Analysis of the return on the social and environmental investments of brazilian companies
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Abstract
This paper investigates the correlation between firm’s financial and social/environmental performance for Brazilian companies from 2001 to 2007; based on two types of panel data econometric models; which aim to analyze correlation and causality. The fixed effects model was used to estimate correlation; while a panel data IV model was used to investigate causality. The results how a positive correlation between corporate social/environmental and financial performance; mainly in the case of internal social investment; which is strongly positively correlated with the variable return on assets (ROA). The causality analysis also showed that the internal social investment has a positive and significant effect on ROA. This result is in accordance with those obtained by Laan et al (2008); which indicate that disregarding the wishes of the primary stakeholders (employees; consumers and investors) contributes negatively to performance measures.
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