The Impact of Corporate Social Responsibility on Financial Performance: A Case Study of French Non-Profit Firms

Abstract

This research assesses the effect of corporate social responsibility (CSR) and firm-specific characteristics on financial performance in French non-profit organizations, contributing to the literature on corporate governance and financial outcomes in the non-profit sector. Using panel data regression techniques, the study examines the relationship between CSR involvement and three financial indicators: Return on Assets (ROA), Return on Equity (ROE), and Earnings Per Share (EPS).

Econometric models were evaluated through Ordinary Least Squares (OLS) pooled regression, the Lagrange Multiplier (LM) test, and the Hausman test. The LM test indicates that ROA and EPS are suited to random effects models, while ROE aligns with pooled OLS estimation. However, the Hausman test confirms that fixed effects models are optimal for ROA and EPS, due to the strong influence of firm-specific factors on these variables.

The results show that corporate governance (GOV) and social commitment (SC), along with audit board characteristics (ABC) and corporate social commitment (CSC), positively influence financial performance. In contrast, firm size (FS) has a negative effect on EPS, suggesting that larger non-profits may face challenges in earnings efficiency. These findings highlight the critical role of governance and CSR in improving financial outcomes and ensuring stability in the non-profit sector.