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Given the dynamism and complexity of today’s business environment, it is very likely that corporate sustainability derived from the practice of its social responsibility will influence FP.According to , the incorporation of sustainability criteria in the main strategies of companies can generate strategic benefits that contribute to value creation.
At the same time, the good function of companies is perceived as a source of important spillover effects at the regional level, as highlighted at [16,17,18].
This lack of consensus is conditioned by a multitude of factors, including the diversity of models used to measure performance , the lack of confidence in identifying more than 80 different performance measures in the literature reviewed , the variables and definitions used to measure sustainability and financial performance and sample characteristics , or the lack of control variables such as size, risk, and the economic sector to which the company belongs .
The relationship between responsible behavior and socially sustainable behavior of companies and their financial performance (FP) has been a subject widely investigated and debated in recent years.
Corporate social responsibility (CSR) is the way in which companies contribute to sustainability, a broader concept involving all actors in a society.
The model also incorporates other business variables that might affect the relationships between both types of performance, such as return on assets (ROA) ratio, company size, debt ratio, and industry.
The results suggest that, for specific industries, return on assets is a necessary condition for companies with leverage to reduce the cost of debt due to their sustainability profile and consequently boost their ROE.Section 4 introduces the data and methodology employed to examine the data.Section 5 presents the results, with Section 6 providing the conclusions, research limitations, and managerial implications. Although there is extensive literature that tries to relate social performance and financial performance, the empirical relationship between both types of performance is still not well established .The second contribution lies in the estimated model itself, which is based on the so-called Du Pont analysis, as in , that breaks the return on equity ratio into its constituent components, operating and asset use efficiency, and financial leverage, to determine which of these components is most responsible for changes in ROE.The results suggest that CSP affects FP in firms with an efficient use of their assets, by both facilitating access to funds, and lowering their financial cost.The purpose is to examine the effect of CSP on FP along with other characteristics of companies, such as return on assets, size, leverage, and the sector of activity in which they operate.This study makes two contributions: the first one explains how complexity theory through fuzzy set qualitative comparative analysis (fs QCA) provides a solid ground to solve the FP puzzle.Financial performance is measured by the return on equity (ROE) ratio, variable that is widely used in Finance and Accounting related research.The corporate performance of the company is measured by its inclusion or not in the sustainability index used as reference for the Spanish capital market, the FTSEGood4 IBEX.There are many investors who integrate sustainability performance data in their capital allocation decisions .Social responsibility investments, in addition to financial profitability, pursue sustainability in the medium and long term and try to influence the real economy.