The modern corporation's relationship to society has undergone drastic changes between the 1960s and the present day, in large part because the general public has held corporations to increasingly higher ethical and moral standards. While originally this relationship manifested itself only as punishment for extreme environmental and human rights violations, as made evident in the divestment movement in Apartheid South Africa and the backlash against Exxon after the Exxon Valdez oil spill, in the past twenty years firms are increasingly rewarded for going beyond the bare minimums set by regulators. Firms like Costco and WholeFoods exemplify this new trend in corporate America, and the current research tests whether a relationship exists between a firm's corporate social responsibility scores and its financial performance. Formally, the research predicts a positive correlation between strong corporate social responsibility and financial performance for firms listed in the S&P 500 in the consumer goods industry. The study relies on corporate social responsibility information provided by the KLD MSCI STATS database as well as financial information from the Mergent online database to test the theory on S&P 500 firms in the consumer goods industry.
Includes bibliographical references.