Corporate Social and Financial Performance: A Canonical Correlation Analysis

A major stream of research has resulted from efforts to understand the relationship between social performance and financial performance that exists for corporations. Can a company do well by doing good? Using canonical correlation, the results of this study indicate a strong relationship between a company's social performance and its financial performance. Further, this association differs across industries. In examining social performance, both strengths and concerns are important and should be considered separately. Finally, this study points to the importance of operating income as a key financial performance measure.