The effect of Social Responsibility on Financial Performance and Earning Response Coefficient

Social responsibility is the commitment of companies to actions that, in addition to serving the interests of the company, also improve the well-being of society. Accordingly, social responsibility is an obligation to which the company must be accountable. In other words, companies have a responsibility to avoid polluting the environment, discriminating in employment matters, disregard for the needs of employees, producing harmful products, and the like that harm the health of society. The purpose of this paper is to investigate the relationship between social responsibility and financial performance and earing response coefficient of firms listed on Tehran Stock Exchange. We investigated the data of 109 firms listed on Tehran Stock Exchange for a period of 7 years from 2010 to 2017. We used The Carroll Index (1979) to measure corporate social responsibility. The results show that social responsibility has a positive significant effect on earning response coefficient. It has also no significant effect on market value to stock value, but has a positive effect on return of assets.