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CORPORATE SOCIAL AND FINANCIAL PERFORMANCE: A CANONICAL CORRELATION ANALYSIS Margaret L. Andersen North Dakota St

Introduction. Past research Corporate social performance (CSP)is positively related to ?is negatively related to ?is not related to ?corporate financial performance (CFP).Questions remain. Measuring CSP. 2007 KLD data seven issue areascommunity relationscorporate governanced

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CORPORATE SOCIAL AND FINANCIAL PERFORMANCE: A CANONICAL CORRELATION ANALYSIS Margaret L. Andersen North Dakota St

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    1. CORPORATE SOCIAL AND FINANCIAL PERFORMANCE: A CANONICAL CORRELATION ANALYSIS       Margaret L. Andersen North Dakota State University   Lori Olsen Central Michigan University

    2. Introduction Past research Corporate social performance (CSP) is positively related to ? is negatively related to ? is not related to ? corporate financial performance (CFP). Questions remain

    3. Measuring CSP 2007 KLD data seven issue areas community relations corporate governance diversity employee relations the environment human rights the product

    4. Measuring CSP 2007 KLD data seven issue areas community relations corporate governance diversity employee relations the environment human rights the product S strengths across the issue areas S concerns across the issue areas

    5. Measuring CFP Earnings per share Operating income Return on assets Annual return Price/earnings ratio Market value/book value

    6. Control Variables Total assets Size Total debt/Total assets Risk Beta Economic sector Industry

    7. Canonical correlation analysis (CCA) a1 X1 + a2 X2 + a3 X3 + … + an Xn ß1 Y1 + ß2 Y2 + ß3 Y3 + … + ßm Ym *and appropriate control variables

    8. Canonical correlation analysis (CCA) a1 X1 + a2 X2 + a3 X3 + … + an Xn ß1 Y1 + ß2 Y2 + ß3 Y3 + … + ßm Ym *and appropriate control variables

    9. Canonical correlation analysis (CCA) a1 X1 + a2 X2 + a3 X3 + … + an Xn ß1 Y1 + ß2 Y2 + ß3 Y3 + … + ßm Ym

    10. Table 1 Descriptive Statistics for Total Concerns and Total Strengths Economic Average Average Number of Sector Concerns Strengths Firm Observations Consumer – Discretionary 2.41 1.46 358 Consumer – Staples 3.08 2.5 50 Energy 3.01 0.89 74 Financials 1.39 1.32 258 Health Care 1.96 1.41 118 Industrials 2.30 1.44 166 Information Technology 1.71 1.81 130 Materials 3.44 1.76 59 Telecom’s 1.83 1.25 18 Utilities 3.51 2.22 42

    11. Table 2 Descriptive Statistics for the Financial Performance Variables Variable N Mean Minimum Maximum EPS 2171 1.403 -76.52 144.15 Op. income 2219 599.32 -13,558 48282 Total assets 2219 14989.33 9.1 2187631 Tot. debt/Tot. assets 2206 27.53 0 162.04 ROA 2199 4.5 -253.66 113.02 Beta 2211 1.15 -124.11 4.21 Annual return 2212 -0.01087 -0.97 7.95 P/E 2219 28.22 -1019 17324 MV/BV 2219 4.99 -288.27 1576

    12. Table 3 Squared Canonical Correlation by Economic Sector

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