CORPORATE SOCIAL RESPONSIBILITY AND SHAREHOLDER VALUE CREATION: EVIDENCE FROM EUROPEAN FIRMS (2021–2023)

Abstract

This study investigates whether corporate social responsibility (CSR) initiatives including both marketing-oriented and non-marketing-oriented practices generate measurable value for European firms. Specifically, it examines how CSR efforts influence corporate reputation and shareholder value creation between 2021 and 2023. The research also explores whether investors and stakeholders perceive CSR as a genuine strategic commitment or a symbolic corporate gesture. A quantitative research design was adopted using a dataset of 120 leading European companies evaluated by Deloitte and Kirchhoff in The Good Company Ranking. Financial data were collected from Forbes, and corporate reputation scores were obtained from Fortune’s Most Admired Companies list. Two regression models were estimated: one assessing the effect of CSR on corporate reputation, and another examining the impact of CSR on shareholder value. The analysis included control variables such as firm size, return on assets (ROA), and industry sector. The data were analyzed using multiple regression and logistic regression techniques. The empirical results indicate that CSR practices, particularly those linked to marketing and brand enhancement, have a positive and statistically significant effect on shareholder value creation. This suggests that investors reward firms that demonstrate visible and strategic CSR engagement. However, no substantial relationship was found between CSR initiatives and corporate reputation, implying that stakeholders may find it challenging to differentiate between authentic CSR efforts and symbolic or image-oriented actions. Overall, CSR contributes more to financial performance than to perceived reputational gains among European firms during the study period. Managers are advised to develop strategic CSR programs that integrate sustainability into the firm’s long-term objectives rather than treating CSR as a marketing tool. Investments in transparent, authentic, and difficult-to-replicate CSR practices can strengthen investor confidence and support sustainable value creation. Furthermore, firms should communicate CSR outcomes more effectively to enhance stakeholder understanding and reputation credibility. This study contributes to the ongoing debate on the strategic role of CSR in European markets by providing recent empirical evidence from 2021–2023. It offers novel insights into how different dimensions of CSR influence financial and reputational outcomes, emphasizing the growing importance of sustainability in shaping corporate value perception and investment behavior.