The Corporate Social Responsibility and Firm Value of Malaysian Companies

Corporate social responsibility has become an interesting topic during recent decades around the world, thus; companies, specifically manufacturing companies, have tried to apply it in their activities to be winner in competitive market. Since then, understanding the association between corporate social responsibility and financial achievement has been an important issue, specially knowing the effects of social responsibility on business activities. In Malaysia, although implementing of corporate social responsibility has been raised in recent years, it is still in its elementary levels. On the other hand, manufacturing companies pay more attention to productivity and being active in global market, thus examining existence of any relationships between social activities and profitability of manufacturing sector is the aim of this research. The sample is 202 manufacturing firms selected from Bursa Malaysia during the years 2007 to 2010. This study implements both determinants of social responsibility and total corporate social responsibility for both short-term and long-term financial performance. The total results indicate there is no specific relationship between corporate social responsibility and firm performance. In specific, only environment has negative link with short-run profitability, thus total social responsibility has negative link with short-run performance. On the other hand, environment has negative, community has positive, workplace has negative and marketplace has positive association with long-run profitability, however; total social responsibility has no relationship with long-run performance. The manufacturing companies are recommended to do more activities and dispread them in all sections of corporate social behaviors. Moreover, disclose more informative and attractive information for customers and shareholders which increase their brand reputation. Bursa Malaysia is recommended to give some extra good point to companies which more disclose social activities in order to make them interested.