Can corporate Social Responsibility Contribute to Bankruptcy Prediction? Evidence from Croatia
Published Online: Aug 22, 2023
Page range: 173 - 183
Received: Feb 23, 2023
Accepted: Jun 26, 2023
DOI: https://doi.org/10.2478/orga-2023-0012
Keywords
© 2023 Adriana Galant et al., published by Sciendo
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Background/Purpose
Companies are becoming aware of the fact that corporate social responsibility (CSR) is becoming the imperative of their sustainable business model despite the potential costs it could generate. Researchers are mostly focused on estimating the relationship between CSR and financial performance where most of the findings indicate their positive relationship. This paper expands existing research and focuses on the relationship between CSR and the risk of bankruptcy using the data from 102 midsize and large companies from non-financial sectors using the data for four years. Research expands existing studies on the EU level according to the fact that most of the existing studies are performed among US companies.
Method
Descriptive statistics and SEM-PLS methodology was used to compare and analyze financial data with data collected from 7 groups of stakeholders.
Results
Research results indicate that the relation between CSR and the risk of bankruptcy is negative.