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Hypothesis development

For the very early days there has been continues controversy regarding CSR. How the researchers had contradictory views regarding profitability of firm and its CSR. It is a fact that CSR has some negative prospect as well as some positives. Too less investment in CSR may result into dissatisfaction among stakeholders as a negative image of the corporation. On the other hand too much investment leads to heavy expenditure that reduces profit margin and the shareholders may feel that they are loosing their profit for the sake of company's CSR. But it is a fact that CSR earns a good name for the company. Through CSR they can benefit not only their stakeholders, but the whole society gets benefited. Many researchers are conducting vital investigation on this fact, but till date no clear cut conclusion can be derived. This has kept CSR and its impact on financial profitability into debatable state. To analyse the reality behind CRS and its financial performance of a company, a research was conducted on 60 companies listed in Dow Jones Sustainability World indexes which belong to different industries. The aim of this research was to detect that where the financial performance of a company have any relation with its CRS index, and if there exists any relationship, then what is the degree and nature of such relation. The variables employed for research are EPS, stock price, and CRS ranking.

The hypotheses that are to be tested through this research are as follows:

H1: the EPS of the firm has positive correlation with company's CSR index

This is because the as the company enhance its CSR activity, it gains more and more goodwill in market which gets clearly reflected through increment in stock prices of that company. People have more faith on the company which taken CRS more seriously because this reflects that the company has a serious determination toward social value and ethics.

H2: ROE of a company has positive relation with CSR index of the company.

It have been assumed that as the company pay more emphasis on its CRS activities, it develops better relations with its stakeholders and thus the company's business expands resulting in better earnings and high profits for company as well as for the share holders. A company that is highly committed toward its social responsibility can easily attract and retain quality human resource. This is also a major factor that helps in enhancement in company's productivity.

Data and Methodology

Data Source
To continue with the analysis, we have collected data for two years, viz., 2007 and 2008, on 22 firms enlisted in the Fortune Global 500 rankings of the individual companies, and have considered observations on Return on Equity, Return on Assets, Earning per Share (basic) and on the Sustainability Index that is calculated by the Dow Jones standard. The former three variables are used to indicate the financial performance of the firms being considered, while the latter one is used as an indicator of the corporate social responsibility. Information on these variables were not found directly, but rather had to be calculated from their respective annual reports that had information on the consolidated income statements and consolidated balance sheet. The data originally collected 本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。