthermore, the control variables, firm size, leverage, sales growth are included in the regression as were the industry and year dummies. The sample of the study consisted of 81 Dutch listed firms. The financial data observations come from 2014-2017, while the lagged CSR and board characteristic observations come from 2013-2016

50

In the first group of OLS regressions the impact of CSR on the accounting-based and market- based proxies of financial performance were performed. The impact was positive and significant for ROA. These results are in line with the expectations from the stakeholder theory, legitimacy theory, resource-based theory. The results showed an insignificant impact

of CSR on ROE and RET. For Tobin’s Q a negative relation was shown, which could be explained

by the agency theory. However, the results were insignificant. Since only evidence was found for a significant impact of CSR on ROA, the first hypothesis; the impact of CSR on financial performance is positive, was not fully supported.

The second group of regressions tested if board characteristics moderate the impact of CSR on financial performance. Only ROA was used as proxy for financial performance, since no significant impact was found for the other proxies of financial performance. The results of the regressions showed that the moderating impact of board size, gender diversity and age diversity and CSR on financial performance is negative. For board independence no significant results were found. This is contrary to hypothesises 2 until 5 and therefore these hypothesises were not supported.

Additional robustness tests were performed to see if the results hold under different circumstances. As first robustness test, an alternative measurement technique was used for CSR. Instead of using content analysis the scores came from the transparency benchmark. The results with CSR scores from the transparency benchmark are robust with the main results, since the impact of CSR on ROA remained significant. When including the moderating impact of the board characteristics, the results were not entirely robust. Similar to the main results, the moderating impact of board size and gender diversity on CSR and financial performance was negative. However, the moderating impact of age diversity was insignificant. In the second robustness test, an alternative measurement of firm size was used. Instead of using total assets, the variable total sales was used. The results showed that the impact of CSR on ROA became insignificant and are therefore not robust with the main findings. The last robustness test made a comparison between financial and non-financial firms. No evidence was found for a significant impact of CSR on financial performance for the financial firms. For the non-financial firms, evidence was found that CSR improved a firms ROA and RET. Additional regressions were performed to test if board characteristics moderate the impact of CSR on ROA and RET for non-financial firms. Evidence was found that board size moderates the impact of CSR on ROA and RET in a significantly negative way. Furthermore, gender diversity moderates the impact of CSR on ROA in a significantly negative way.

Overall this thesis contributes by finding evidence of a positive influence of CSR on ROA for Dutch listed firms, suggesting that more CSR engagements leads to improved ROA. However, no consensus was found for the other proxies of financial performance. Secondly, the study found that board size, gender diversity and age diversity weaken the impact of CSR on ROA. The results of the study help convincing Dutch listed firms to engage in CSR activities, since it improves their financial performance.

51