Authors: Afroditi Papadaki, Olga-Chara Pavlopoulou-Lelaki

Title: The effects of country level transparency and firm level social responsibility on profitability

Abstract

This study offers evidence on how the level of transparency at the market level and social responsibility at the firm level jointly affect corporate performance. The evidence is based on analysis of a global sample of publicly listed firms with a time frame spanning from 2002 to 2018. The empirical results document that a robust social responsibility profile (indicated by effective workplace relationships, respect of human rights, community commitment, and protection of client safety) is associated with higher corporate profit in firms with ethics-related policies in place. In addition, the evidence shows that market transparency is positively (negatively) associated with corporate profit in environments of low (high) corruption perceptions. Corporate social responsibility and ethics are at the core of the discussions around re-defining contemporary financial reporting, and therefore, the findings may be of interest to academic researchers, practitioners, as well as policy makers.