Relationship Between Investor Return And Financial Performance

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There is a wide range of financial performance measurement methods however there are two broad categories that are widely used as the baseline of measuring financial performance which are Investor returns and accounting returns. Investor returns simply implies that the financial performance of firms is solely dependable on the stakeholders returns, the better returns shareholders get the better the firm is doing. First studies to employ investor returns as a measure of financial performance were those of Markowitz(1927)and Vance (1975).However previous studies indicate this as a flawed approach because share price is only one element of investor returns, dividend income is ignored which is also one crucial element of investor returns therefore …show more content…

There is major concern for corporate management whether there is a direct relationship between corporate social responsibility and financial performance. There is need for assessing the validity of the relationship between CSR and financial performance .Macguire, sundgren and schneweels (1986) argued that previous research has yielded mixed results regarding the relationship between CSR and measures of financial performance. Reviews by Cochran and Wood (1984) and Ullman have all found mixed results regarding the relationship between CSR and a firm’s financial performance. Ullman suggested that the results may have been derived from differences in research methodologies and measures of financial performance …show more content…

Studies done by various researchers and scholars on corporate social responsibility impact on financial performance reveal mixed results with others citing a negative, positive neutral impact of CSR on financial performance of firms. Mwangi (2011) studied the relationship between CSR and financial performance of companies quoted at NSE. The results of the analysis conclude that there was an upward trend in performance of listed firms on the NSE as well as an upward trend in the amount of money investment in corporate social practices. This leaves managers with critical decisions to make especially on how much does a firm need to invest in CSR without compromising the returns of stakeholders more so the shareholders and whether investment in CSR has any impact at all on the financial performance of the firm.(Abagail & Donald ,

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