CSR, financial performance, and risk: A theoretical perspective analysis

Abstract

This paper explores the relationship between Corporate Social Responsibility (CSR), financial performance, and risk. The first section defines CSR and examines its theoretical implications, providing a solid foundation for understanding the concept. Key theories such as neoclassical theory, agency theory, stakeholder theory, and the resource-based view theory are examined to frame the analysis of CSR’s impact on financial performance and risk. The paper then reviews the empirical literature, highlighting studies that analyze CSR’s influence on profitability and different types of risk. While some studies suggest a positive relationship, others point to a complex and nuanced connection, emphasizing the importance of sectoral and contextual differences. The findings offer practical recommendations for businesses and policymakers seeking to balance CSR with financial objectives.