Corporate Social Responsibility: Impact on Firms’ Financial Performance

i Co po a e Social Responsibili y: Ma ia Ba e o Calhei os Impac on Fi ms’ Financial Pe o mance Disse a ion p esen ed as pa ial equi emen o ob aining he Mas e ’s deg ee in S a is ics and In o ma ion Managemen wi h specializa ion in Risk Analysis and Managemen ii NOVA In o ma ion Managemen School Ins i u o Supe io de Es a ís ica e Ges ão de In o mação Uni e sidade No a de Lisboa CORPORATE SOCIAL RESPONSIBILITY: IMPACT ON FIRMS’ FINANCIAL PERFORMANCE By Ma ia Ba e o Calhei os Mas e s P oposal p esen ed as pa ial equi emen o ob aining he Mas e ’s deg ee in S a is ics and In o ma ion Managemen wi h specializa ion in Risk Analysis and Managemen P o . Dou o Jo ge Miguel Ven u a B a o June 2019 iii ABSTRACT The aim o his s udy is o p o ide a comp ehensi e and s uc u ed analysis o he ela ionship be ween i m’s inancial pe o mance and Co po a e Social Responsibili y (CSR) on a global scale. E idence om p e ious s udies sugges s no consensus in he ela ionship be ween CSR and i ms’ pe o mance. This s udy is conduc ed wi h a sample o 744 companies om 31 coun ies and 147 di e en indus ies, be ween 2005 and 2019. The CSR pe o mance analysis is conduc ed h ough i ms’ En i onmen , Social and Go e nance (ESG) sco es whils he inancial pe o mance is e alua ed by Re u n on Asse s (ROA) and Re u n on Equi y (ROE). All da a is ex ac ed om Thomson Reu e s Eikon. The esul s sugges he e is a posi i e ela ionship be ween CSR and he inancial pe o mance o he companies. The indings also sugges ha companies ha ha e a low alue o To al Re enues do no bene i om an in es men on ESG Fac o s, as he esul s show a nega i e ela ionship be ween ESG Sco e and Re u n on Asse s. Las ly, his s udy allows o conclude ha when conside ing he h ee pilla sco es indi idually, he Social Pilla is he only one ha leads o a be e pe o mance o he companies. The ou comes o his s udy a e impo an no only o he in es men decision-making o bo h alues-d i en and p o i -d i en in es o s bu also o inc ease awa eness o how sus ainable inancial ma ke s can con ibu e posi i ely o educe global isks. KEYWORDS Co po a e Social Responsibili y, En i onmen al Social Go e nance (ESG), Financial Pe o mance i Acknowledgemen s Fo emos , I would like o exp ess my since e g a i ude o my supe iso P o . Doc o Jo ge B a o, o his guidance and suppo h ough his jou ney. To my pa en s and b o he , o p o iding me he oppo uni y o pu sue wi h my s udies and always suppo ing my decisions, which would no be possible wi hou hei lo e and mo i a ion. To my g andpa en s, and hei cons an kind wo ds and lo e du ing his chap e . To my boy iend Alexand e, o his lo e and endless suppo , o always belie ing in me and ne e gi ing up on me e en in he ha des momen s. To my iend Ma iana, o he ue iendship and encou agemen h oughou he en i e ime. To my iends a No a IMS, specially Bea iz and Te esa, o hei iendship, suppo and good ad ices. And las , bu no leas o all my iends and colleagues a wo k, especially o Ma ia João, o all he help and mo i a ion and o always lis ening my complains. Index 1. In oduc ion .................................................................................................................. 1 1.1. The ESG F amewo k .............................................................................................. 2 2. Li e a u e Re iew ......................................................................................................... 4 2.1. E olu ion o Co po a e Social Responsibili y ........................................................ 4 2.1.1. CSR in he 1950’s ............................................................................................ 5 2.1.2. CSR in he 1960’s ............................................................................................ 5 2.1.3. CSR in he 1970’s ............................................................................................ 6 2.1.4. CSR in he 1980’s .......................................................................................... 10 2.1.5. CSR in he 1990’s .......................................................................................... 12 2.1.6. CSR in he 2000’s .......................................................................................... 14 2.1.7. CSR in he 2010’s un il oday ........................................................................ 16 3. Ma e ials and Me hods .............................................................................................. 18 3.1. Da a ..................................................................................................................... 18 3.2. Va iables .............................................................................................................. 18 3.3. Me hodology ....................................................................................................... 20 4. Resul s......................................................................................................................... 24 4.1. Desc ip i e da a ................................................................................................... 24 4.2. Resul s ................................................................................................................. 25 5. Conclusions ................................................................................................................. 31 Re e ences ....................................................................................................................... 34 Appendix.......................................................................................................................... 34 i Lis o Tables and Figu es Figu e 1- The h ee pilla s o he ESG amewo k. ..................................................................... 3 Figu e 2 - The Co po a e Social Responsibili y Py amid. ......................................................... 12 Figu e 3 – Concep ual F amewo k o he s udy. ...................................................................... 18 Figu e 4 – Companies’ ESG Sco e e olu ion, om 2005 o 2019.. .......................................... 25 Table 1 - ESG Pilla Sco es, Ca ego y and Pilla Weigh s ........................................................... 3 Table 2 - Summa y S a is ics .................................................................................................... 24 Table 3 - Reg ession 1 esul s: ESG Sco e ................................................................................ 26 Table 4 - Reg ession 2 esul s: ESG Sco e and AFTER__ESGSco e ........................................... 27 Table 5 - Reg ession 3 esul s: HIGH__lTo alRe enues and LOW__lTo alRe enues ............... 29 Table 6 - Reg ession 4 esul s: En i onmen al, Social and Go e nance pilla sco es .............. 30 ii Lis o Abb e ia ions CEO Chie Execu i e O ice CSP Co po a e Social Pe o mance CSR Co po a e Social Responsibili y EPS Ea nings-pe -Sha e ESG En i onmen al, Social and Go e nance E&G En i onmen al and Go e nance OLS O dina y Leas Squa es P/E P ice/Ea nings R&D Resea ch and De elopmen ROA Re u n-on-Asse s ROE Re u n-on-Equi y SIP Social Issue Pa icipa ion SM S akeholde Managemen SR Social Responsibili y SRI Socially Responsible In es men 1 1. INTRODUCTION In ecen yea s, he wo ld has seen exponen ial g ow h in he numbe o companies conside ing Co po a e Social Responsibili y (CSR) c i e ia. Al hough he ecen spike in he popula i y o CSR, his concep was o iginally coined in 1953 by he Ame ican economis Howa d R. Bowen (1953) in his book Social Responsibili ies o he Businessman. As such, Bowen is o en e e ed o as he a he o CSR (Ca oll, 2009). A decade la e , se e al au ho s con ibu ed o he de elopmen o he concep (Falck & Heblich, 2007). Since ha momen , companies s a ed o ocus hei goals beyond p o i maximiza ion by pa icipa ing in ac i i ies ha con ibu e o an inc ease in s akeholde s’ wel a e, by in es ing in p oduc ion p ocesses ha a e en i onmen - iendly, excluding supplie s ha use child labou , and o ming plans o help he poo in coun ies ha a e less de eloped (Liang & Renneboog, 2017). P io esea ch has shown a posi i e ela ionship be ween CSR and i ms’ pe o mance (see, e.g., Backhaus, S one, & Heine , 2002; Dyck, Lins, Ro h, & Wagne , 2019; Kemp & Os ho , 2007; Re ab, B ik, & Mellahi, 2009; R. A. Wood & Coch an, 1984), while o he s udies ound a nega i e ela ionship (see, e.g., Ba nea & Rubin, 2010; G oening & Kanu i, 2013; López, Ga cia, & Rod iguez, 2007), and also some o he au ho s ound no ela ion be ween CSR and i ms pe o mance (see, e.g., Abbo & Monsen, 1979; Alexande & Buchholz, 1978; Fogle & Nu , 1975). The aim o his hesis is o s udy he ela ionship be ween Co po a e Social Responsibili y and i m’s inancial pe o mance, bo h h ough o al ESG sco es and each indi idual pilla sco es. In e ms o me hods, we use s anda d panel da a eg ession analysis conside ing al e na i e inancial pe o mance measu es, con ol a iables (size, isk, indus y and coun y headqua e s). The da ase comp ises a sample o 744 companies om 31 coun ies wo ldwide and 147 di e en indus ies om 2005 and 2019 e ie ed om Thomas Reu e s Eikon. Econome ic eg essions will be pe o med by using S a a, a comple e and in eg a ed s a is ical so wa e. Despi e p e ious s udies done on his subjec , i is s ill missing an unde s anding o how co po a e social pe o mance can con ibu e o i m’s pe o mance and his s udy may help esea che s and companies o imp o e and de elop a wide knowledge on his opic and i s implica ions. 2 Ou esul s show ha in es ing on ESG sco e con ibu es o a highe Re u n on Asse s and he e o e he e is a posi i e ela ionship be ween CSR and company’s inancial pe o mance. Finally, esul s demons a e ha when analysing he 3 pilla s indi idually, Social Pilla is he only one ha con ibu es o a be e company’s pe o mance since i has a posi i e and s a is ically ela ionship wi h Re u n on Asse s a io. The s uc u e o he hesis is as ollows. Sec ion 2 desc ibes he e olu ion o he CSR concep ollowed by an o e all iew o how his concep is seen a ound he wo ld. Sec ion 3 ou lines he heo e ical amewo k and he me hods used in his s udy. The Da a and Me hodologies applied o he empi ical analysis is desc ibed a e wa ds. Sec ion 4 desc ibes and analyses he empi ical esul s ob ained. Sec ion 5 d aws he main conclusions o his esea ch. 1.1. THE ESG FRAMEWORK Th oughou his s udy we will conside En i onmen , Social and Go e nance ac o s o analyse he Co po a e Social Responsibili y pe o mance o he wo ldwide companies’ da ase . All in o ma ion conce ning CSR pe o mance is e ie ed om Thomson Reu e s Eikon as i cap u es and compu es o e 400 company-le el ESG measu es, o which a subg oup o 178 o he mos compa able and ele an ields o powe he global company e alua ion and sco ing p ocess is selec ed. Acco ding o Thomson Reu e s Eikon, he unde lying measu es a e based on conside a ions a ound compa abili y, da a a ailabili y and indus y ele ance. Thomson Reu e s Eikon analyses he company’s ESG pe o mance, commi men and e ec i eness based on publicly epo ed in o ma ion. A h ee Pilla Sco e is se and subdi ides he 3 sco es in 10 ca ego ies as shown in Figu e 1, ha a e weigh ed p opo iona ely o he coun o measu es wi hin each ca ego y, om 0 o 100, being 0 he lowes sco e and 100 he highes (Table 1). 9 analysed by Vance, 1972-1974, was conside ed a bea ma ke , and consequen ly, he dispa i y be ween he iskiness o he e u ns o he companies (R. A. Wood & Coch an, 1984). Followed by Moskowi z (1972) and Vance (1975), Abbo & Monsen (1979) p esen ed a s udy whe e hey analysed he in es o s e u n measu e no only using changes in p ice-pe -sha e bu also including he di idends. Abbo and Monsen eached ou o he conlcusion o no linkage be ween CSR and inancial pe o mance. Ano he s udy ollowed by Moskowi z (1972) and Vance (1975) was pe o med by Alexande & Buchholz (1978). The main me hodological dis inc ion om Vance’s analysis co esponds o he inco po a ion o isk adjus men o he co po a ions men ioned in he epu a ional su ey. Alexande and Buchholz used a sensi i i y measu e o a i m’s s ock p ice, denomina ed as Be a, in o de o adjus he pe o mance o he i ms. The au ho s eached ou o a conclusion o no ela ion be ween s ock isk le els and SR. One mo e ele an s udy o his decade was conduc ed by Holmes (1976). The au ho used a sample o co po a e execu i es wi h he goal o examining hei opinions and a i udes conce ning co po a e social esponsibili y. Holmes p esen ed o co po a e execu i es a se o s a emen s ega ding CSR o e alua e how many ag eed o disag eed wi h hose s a emen s. The mos chosen s a emen among he execu i es was ha business should help o sol e social p oblems ega dless he ac ha ha business con ibu ed o no o c ea e hose p oblems, e en i in a long o sho un, he e was no po en ial p o i . In his s udy, he execu i es we e also asked o conside he ou comes o SR. The esul s show ha he e was a g ea e ag eemen on posi i e ou comes han nega i e ones. Almos all belie ed ha i m goodwill and epu a ion would be enhanced, and a subs an ial pe cen age conside ed ha he economic and social sys ems would be ein o ced by co po a e social engagemen . A he end o 1970’s, A chie B. Ca oll sugges ed a co po a e social pe o mance concep ual model whe e Ca oll dis inguished h ee aspec s o CSP ha mus be in e ela ed: he i s consis in a basic de ini ion o SR; secondly, an unde s anding o issues o which a SR exis ed and, hi dly, a “speci ica ion o he philosophy o esponse” o he issues (Ca oll, 1979, p. 499). The au ho also s a ed ha in de ining Social Responsibili y o ully add ess all obliga ions co po a ions ha e o socie y, i is necessa y o inco po a e disc e iona y, e hical, legal and economic business pe o mance ca ego ies. 10 Despi e he ac ha he 1970’s was s ill a decade wi h mo e “ alk” hen “ac ion”, legisla i e ini ia i es eme ged and u ged i ms o de elop o ganiza ional mechanisms o comply wi h ede al laws ega ding he en i onmen , employmen disc imina ion, sa e y o he wo ke s and p oduc s (Ca oll, 2009). 2.1.4. CSR in he 1980’s The decade o he 1980’s was ma ked by he de elopmen o new and polished de ini ions o CSR. Complemen a y o al e na i e concep s, models and heo ies, such us co po a e social pe o mance, co po a e social esponsi eness and public policy, s akeholde heo ies and business e hics, among o he s, eme ged and began o gain mo e a en ion (Ca oll, 2009). In 1980, Thomas M. Jones was one o he i s w i e s ega ding CSR discussion o he decade. In his pape , Jones (1980), i s ly de ined CSR as a olun a y obliga ion om co po a ions o socie y. Jones hen summa izes di e en a gumen s being some in a ou and some agains CSR. In con as o P es on & Pos (1975), Jones s a es ha Public Responsablili y is no use ul in e ms o decision-making c i e ia, e en hough i could be use ul o na ow he scope o adequa e co po a e social in ol emen . One o he Jones’ key con ibu ions in his pape was he ision o CSR as a p ocess ins ead o a se o ou comes, highligh ing he di icul y in de ining wha cons i ues a socially esponsible beha io . Tuzzolino & A mandi (1981) p oposed a need-hie a chy amewo k based on Maslow (1954) need-hie a chy1, conside ing i use ul in o de o concep ualize he o ganiza ion in i s eme ging socially esponsible pa . The au ho s also men ion ha a axonomic amewo k such us he one hey c ea e and desc ibe acili a es he CSR ope a ionaliza ion. The au ho s accep ed he de ini ion o CSR gi en by Ca oll (1979) conside ing i as app op ia e o hei pu poses. The aim o he au ho s was no o ede ine he concep o CSR. Ins ead, hey conside ed o ganiza ions in he same way as indi iduals, in he sense ha co po a ions also 1 Maslow’s need-hie a chy is a mo i a ional heo y in psychology ha comp ises a i e-le el model o human needs, equen ly depic ed as hie a chical ie s wi hin a py amid. F om he bo om o he op o he hie a chy, he needs a e: physiological, sa e y, lo e and belonging, es eem, and sel -ac ualiza ion. Needs should be sa is ied om he lowe o he uppe le el. 11 had c i e ia ha equi ed o be ul illed, jus as indi iduals do as desc ibed in he Maslow’s hie a chy. Wood & Coch an (1984), h ough a sample o i ms, s udied he impac o CSR on inancial pe o mance using h ee measu es o accoun ing e u ns: he ope a ing ea nings o asse s a io, he ope a ing ea nings o sales a io and he excess o ope a ion alua ion (R. A. Wood & Coch an, 1984, p. 49). The au ho s also conside ed asse age and asse u no e as explana o y a iables. A e eg essions we e pe o med, he au ho s es ablished a posi i e co ela ion be ween accoun ing pe o mance and SR. Wood and Coch an also concluded ha co po a es wi h olde asse s, end o ha e lowe CSR a ings. A good example o “going beyond” CSR du ing he decade o he 1980’s was he inc easing ecogni ion o he idea o “co po a e social pe o mance” as a mo e comp ehensi e hypo hesis unde which he concep o CSR migh be classi ied (Ca oll, 2009). As men ioned abo e in he decade o he 1970’s, he no ion o CSP has been s udied and analysed by some au ho s. In 1985, u he esea ch was made by Coch an & Wa ick (1985) whe e hey desc ibed an e olu ion o CSP model by concen a ing on h ee concep s o CSR: social esponsibili y, social esponsi eness and public esponsibili y, ollowed by a “p inciple/p ocess/policy app oach”, espec i ely (Coch an & Wa ick, 1985, p. 763). S ill in he mid-1980’s, Auppe le, Ca oll & Ha ield (1985) pe o med an analysis h ough he applica ion o a o ced-choice su ey ins umen o chie execu i e o ice s (CEOs). The au ho s concluded ha no signi ica i e ela ion exis ed be ween co po a e social pe o mance and co po a e’s isk adjus ed e u n-on-asse s (ROA). In 1987, Edwin M. Eps ein sugges ed a new concep named “Co po a e Social Policy P ocess” by inco po a ing key componen s om business e hics, co po a e esponsi eness and CSR concep s (Eps ein, 1987, p. 102). Mcgui e, Sundg en & Schneeweis (1988) used isk-adjus ed e u n and o al e u n as ma ke pe o mance measu es and be a and s anda d de ia ion o o al e u n as measu es o ma ke isk, o p oduce a s udy wi h a sample o i ms in o de o analyse he co ela ion be ween CSR and Fi m Pe o mance. The esul s e ealed an insigni ican ela ion be ween SR 12 and s ock-ma ke -based pe o mance measu es. In con as , he au ho s iden i ied a posi i e ela ionship be ween CSR and ROA and o al asse s. As men ioned abo e, he decade o 1980’s was ma ked by wo impo an and al e na i e subjec s: he s akeholde heo y and business e hics. In 1984, R. F eeman (1984) published “S a egic managemen : a s akeholde app oach” cen ing on s a egic managemen . I was u he de eloped in he ollowing yea s and decades. The business e hics opic eme ged in his decade ha was ma ked by he e hical scandals a ound he wo ld such us he explosion in India o Union Ca bide Bhopal, in 1984, he ques ionable suppo o i ms in ela ion o apa heid by main aining businesses in Sou h A ica and he inside ading scandal o I an Boesky (Ca oll, 2009). 2.1.5. CSR in he 1990’s The analysis o he ela ionship be ween inancial pe o mance and co po a e social pe o mance was u he de eloped in he decade o 1990’s. In 1991, Ca oll e-examined his amewo k pe o med in 1979 and de ined a ou -pa concep ualiza ion o economic, legal, e hical and philan h opic/disc e iona y esponsibili ies (Ca oll, 1991, p. 40). In a py amidal shape, Ca oll de ined he ou esponsibili ies in ie s as shown in Figu e 2.: Figu e 2 - The Co po a e Social Responsibili y Py amid. Sou ce: Adap ed om Ca oll (1991, p.42). Philan ophic Responsibili ies "Be a good co po a e ci izen. con ibu e esou ces o he communi y; imp o e quali y o li e." E hical Responsabili ies "Be e hical. Obliga ion o do wha is igh , jus , and ai . A oid ha m." Legal Responsibili ies "Obey he law. Law is he socie y's codi ica ion o igh and w ong. Play by he ules o he game." Economic Responsibili ies "Be p o i able. The ounda ion upon which all o he s es ." 13 Ca oll de ends ha , despi e hese concep s ha e di e en meanings, hey a e no communally exclusi e and a e no mean o compa e a company’s economic esponsibili ies, wi h i s o he esponsibili ies. In 1992, Business o Social Responsibili y (BSR), a nonp o i able o ganiza ion was ounded o embody p og ams and help co po a es o implemen and success ully de elop SR p ac ices. BSR also s a es ha empowe s i s ep esen a i es o le e age CSR as a compe i i e ad an age. Swanson (1995) and D. J. Wood (1991) conduc ed s udies wi h he aim o including he posi ion o social issues in o e alua ion o CSP. Th ough he compu a ion o eg ession analysis, he au ho s used size, indus y and isk as con ol a iables and used he le el o deb held by he i m as a p oxy o managemen ’s isk ole ance (Waddock & G a es, 1997, p. 309). As conclusion, he au ho s ound a posi i e ela ion be ween CSP and inancial pe o mance. Waddock and G a es also highligh ha co po a ions wi h a ailable esou ces may choose o expend i on “doing good by doing well” and consequen ly an imp o emen o o e all co po a e social pe o mance. In 1997, Waddock & G a es (1997) conduc ed a s udy wi h he objec i e o es ing i CSP is bo h a p edic o and a consequence o co po a ions’ inancial pe o mance. A he end o he decade, se e al books we e published including new and ede ined concep s. Some examples o i is Elking on (1998), as he buil a concep o T iple Bo om Line (TBL), by applying s akeholde heo y o e alua e he impac o co po a e social esponsibili y wi h ocus on economic, social and en i onmen al concep s. Ano he impo an book published was “S akeholde s, Social Responsibili y, And Pe o mance: Empi ical E idence and Theo e ical Pe spec i es”, w i en by Ha ison & F eeman (1999), whe e hey p o ided a de ailed o e iew o six e o s o accomplish ideas ega ding social esponsibili y, s akeholde s and pe o mance. Du ing he end o he decade o 1980’s and in o he decade o 1990’s, he philan h opic no ion g ew signi ican ly (Ca oll, 2009). A he end o 1990’s, Mui head (1999) de ined his decade o i m con ibu ions as di e si ied and globalized. 14 2.1.6. CSR in he 2000’s In he 2000’s, he heo e ical wo k done on p e ious decades has con ibu ed o a g ow h on empi ical esea ch and de elopmen s beyond he no ion and meaning o CSR concep , such us he s akeholde heo y, sus ainabili y, business e hics and co po a e ci izenship (Ca oll, 2009). One example o he inc easing impo ance o CSR concep among he business pe o mance is he i s epo eleased by he O ganisa ion o Economic Co-ope a ion and De elopmen (OECD, 2001) wi h CSR guidelines o i s cons i uen coun ies wi h olun a y p ojec s in his a ea. In he ea ly 2000’s, Hus ed (2000) p esen ed a con ingency heo y o CSP ga he ing he no ion o social issue and i s co esponding s uc u es and app oaches. The au ho sugges s ha a high CSP may be achie ed by closing exis ing gaps o social issues ha occu be ween he isions o he company and i s s akeholde s, and in eg a es in his model elemen s o CSR, co po a e social esponsi eness, managemen issues and s akeholde managemen (Hus ed, 2000, p. 41). Mcwilliams & Siegel (2000) e isi ed he econome ic model used by Waddock & G a es (1997) and conside ed i was an inconsis en and mis speci ied model due o he omission o ce ain a iables ha con ol he company’s a e o in es men s in Resea ch and De elopmen (R&D) and he ad e ising in ensi y o he business. In o de o o e come his p oblem, Mcwilliams & Siegel included on he o iginal econome ic model pe o med by Waddock & G a es, wo co a ia es: “R&D in ensi y o i m (R&D expendi u e/sales)” and “ad e ising in ensi y o he indus y o i m” (Mcwilliams & Siegel, 2000, p. 604). The au ho s obse ed a high co ela ion be ween R&D and CSP, and wi h R&D in ensi y included in he model, CSP and i m p o i abili y ha e a neu al ela ionship. Rowley & Be man (2000) suppo ed he idea o a linkage be ween CSP and Financial Pe o mance (FP) and ha he u u e pa h o CSP needed o be c ea ed no by including all ea u es o CSP bu ins ead ope a ion measu es should be na owed. Followed by hese au ho s, G i in (2000) de ended he idea ha exis ing s udies in ela ed ields such as psychology, ma ke ing and human ela ions can con ibu e o an inc ease o he unde s anding o CSP. In a s udy conduc ed by R. Jones & Mu ell (2001), he au ho s 15 concluded ha public ecogni ion o a i m o good social pe o mance can con ibu e as a posi i e signal o he company’s pe o mance o i s sha eholde s. Backhaus, S one, & Heine (2002) pe o med a s udy o analyse he employmen a ac i eness o CSP. They concluded ha job seeke s end o conside CSP as an impo an opic o he assessmen o a i m and ha women and o he mino i ies ha e a highe in e es and conce ns on good social pe o mance o a i m. Hillman & Keim (2001) es ed he ela ionship be ween s akeholde managemen (SM), sha eholde alue and social issue pa icipa ion (SIP) and concluded ha by c ea ing be e ela ions wi h p ima y s akeholde s such us cus ome s, employees, supplie s and communi ies could con ibu e o con ibu e o a g ow h on he sha eholde capi al and consequen ly be a compe i i e ad an age. Wi h a sample o i ms and es ing econome ic eg essions using he ollowing a iables: Ma ke - o-book Asse s, Ma ke Value Added, ROA, ROE, Ne Sales and Ne Income as p oxies o size, Indus y, Be a as a measu e o isk, SIP and SM (Hillman & Keim, 2001, p. 133), he au ho s s ablished a nega i e ela ion be ween social issue pa icipa ion and sha eholde alue, in con as wi h a posi i e ela ion be ween s akeholde managemen and sha eholde alue. A e he s udies conduc ed by Ca oll (1979, 1991) whe e he de ined a h ee-domain app oach and a CSR py amid wi h ou ca ego ies, Schwa z & Ca oll (2003) e iewed hese models and na owed he ca ego ies o h ee: economic, legal, and e hical domains (Schwa z & Ca oll, 2003, p. 525). This new Venn model, acco ding o he au ho s, con ibu ed he discussion o business e hics, con e ged he philan h opic heo y in o he e hical elemen and de ined ha philan h opy could be hypo hesized in disc e iona y and e hical e ms. In 2007, Kemp & Os ho (2007) pe o med an analysis o he e ec o Socially Responsible In es ing (SRI) on po olio pe o mance. The au ho s s udied whe he in es o s can ise hei pe o mance using a simple s a egy o buying s ocks wi h high SRI a ings and selling s ocks wi h low SRI a ings. To do so, hey used KLD a ings da a o e alua e he SR o a company, and six quali a i e measu es: “communi y, di e si y, employee ela ions, en i onmen , human igh s, and p oduc ” (Kemp & Os ho , 2007, p. 910). As esul s, he au ho s concluded ha ma ke - isk, size, book- o-ma ke and he momen um ac o ha e a subs an ial e ec on he po olios’ excess e u ns. 16 Con a ily, López, Ga cia, & Rod iguez (2007) epo a nega i e ela ionship be ween CSR and inancial pe o mance, es ablishing ha he esul o sus ainabili y me hods on pe o mance measu es is nega i e in he i s yea s in which he indica o s a e applied. Wahba (2008) in his s udy s a ed ha he ma ke compensa es companies o being en i onmen al conscious and concluded ha co po a e en i onmen al esponsibili y con ibu ed o a posi i e and signi ican coe icien on he ma ke - alue o a company by using Tobin’s q a io a measu e. Also, Re ab, B ik & Mellahi (2009) es ablished a posi i e associa ion be ween CSR and inancial pe o mance. 2.1.7. CSR in he 2010’s un il oday The pas decade was ma ked by a con inuous inc easing o he awa eness and impo ance o CSR wi hin he pe o mance o he i ms. Gholami (2011) desc ibed in his pape he alue c ea ion o a i m and socie y because o a common dependency be ween hem due o he link be ween co po a e pe o mance and CSR, including no only inancial bu also non- inancial pe o mance. The au ho p oposed a new amewo k comp ising a alue c ea ion cycle based on o ganiza ion pe o mance and Ca oll’s py amid (Ca oll, 1991) in which he ou esponsibili ies ou lined in he py amid ough o be deli e ed by a i m in o de o c ea e alue o he socie y and o he o ganiza ion. G oening & Kanu i (2013) and Ba nea & Rubin (2010) showed a nega i e ela ionship o CSR in he companies’ pe o mance s a ing ha i ms may be using aluable and limi ed esou ces in CSR ac i i ies ha could ins ead been used o in es in mo e p o i able p ojec s. In 2017, Wang & Sa kis (2017) s udied he e ec o CSR ou comes in he ela ionship be ween inancial pe o mance and CSR go e nance. The au ho s used a sample o 1980 i m-yea obse a ions om 423 companies o yea be ween 2009 and 2013. As independen alues, he au ho s used En i onmen al, Social and Go e nance (ESG) c i e ia and as dependen alues, ROA and Tobin’s Q we e conside ed. A e an econome ic analysis, he conclusion accomplished is ha co po a e CSR ou comes con ibu e o be e inancial ou comes. Dyck, Lins, Ro h & Wagne (2019) conduc ed an analysis using a sample o aded companies om 41 coun ies and concluded ha ins i u ional in es o s a e seeking o i ms ha ha e a 17 s ong le el o En i onmen al and Social pe o mance. The au ho s also conclude ha companies a e mo i a ed no only by inancial e u ns bu also social e u ns. Fe nandes (2019) analysed he ela ionship be ween CSR and he inancial pe o mance o Eu opean companies. The au ho used ESG sco es o es ima e he CSR pe o mance and ROA, ROE and Tobin’s Q o ep esen inancial pe o mance o he companies. The au ho concluded ha companies wi h highe CSR pe o mance ha e highe e u ns, howe e , no e idence was ound ha companies wi h a lowe CSR pe o mance a e linked o wo se inancial ou comes. The au ho also concluded ha each indi idual pilla o ESG has di e en ela ionships wi h he pe o mance o he i ms, highligh ing ha Social and Go e nance pe o mance ha e a posi i e ela ionship wi h he companies’ pe o mance whils En i onmen al pe o mance has a nega i e ela ionship wi h he i ms’ pe o mance and i ms’ alue. In 2020, Szegedi, Khan, & Len ne conduc ed a s udy o analyse CSR impac on he inancial pe o mance in he Pakis an’s banking sec o . The au ho s used da a om 2008 o 2018 and 4 inancial indica o s o examine he inancial pe o mance o he Pakis ani Banks: ROA, ROE, Ea nings pe Sha e (EPS) and Tobin's Q. The au ho s obse ed an inc ease o 14.58% in CSR disclosu e du ing pe iod analysed and concluded ha he Pakis an’s banking sec o pa icipa ion in CSR p ac ices bene i s hei accoun ing-based economic pe o mance. 18 3. MATERIALS AND METHODS 3.1. DATA This analysis will be conduc ed wi h a sample o 744 companies om 31 coun ies (Appendix A and B) a ound he wo ld. These companies co espond o 147 di e en indus ies. This analysis comp ises da a om he pas 15 Fiscal Yea s, be ween 2005 and 2019. All Da a is e ie ed om Thomas Reu e s Eikon (da a e ie ed on Augus 2020) and ea ed as a panel da a model, as a iables’ beha iou is obse ed o e a gi en pe iod. 3.2. VARIABLES The a iables used on his s udy can be classi ied as Dependen Va iables, Independen Va iables and Con ol Va iables. Figu e 3 summa izes he F amewo k used in his s udy (Szegedi e al., 2020). Concep ual F amewo k: ROE ROA Financial Pe o mance Co po a e Social Responsibili y En i onmen al Social Go e nance Resou ce use Emissions Inno a ion Communi y P oduc esponsibili y Human Righ s Wo k o c e CSR s a egy Sha eholde s Managemen Con ol Va iables Fi m’s Size Fi m’s Indus y Fi m’s Financial Risk Fi m’s Coun y Headqua e Log o To al Asse s Log o To al Re enues Deb - o- Asse Ra io NAICS Financial pe o mance indica o s Figu e 3 – Concep ual F amewo k o he s udy. Sou ce: Au ho ’s elabo a ion. 25 om 41.93 o 53.8 poin s, ollowed by a smoo h inc ease un il 2011 eaching an a e age o 59.84. Be ween 2011 and 2014 he ESG Sco e a e age emained cons an . F om 2014 o 2019 i is possible o obse e again a cons an inc ease eaching 67.22 poin s in 2019. These esul s obse ed om 2014 a e also sus ained by a s udy conduc ed by Roncalli & Mo ie (2019) whe e he au ho s conclude ha since 2014, he in eg a ion o ESG ac o s c ea ed alpha in po olios in he Eu ozone and No h Ame ica. 4.2. RESULTS Table 3 shows he esul s o Reg ession Se 1 desc ibed abo e on Me hodologies. Reg essions (1) and (3) ha e as dependen a iable Re u n on Asse s (ROA) and eg essions (2) and (4) ha e as dependen a iable Re u n on Equi y (ROE). (1) and (2) eg essions we e pe o med wi h independen a iable ESGSco e and con ol a iables Risk lTo alAsse s, lTo alRe enues, nNAICS, yea and nCoun yHeadqua e s. Reg ession (3) and (4) excludes a iable nCoun yHeadqua e s. Analysing eg ession (1), all a iables a e s a is ically signi ican , being ESGSco e s a is ically signi ican a he 10% le el and all o he s a he 1% le el. On eg ession (3), all a e s a is ically signi ican on le el 1%. These esul s allow o ejec he null hypo hesis. On eg ession (2) only Risk a iable has signi icance a he 10% le el. On eg ession (4) a iables Risk and lTo alAsse s a e s a is ically signi ican a 10% le el. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 mean 41.93 44.03 48.71 53.8 56.96 58.73 59.84 59.88 59.94 60.23 61.8 62.91 63.97 65.35 67.22 40 45 50 55 60 65 70 ESG SCORE YEAR E olu ion o Companies' ESG Sco e Figu e 4 – Rep esen a ion o he a e age o companies’ ESG Sco e e olu ion conside ed in his sample, om 2005 o 2019. Sou ce: Au ho ’s elabo a ion. 26 All o he a iables do no ha e any s a is ical signi icance. The ESGSco e is s a is ically signi ican a he 10% le el on eg ession (1) and a he 1% le el on eg ession (3). This a iable also shows a posi i e ela ionship wi h he pe o mance o he companies on eg essions (1) and (3), meaning ha an inc ease o 1 in ESGSco e, in e ms o he dependen a iable, he companies ha e on a e age a posi i e inc ease o ROA and ROE, espec i ely. These esul s allow o conclude ha an in es men on Co po a e Social Responsibili y con ibu e o a be e pe o mance o he companies. Howe e , ESGSco e has no s a is ical signi icance on eg ession (2) and (4). The a io Deb - o-Asse used o con ol he i ms’ inancial Risk, desc ibed as a iable Risk, as a nega i e ela ionship on all eg essions, wi h he dependen a iable. I can be in e p e ed as he highe he a io Deb o Asse , he lowe he alue o ROA. Rega ding he i m size, examined by he Log o To al Asse s and he Log o To al Re enues, he eg essions show mixed esul s. The a iable lTo alRe enues has a posi i e ela ionship wi h he dependen a iables, whils lTo alAsse s has a nega i e ela ionship wi h he dependen a iables. Table 3 - Reg ession Se 1: esul s om OLS coe icien s and -s a is ic analysis om he eg essions o ROA and ROE and ESG Sco e. (1) (2) (3) (4) VARIABLES ROA ROE ROA ROE ESGSco e 7.75e-05* -4.28e-08 0.000167*** 0.00103 (4.32e-05) (0.000878) (4.09e-05) (0.000739) Risk -0.0369*** -0.186* -0.0401*** -0.191* (0.0125) (0.101) (0.0129) (0.104) lTo alAsse s -0.0242*** -0.0311 -0.0194*** -0.0397* (0.00176) (0.0293) (0.00174) (0.0220) lTo alRe enues 0.0233*** 0.0454 0.0173*** 0.0370 (0.00177) (0.0298) (0.00178) (0.0262) nNAICS Yes Yes Yes Yes yea Yes Yes Yes Yes nCoun yHeadqua e s Yes Yes No No Cons an 0.175*** 0.146 0.206*** 0.509** (0.0232) (0.258) (0.0228) (0.252) Obse a ions 11,149 11,148 11,149 11,148 R-squa ed 0.279 0.037 0.231 0.034 No es: Reg essions include Indus y Dummies, Yea Dummies, Coun y Headqua e Dummies, whe e indica ed. Robus s anda d e o s in pa en heses. The signi icance o 1%, 5% and 10% o he coe icien s a e ep esen ed by ***, ** and *, espec i ely. 27 On Reg ession Se 2, a dummy a iable is inse ed, AFTER__ESGSco e, whe eas AFTER__ESGSco e co esponds o 1 o yea s equal and a e 2014 and 0 o yea s be o e 2014. Gi en he inc ease on he a e age o ESGSco e a e 2014 un il 2019, obse ed on Figu e 4, he ollowing eg essions aimed o es i a e 2014, he ESGSco e in luenced o no ROA and ROE, espec i ely. The esul s on Table 4 shows ha a iable AFTER__ESGSco e does no ha e s a is ical signi icance on any eg ession in e ms o he dependen a iables. These esul s s a e ha , gi en no s a is ical signi icance o he dummy a iable inse ed, he e is no e idence ha a e 2014, he e was highe con ibu ion o ESG Sco e o he pe o mance o he companies. The con ol a iables show simila esul s as desc ibed on Reg ession 1 analysis. Only on eg ession (3) ESGSco e shows s a is ical signi icance a he 1% le el. Table 4 – Reg ession Se 2: esul s om OLS coe icien s and -s a is ic analysis om he eg essions o ROA and ROE and ESG Sco e and AFTER__ESGSco e Dummy. (1) (2) (3) (4) VARIABLES ROA ROE ROA ROE ESGSco e 3.90e-05 0.000137 0.000144*** 0.00122 (5.06e-05) (0.000962) (4.76e-05) (0.000803) AFTER__ESGSco e 9.98e-05 -0.000356 6.18e-05 -0.000499 (6.31e-05) (0.00110) (6.57e-05) (0.00110) Risk -0.0368*** -0.186* -0.0400*** -0.191* (0.0125) (0.101) (0.0129) (0.104) lTo alAsse s -0.0242*** -0.0310 -0.0195*** -0.0397* (0.00176) (0.0292) (0.00174) (0.0220) lTo alRe enues 0.0233*** 0.0453 0.0173*** 0.0369 (0.00177) (0.0297) (0.00178) (0.0261) nNAICS Yes Yes Yes Yes yea Yes Yes Yes Yes nCoun yHeadqua e s Yes Yes No No Cons an 0.177*** 0.137 0.207*** 0.498** (0.0234) (0.257) (0.0231) (0.254) Obse a ions 11,149 11,148 11,149 11,148 R-squa ed 0.279 0.037 0.231 0.034 No es: Reg essions include Indus y Dummies, Yea Dummies, Coun y Headqua e Dummies, whe e indica ed. Robus s anda d e o s in pa en heses. The signi icance o 1%, 5% and 10% o he coe icien s a e ep esen ed by ***, ** and *, espec i ely. 28 On Reg ession Se 3, ep esen ed on Table 5, since he sample being conside ed in his disse a ion con ains companies wi h di e en sizes and consequen ly di e en amoun s o To al Re enues, i was included wo dummy a iables, one ha e e o he 20% o companies wi h highe amoun o lTo alRe enues named HIGH__lTo alRe enues and ano he one ha co espond o he 20% o companies wi h lowe alues o lTo alRe enues, named LOW__lTo alRe enues. The 20% high and low we e de ined based on he da a om he las iscal yea (2019), and he e o e he a iable yea was emo ed om he se o equa ions. On eg ession (1), wi h ROA as dependen a iable, ESGSco e a iable is s a is ically signi ican on he 5% le el, and shows a nega i e ela ionship wi h he dependen a iable. Also, on his eg ession, a iable LOW__lTo alRe enues shows a s a is ical signi icance on he 1% le el while he HIGH__lTo alRe enues a iable does no show any s a is ical signi icance. All o he con ol a iables a e s a is ically signi ican a 1% le el, and a iables Risk and lTo alAsse s a e nega i e coe icien s. On eg ession (2), wi h ROE as dependen a iable, all a iables a e no s a is ically signi ican excep Risk, being signi ican a he 10% le el. On eg ession (3), ESGSco e does no show s a is ical signi icance, while all o he a iables show he same esul s as desc ibed on eg ession (2), excep dummy HIGH__lTo alRe enues, ha displays a posi i e coe icien and a s a is ical signi icance a 5% le el. On eg ession (4), HIGH__lTo alRe enues is s a is ically signi ican a he 10% le el, Risk and lTo alAsse s ha e a nega i e ela ionship wi h ROE and a e s a is ically signi ican a he 10% and 5% le els, espec i ely. These esul s show ha an inc ease o 1 on a iable LOW__lTo alRe enues, has a posi i e impac o 0.000662% on ROA in eg ession (1), howe e an inc ease o 1 on ESGSco e dec eases ROA by 8.64e-05 uni s. 29 Table 5 – Reg ession Se 3: esul s om OLS coe icien s and -s a is ic analysis om he eg essions o ROA and ROE and ESG Sco e. Dummies HIGH__lTo alRe enues and LOW__lTo alRe enues we e included. (1) (2) (3) (4) VARIABLES ROA ROE ROA ROE ESGSco e -8.64e-05** -0.000767 -1.24e-05 0.000155 (3.70e-05) (0.000898) (3.65e-05) (0.000743) HIGH__lTo alRe enues 5.18e-05 0.00207 0.000183** 0.00257* (9.24e-05) (0.00140) (9.32e-05) (0.00133) LOW__lTo alRe enues 0.000662*** -0.000294 0.000878*** 0.000438 (0.000114) (0.00177) (0.000118) (0.00163) Risk -0.0385*** -0.189* -0.0409*** -0.193* (0.0130) (0.101) (0.0132) (0.105) lTo alAsse s -0.0245*** -0.0356 -0.0205*** -0.0469** (0.00177) (0.0277) (0.00173) (0.0207) lTo alRe enues 0.0271*** 0.0427 0.0221*** 0.0375 (0.00204) (0.0291) (0.00205) (0.0258) nNAICS Yes Yes Yes Yes yea No No No No nCoun yHeadqua e s Yes Yes No No Cons an 0.107*** 0.342 0.129*** 0.687*** (0.0313) (0.233) (0.0309) (0.257) Obse a ions 11,149 11,148 11,149 11,148 R-squa ed 0.261 0.036 0.215 0.032 No es: Reg essions include Indus y Dummies and Coun y Headqua e Dummies, whe e indica ed. The signi icance o 1%, 5% and 10% o he coe icien s a e ep esen ed by ***, ** and *, espec i ely. Las ly, on Table 6, in Reg ession Se 4 we conside ESG indi idual pilla s o u he unde s and how each ESG pilla sco e impac s i m’s inancial pe o mance. As p esen ed on Table 6, he a iable En i onmen Pilla Sco e is s a is ically signi ican on he 1% le el on eg ession (3) and s a is ically signi ican on he 5% le el on eg ession (4) whe e En i onmen Pilla Sco e p esen s a nega i e ela ionship wi h he dependen a iable. The a iable SocialPilla Sco e is s a is ically signi ican a he 1% le el on eg ession (1), (3) and (4). I shows a posi i e ela ionship wi h ROE and ROA. The a iable Go e nancePilla Sco e is only signi ican on eg ession (3) on he 10% le el. Also, his a iable has a nega i e ela ionship wi h he dependen a iable. The con ol a iables show simila esul s as desc ibed on Reg ession 1 analysis. I is clea ha he pilla ha con ibu es he mos o a good pe o mance o he i m is he Social Pilla . 30 Table 6 – Reg ession Se 4: esul s om OLS coe icien s and -s a is ic analysis om he eg essions o ROA and ROE and each indi idual ESG pilla sco e: En i onmen al, Social and Go e nance. (1) (2) (3) (4) VARIABLES ROA ROE ROA ROE En i onmen Pilla Sco e 1.29e-05 -0.000631 -0.000116*** -0.000966** (3.35e-05) (0.000504) (3.32e-05) (0.000461) SocialPilla Sco e 0.000110*** 0.000582 0.000312*** 0.00163*** (4.22e-05) (0.000455) (3.64e-05) (0.000397) Go e nancePilla Sco e -4.30e-05 -8.40e-05 -5.04e-05* 0.000102 (2.91e-05) (0.000533) (2.87e-05) (0.000514) Risk -0.0370*** -0.187* -0.0407*** -0.194* (0.0125) (0.101) (0.0129) (0.105) lTo alAsse s -0.0242*** -0.0304 -0.0199*** -0.0410* (0.00176) (0.0296) (0.00173) (0.0222) lTo alRe enues 0.0231*** 0.0456 0.0176*** 0.0396 (0.00178) (0.0296) (0.00178) (0.0258) nNAICS Yes Yes Yes Yes yea Yes Yes Yes Yes nCoun yHeadqua e s Yes Yes No No Cons an 0.181*** 0.131 0.212*** 0.495** (0.0233) (0.238) (0.0231) (0.237) Obse a ions 11,149 11,148 11,149 11,148 R-squa ed 0.280 0.037 0.235 0.034 No e: All eg essions include Indus y Dummies, Yea Dummies and Coun y Headqua e Dummies, whe e indica ed. The signi icance o 1%, 5% and 10% o he coe icien s a e ep esen ed by ***, ** and *, espec i ely. 31 5. CONCLUSIONS The aim o his s udy is o o m a comp ehensi e and s uc u ed analysis be ween he pe o mance o CSR and he companies’ pe o mance. This disse a ion con ibu es o he exis ing esea ch and aims o add new indings o his heme. F om he esul s ob ained abo e in his pape we conclude ha he e is a posi i e ela ionship be ween Co po a e Social Responsibili y and he inancial pe o mance o he companies. I is possible o obse e ha an in es men on ESG ac o s con ibu e o a highe Re u n on Asse s and he e o e i can be in e ed ha he pe o mance o he i ms ises. As obse ed in Figu e 3, he a e age o ESG Sco e ose a e 2014 un il 2019. The e o e, an analysis was conduc ed o unde s and i , a e 2014, ESG Sco e in luenced he pe o mance o he companies. The esul s allow o conclude ha he e is no s a is ical signi icance o conclude ha ESG sco e con ibu ed o he pe o mance o he companies be ween his pe iod. Ano he conclusion eached om his s udy is ha companies ha ha e an ex emely low alue o To al Re enues do no bene i om an in es men on ESG Fac o s, in ac , he esul s show a nega i e ela ionship be ween ESG Sco e and Re u n on Asse s. On he o he hand, no e idence shows ha companies wi h ex emely high alue o To al Re enues con ibu e o a posi i e o nega i e ela ionship wi h i m’s pe o mance. Las ly, his s udy allows o conclude ha when conside ing he h ee pilla sco es indi idually, he Social Pilla is he only one ha clea ly lead o a be e pe o mance o he companies since i has a posi i e and s a is ically ela ionship wi h Re u n on Asse s a io. In con as , he En i onmen al and Go e nance pilla sco es ha e a nega i e ela ionship wi h Re u n on Asse s and Re u n on Equi y. Gi en hese conclusions, we aim ha companies s a o conside and inc ease hei in es men on En i onmen , Social and Go e nance ac o s in hei s a egies as i no only leads o a be e inancial pe o mance bu also con ibu es o a heal hie wo ld whe e he companies ha e an impo an ole o a good de elopmen o he socie y and whe e u u e gene a ions can lead by example. 32 Despi e he conclusions ound in his s udy, he e is s ill oom o imp o e and educe limi a ions in his analysis. Fi s ly, al hough he concep o CRS was in oduced in he 50’s, only ecen ly companies s a ed o in es and conside En i onmen al, Social and Go e nance ac o s in hei s a egies. Acco ding o Thomson Reu e s Eikon, he i s da a including hese ac o s was in 2012, he e o e, i c ea es a limi a ion o pe o m a deepe his o ical analysis. Also, based on p e ious li e a u e esea ch, Co po a e Social Responsibili y is a wide and di icul concep o de ine ha goes beyond ESG ac o s and he e o e we sugges ha on u he esea ch o he a iables such as Resea ch and De elopmen (R&D) a iable and he ad e ising in ensi y o he business should be conside ed and aken in o accoun (Mcwilliams & Siegel, 2000; Waddock & G a es, 1997). As accoun ing-based measu es, ROA and ROE we e conside ed. The ini ial aim o his analysis was also o include Tobin’s Q a io as a p oxy o i m alue (Dowell, Ha , & Yeung, 2000; Fe nandes, 2019; Wahba, 2008; Wang & Sa kis, 2017), howe e due o he high numbe o missing alues in he da a, his a iable was no included. Fo u u e analysis, since he pe iod being s udied include he “c edi c unch” in 2007-2008, we sugges making an analysis on he ela ionship be ween his e en and he companies’ in es men on ESG. 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Do ins i u ional in es o s d i e co po a e social 41 Oil and Gas Ex ac ion 17 2.28% O he Chemical P oduc and P epa a ion Manu ac u ing 4 0.54% O he Elec ical Equipmen and Componen Manu ac u ing 9 1.21% O he Fab ica ed Me al P oduc Manu ac u ing 7 0.94% O he Financial In es men Ac i i ies 8 1.08% O he Food Manu ac u ing 4 0.54% O he Gene al Pu pose Machine y Manu ac u ing 6 0.81% O he Hea y and Ci il Enginee ing Cons uc ion 2 0.27% O he In es men Pools and Funds 2 0.27% O he Lea he and Allied P oduc Manu ac u ing 1 0.13% O he Miscellaneous Manu ac u ing 5 0.67% O he Nonme allic Mine al P oduc Manu ac u ing 1 0.13% O he Telecommunica ions 1 0.13% O he Tex ile P oduc Mills 1 0.13% O he T anspo a ion Equipmen Manu ac u ing 3 0.40% O he Wood P oduc Manu ac u ing 1 0.13% Ou pa ien Ca e Cen e s 1 0.13% Pain , Coa ing, and Adhesi e Manu ac u ing 8 1.08% Pape and Pape P oduc Me chan Wholesale s 1 0.13% Pes icide, Fe ilize , and O he Ag icul u al Chemical Manu ac u ing 3 0.40% Pe oleum and Coal P oduc s Manu ac u ing 15 2.02% Pe oleum and Pe oleum P oduc s Me chan Wholesale s 1 0.13% Pha maceu ical and Medicine Manu ac u ing 26 3.49% Pipeline T anspo a ion o C ude Oil 1 0.13% Pipeline T anspo a ion o Na u al Gas 3 0.40% Plas ics P oduc Manu ac u ing 3 0.40% Pos al Se ice 2 0.27% P in ing and Rela ed Suppo Ac i i ies 3 0.40% Pulp, Pape , and Pape boa d Mills 8 1.08% Radio and Tele ision B oadcas ing 5 0.67% Rail T anspo a ion 7 0.94% Rail oad Rolling S ock Manu ac u ing 1 0.13% Residen ial Building Cons uc ion 10 1.34% Resin, Syn he ic Rubbe , and A i icial and Syn he ic Fibe s and Filamen s Manu ac u ing 14 1.88% Rubbe P oduc Manu ac u ing 8 1.08% Sa elli e Telecommunica ions 1 0.13% Sawmills and Wood P ese a ion 1 0.13% Scheduled Ai T anspo a ion 9 1.21% School and Employee Bus T anspo a ion 1 0.13% Secu i ies and Commodi y Con ac s In e media ion and B oke age 3 0.40% Secu i ies and Commodi y Exchanges 2 0.27% Semiconduc o and O he Elec onic Componen Manu ac u ing 15 2.02% Se ices o Buildings and Dwellings 1 0.13% Ship and Boa Building 3 0.40% 42 Soap, Cleaning Compound, and Toile P epa a ion Manu ac u ing 10 1.34% So wa e Publishe s 5 0.67% Special Food Se ices 1 0.13% Special y (excep Psychia ic and Subs ance Abuse) Hospi als 1 0.13% Spo ing Goods, Hobby, and Musical Ins umen S o es 1 0.13% Sp ing and Wi e P oduc Manu ac u ing 2 0.27% S eel P oduc Manu ac u ing om Pu chased S eel 3 0.40% Suppo Ac i i ies o Ai T anspo a ion 5 0.67% Suppo Ac i i ies o Mining 5 0.67% Suppo Ac i i ies o Road T anspo a ion 2 0.27% Tobacco Manu ac u ing 4 0.54% T a el A angemen and Rese a ion Se ices 1 0.13% T a ele Accommoda ion 3 0.40% U ban T ansi Sys ems 2 0.27% Venee , Plywood, and Enginee ed Wood P oduc Manu ac u ing 1 0.13% Ven ila ion, Hea ing, Ai - Condi ioning, and Comme cial Re ige a ion Equipmen Manu ac u ing 4 0.54% Was e Collec ion 2 0.27% Was e T ea men and Disposal 2 0.27% Wa e , Sewage and O he Sys ems 3 0.40% Wi ed Telecommunica ions Ca ie s 7 0.94% Wi eless Telecommunica ions Ca ie s (excep Sa elli e) 12 1.61% Sou ce: Thomson Reu e s, 2020. 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