Corporate social responsibility and financial performance: An empirical analysis of the Italian case

Framing of the research. Since 2012, European directives have involved CSR-related issues, supporting “honest” entrepreneurs and sustainable business paradigms. EU States are introducing new CSR-tools into their legal systems, and Italy introduced the “legality rating” in order to promote firms’ ethical behaviours and rewarding the most “sustainable” ones. Purpose of the paper. Research aims to analyze the relationship between the introduction of the “legality rating” and firm’s financial performance. The hypothesis underlying the study concerns a positive impact of the tool. Methodology. We implemented a panel data-type regression analysis considering a sample of 100 “rated” firms located in the Lazio region. Results. The analysis shows that the introduction of the “legality rating” guarantees an improvement in the financial performance of considered companies. Research limitations. Main limitations regard the italian low maturity about CSR issues and consequently the scarce relevance of the data provided by Agcm. Companies with “legality rating” could behave in an unethical manner while maintaining their “virtuous” status. This can invalidate the work’s results. Managerial implications. This research offers food for thought for the academic world which is increasingly attentive to CSR issues. It also fits into the literature that could be useful for managers to understand how to voluntarily improve their financial performance. Originality of the paper. The paper contributes to the expansion of the literature on the theme, considering the specific case of Lazio, where a high density of “rated” companies can be traced and considering Return On Debt as independent variable in the regression model.