[Link] Accounting and Finance Research Vol. 6, No.

4; 2017

Corporate Social Responsibility and Firm Performance:

Evidence from an Emerging Market
Elif Akben Selcuk1 & Halil Kiymaz2
1
Department of Business Administration, Kadir Has University, Istanbul, TURKEY
2
Crummer Graduate School of Business, Rollins College, Winter Park, FL, USA.
Correspondence: Halil Kiymaz, Crummer Graduate School of Business, Rollins College, 1000 Holt Avenue-2722,
Winter Park, FL 32789, USA.

Received: May 15, 2017 Accepted: August 23, 2017 Online Published: September 7, 2017
doi:10.5430/afr.v6n4p42 URL: [Link]

Abstract
This study focuses on the relationship between firm performance and corporate social responsibility (CSR) of firms
listed on Borsa Istanbul during the period of 2009-2011. We use content analysis of annual reports/websites of
Turkish firms for any socially responsible activities. We find a negative relationship between CSR and financial
performance, meaning that firms which disclose more information about CSR initiatives in their annual reports have
a lower return on assets. After controlling for debt and size of the firms, we further find that while highly levered
firms are less profitable, larger firms have higher profits. Finally, we do not find any significant relationships
between research and development expenditures and financial performance.
JEL Classification:
Keywords: Corporate social responsibility, Emerging markets, Firm performance
1. Introduction
The fundamental goal of a business firm, especially a corporation, is to maximize shareholder wealth as reflected in
the market price of the firm’s stock. Achieving this goal assumes that managers operate in the best interests of
stockholders, avoid actions designed to deceive financial markets to boost the firm’s stock price, and act in a socially
responsible manner. So, shareholder wealth maximization is consistent with the best interest of stakeholders and
society in the long run. However, it is unclear how corporate socially responsible finance aligns with the shareholder
wealth maximization. In today’s business environment, companies are increasingly faced with a demand for more
attention to corporate social responsibility (CSR) initiatives, from the part of several non-shareholding stakeholders
including customers, employees or NGOs (Michelon, Boesso, and Kumar (2013). Even though most companies
accept the need to conduct CSR activities to establish better relationships with stakeholders, a question which arises
is whether these initiatives lead to better financial performance.
Socially responsible finance includes responsibility from the corporate side (corporate social responsibility) as well
as the investor side (socially responsible investing) in the capital markets. On the corporate side, as the consumers
become more aware of corporate activities, some corporations decided to embark on CSR programs designed to
offset some of their effects on the world while also generally improving corporate practices. CSR is the
decision-making and implementation process that guides all company activities in protecting and promoting labor
and environmental standards, and compliance with legal requirements within its operations. CSR involves a
commitment to contribute to the economic, environmental, and social sustainability of communities. Socially
responsible investing (SRI), on the other hand, is ethical investing and green investing that is considered socially
responsible because of the nature of the business the company conducts.
The relationship between a firm's CRS and its financial performance has been debated since the 1960s without
consensus by the academic community. A clear evidence of a relationship or lack of it is an important issue for
management. If socially responsible activities add value to the firm, then firms may be encouraged to pursue such
activities. Although the link between CSR and financial performance has been a central topic of research for more
than three decades, the majority of the studies in the literature have been conducted for developed economies rather
than developing countries. However, the need for CSR initiatives is stronger in the developing world since there are

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fewer institutions to provide social goods and there is a demand from the companies to fill these gaps (Dobers and
Halme (2009)).
The focus of this research is to investigate the relationship between firm performance and CRS. Our approach
focuses on the content analysis of annual reports/websites of Turkish firms during the period of 2009-201 for any
socially responsible activities. Our study contributes to the literature in the following ways. First, we provide
evidence for a fast-growing emerging market on the social responsibility awareness of the firms. Second, we use of
content analysis which has the advantage of being objective as the results are independent of the particular research.
On the other hand, the choice of variables to measure is subjective. Further, content analysis is a report of what firms
say they are doing, and not necessarily what they are doing. Finally, we further examine the impact of CSR
disclosure level on financial performance using various proxies for financial performance.
We find a negative relationship between corporate social responsibility disclosure (CSRD) and financial performance,
meaning that firms which disclose more information about CSR initiatives in their annual reports have a lower return
on assets. When we control for size, capital structure, and R&D expenditure among other variables. We find return
measures are directly related to the size of the firm, inversely related to leverage.
The remaining of the study is organized as followings. The next section reviews the literature on SRS and firm
performances for developed as well as emerging markets. Then we report data selection, model, and statistical
summaries. The empirical findings are reported in Section 4. We conclude the paper in the last section.
2. Literature Review
The literature contains mixed results on the relationship between corporate social and corporate financial
performance. Theoretically, the neoclassical theory suggests a negative effect of firms’ CSR practices on their
financial performance because socially responsible companies face additional costs (Bird, Hall, Momente, and
Reggiani (2007)). On the contrary, the stakeholder theory suggests that companies should engage in good
relationships with all stakeholders (Freeman (2004)). Hence, socially responsible companies are expected to obtain
greater financial returns through indirect effects such as the recruitment of more qualified employees (Greening and
Turban (2000)) or building moral capital (Godfrey (2005)).
Empirically, many studies investigated the relationship between corporate social responsibility initiatives and
financial performance. Although studies conducted on developed country firms usually documented a positive
relationship, there is also evidence to the contrary. For example, Cochran and Wood (1984) find firms with older
assets have lower CRS ratings. Potential explanations for their findings include the fact that firms with older assets
likely built their plants in a period when regulatory constraints were less severe. Another reason is firms with older
assets being less flexible to adopt social changes. After controlling the age of assets, they provide weak evidence on
the relationship between CSR and firm financial performance. On the other hand, Aupperle, Carroll, and Hatfield
(1985) using a survey on administrated to corporate CEOs did not find any relationship between CSR and
profitability. McGuire, Sundgren, and Schneeweis (1988) using Fortune magazine's ratings of corporate reputations
show that a firm's prior performance is more closely related to CRS than is subsequent performance. They also report
measures of risk are more closely associated with social responsibility than previous studies have suggested.
Griffin and Mohan (1997) emphasize the methodological inconsistencies in previous studies and use the five most
commonly applied accounting measures in the corporate social performance and corporate financial performance
literature to show that a priori use of measures may predetermine the CSR/CFP relationship outcome. Waddock and
Graves (1997) find corporate social performance is positively associated with both past and future financial
performance, supporting the theory that good management and CSP are positively related. McWilliams and Siegel
(2000) argues that most of the studies investigating the impact of CSR on financial performance without taking into
consideration the role of R&D lead to upwardly biased estimates of the impact of CSR. The authors further note that
to their empirical results, the impact of CSR on financial performance is a neutral one once firms’ R&D expenditures
are accounted. Similarly, Orlitzky (2001) focus on the impact of size on the relationship between CRS and firm
financial performance. The author does not confirm size as a third factor which would confound the relationship
between CSR and firm performance but rather suggests that both small and large firms can benefit from CSR.
A meta-analysis by Peloza (2009) reviewed 128 empirical studies and reported that 59% found a positive
relationship between CSR and financial performance, 14% found a negative relationship and 27% found no
relationship at all. In another meta-analytic study, Orlitzky, Schmidt, and Rynes (2003) report a positive
relationship between CSR and financial outcomes, especially when reputation was used as a proxy for corporate
social/ environmental responsibility. Similarly, Margolis and Elfenbein (2008) and Margolis, Elfenbein, and Walsh

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(2009) reviewed a large sample of 251 studies and concluded that the effect of CSR on financial performance is
positive but small. Brammer and Millington (2008) use corporate social performance using corporate charitable
giving as a proxy. Findings show that that firms with both unusually high and low CSP have higher financial
performance than other firms, with unusually poor social performers doing best in the short run and unusually good
social performers doing best over longer time horizons. Going one step further than the simple investigation of the
link between CSR and financial performance, Hull and Rothenberg (2008) use additional variables, including
innovation and level of differentiation as moderators of the link between financial performance and CSR. They
document that the benefits of CSR are more pronounced for less innovative firms and those operating in industries
with little differentiation. More recently, Wang and Choi (2013) find that not only the level but also the temporal and
interdomain consistency of corporate financial performance have significant financial implications for companies
using data from a sample of 622 companies, the authors. The authors further documented that consistency is most
important for firms with high knowledge intensity.
There are also some studies examining the issue of CSR and financial performance in developing countries.
Chapple and Moon (2005) investigate CRS in multiple Asian countries and report that that CSR does vary
considerably among Asian countries but that this variation is not explained by development but by factors in the
respective national business systems. It also concludes that multinational companies are more likely to adopt CSR
than those operating solely in their home country. Chih, Chih, and Chen (2010) examine CSR and financial
performance for a total of 520 financial firms in 34 countries, between the years 2003 and 2005. Findings show that
firms with larger size are more CSR minded, and the financial performance and CSR are not related. Furthermore,
financial firms in countries with stronger levels of legal enforcement tend to engage in more CSR activities, and
those firms in countries with stronger shareholder rights tend to engage in less CSR activities.
In another focusing Asian emerging markets, Cheung, Tan, Ahn, and Zhang (2010) use the CSR scores issued by
Credit Lyonnais for the period between 2001 and 2002. The authors document a positive relationship between the
CSR practices of Asian companies and their market valuation. This positive relationship is also confirmed in several
emerging market studies. For example, Saleh (2009) for Malaysia, Uadiale and Fagben (2012) for Nigeria, Choi and
Jung (2008) for Korea, Mishra and Suar (2010) for India, and Yan, Lin and Chang (2010) for Taiwan. However, a
negative relationship is also documented in other studies including those by Rahman, Zain, and Al-Haj (2011) for
Malaysia and by Siregar and Bachtiar (2010) for Indonesia. Scholtens and Kang (2013) examine how earnings
management is associated with CSR and investor protection with 139 firms in ten Asian countries. Findings show
that Asian firms with relatively good CSR are engaged significantly less with earnings management. Investor
protection also is negatively associated with earnings management. Hu and Scholtens (2014) investigate the
corporate social responsibility (CSR) policies of commercial banks in 44 developing countries and report a positive
and significant association between CSR policies and bank financial performance.
Studies focusing on CSR practices of Turkish firms are relatively few, mostly due to the lack of reliable scores. To
develop a scale of CSR for Turkish firms, Turker (2009) uses data from 269 business professionals and identifies the
four following dimensions of CSR: employees, customers, government and social stakeholders. In their descriptive
study of the online communication practices of Turkish SMEs, Dincer and Dincer (2010) report that the number of
SMEs disclosing their CSR practices is very low. In another study on Turkish firms, Ertuna and Tükel (2009) show,
through content analysis, that traditional practices and market-driven local norms, rather than international factors
affect CSR reporting.
In one of the few studies investigating CSR-financial performance relationship in Turkey, Aras, Aybars, and Kutlu
(2010) analyze the companies in the ISE-100 index for the years 2005-2007 and document a positive relationship
between CSR disclosure and firm size. However, no significant relationship between CSR and financial performance
is reported. This finding is also confirmed by a more recent study of ISE-100 firms by Özçelik, Öztürk, and Gürsakal
(2015). On the other hand, using a smaller sample of 28 firms belonging to ISE Corporate Governance index, Arsoy,
Arabaci and Çiftçioğlu (2012) find a positive relationship between CSR scores derived from content analysis and
accounting based financial performance indicators. So, the evidence on the financial performance and CRS of
Turkish firms are mixed at best. Our study provides additional evidence using a more recent and extended data.
3. Methodology
3.1 Data and Variables
To investigate the relationship between corporate social responsibility disclosure and financial performance in
Turkey, we collect data on firms listed on Borsa Istanbul from January 2009 to December 2011. The sample consists

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of 341 firms per year and a total of 1,023 firm-years of observations. Data on financial performance and
firm-specific characteristics are obtained from Finnet database.
To measure corporate social responsibility, we employ the content analysis method on the companies’ annual reports
as suggested by Hughes, Anderson, and Golden (2001). Corporate social responsibility is analyzed based on seven
distinct dimensions: environment, energy, consumer, community involvement, employee health and safety, other
employee-related issues, and general (Aras, Aybars, and Kutlu (2010)). We use three units for our analysis: the
number of sentences devoted to CSR on the annual report, the number of pages related to CSR, and the number of
the CSR dimensions mentioned based on the seven categories. Based on these units of analysis, three different CSR
disclosure (CSRD) measures are defined: The first measure is related to the depth of CSRD and is calculated as the
total number of sentences the company devotes to the seven CSR dimensions in its annual report. We also calculate a
second CSRD measure defined as the total number of pages devoted to CSR, instead of the number of sentences.
CSR breadth, on the other hand, is defined as the number of CSR dimensions that the company refers to in its annual
report.
Return on assets (ROA) is used as a dependent variable for this study to measure the potential benefits that
companies could get from their CSR activities. We also include several control variables that might affect a
company’s financial performance. First, we include the variable SIZE defined as the natural logarithm of the firm’s
total sales. LIQUIDITY is measured by the firm’s current ratio calculated as the ratio of its current assets divided by
its current liabilities. RISK is proxied by the beta coefficient. The variable R&D refers to the research and
development expenditures divided by net sales INT is a dummy which takes the value of 1 for firms which derive
some of their revenues from international sales and 0 otherwise. LEVERAGE is measured by the ratio of total
interest-bearing debt to total assets while the variable GROWTH refers to the percentage change in net sales
compared to the previous year.
3.2 Estimation
Three different versions of the following equation will be used, each using one of the three measures of CSRD
introduced in the previous section. Panel regressions with robust standard errors will be estimated to assess the
relationship between CSRD and financial performance. To control for industry-specific effects that might affect
financial performance, we include industry dummies in the regression models. We prefer a stepwise approach where
control variables are incorporated one by one into the model.
ROAit = β0 + β1CSRDit + β2Xit + ɛit (1)
where:
ROAit is the return on assets for firm i in year t,
CSRDit is one of the three corporate social responsibility disclosure measures for firm i in year t,
Xit is the set of control variables for firm i in year t,
β0, β1, and β2 are vectors of parameters to be estimated,
ɛit is the error term.
4. Empirical Results
4.1 Statistics on CSR Disclosure
Table 1 reports the CSR disclosures made by firms in our sample for during the study period. The table shows the
companies making at least one CSR disclosure in their annual reports. The number of companies making at least one
CSR disclosure in any of the categories increased from 208 in 2009 to 253 in 2011. The maximum number of
disclosures was recorded in the general CSR category with 240 companies in 2009 followed by environment
category with 235 disclosures while the minimum was observed in the energy category with 50 companies in the
year 2009. The average number of CSR dimensions that companies mention in their annual reports are equal to 2.63,
2.65 and 2.85 for the years 2009, 2010, and 2011 respectively.

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Table 1. CSR Disclosure in the Turkish Companies’ Annual Reports

This reports the distribution of firms with CSR disclosures during the study period 2009-2011.
2011 2010 2009
n % n % n %
Environment 235 0.69 212 0.62 197 0.58
Energy 59 0.17 53 0.16 50 0.15
Consumer 79 0.23 71 0.21 70 0.21
Community 103 0.30 91 0.27 97 0.28
Employee health and safety 67 0.20 59 0.17 56 0.16
Employee, other 185 0.54 153 0.45 147 0.43
General 240 0.70 212 0.62 194 0.57
Total 253 0.74 228 0.67 208 0.61
n=number of companies making at least one disclosure in each category
%=number of companies making at least one disclosure in each category as a percentage of total sample (n=341)
Table 2 and Table 3 contain the descriptive statistics on CSR based on the number of sentences and the number of
pages respectively. The average number of sentences devoted to CSR in the Turkish companies annual reports
increased from approximately 30.63 sentences in 2009 to 38.65 sentences in 2001. Similarly, the average number of
pages increased from 3.17 in 2009 to 3.88 in 2001.
Table 2. Number of Sentences Devoted to CSR
This table reports the summary statistics related to the number of sentences devoted to CSR in annual reports
Emp.
2011 Env. Energy Cons. Community Health Other General Total
Mean 6.36 2.44 3.16 5.98 2.90 7.19 16.41 38.65
Median 4 0 0 0 0 5 17 27
Min 0 0 0 0 0 0 0 0
Max 127 65 78 112 97 75 124 597
StDev 10.19 7.48 8.99 15.17 8.61 9.59 15.12 60.12
Range 127 65 78 112 97 75 124 597
Emp.
2010 Env. Energy Cons. Community Health Other General Total
Mean 6.67 2.34 3.10 5.57 2.51 6.42 15.35 34.45
Median 3 0 0 0 0 0 17 23
Min 0 0 0 0 0 0 0 0
Max 90 65 90 121 39 75 124 476
StDev 10.06 7.34 9.36 14.53 6.62 9.51 14.89 55.08
Range 90 65 90 121 39 75 124 476
Emp.
2009 Env. Energy Cons. Community Health Other General Total
Mean 6.04 2.17 3.11 5.39 2.44 6.01 13.73 30.63
Median 3 0 0 0 0 0 14 17
Min 0 0 0 0 0 0 0 0
Max 110 65 90 121 39 75 111 521
StDev 9.86 6.95 9.11 13.44 6.53 8.95 13.60 52.71
Range 110 65 90 121 39 75 111 521

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We further report the number of sentences related to various sub-topics. These include environment, energy,
consumer, community, health, employee-related, and general. The maximum average number of sentences (16.41)
and pages (1.52) is recorded in the general category in 2011. This category is followed by the other employee-related
issues dimension averaging 7.19 sentences and 0.50 pages in 2011. The minimum amount of CSR disclosure is in the
energy category.
Overall, we find that every sub-category experiences increase in their disclosure during the study period. Both the
number of sentences devoted to CSR and the number of pages reported to CSR increases. This would suggest that
Turkish firms are becoming more aware of the demand for more attention to corporate
Table 3. Number of Pages Devoted to CSR
This table outlines the summary statistics of number pages reported to CSR
Emp.
2011 Env. Energy Cons. Community Health Other General Total
Mean 0.52 0.27 0.29 0.46 0.25 0.50 1.52 3.88
Median 0 0 0 0 0 0 1 2
Min 0 0 0 0 0 0 0 0
Max 6 6 9 9 6 5 8 40
StDev 0.93 0.82 0.99 1.43 0.82 0.93 1.46 5.95
Range 6 6 9 9 6 5 8 40
Emp.
2010 Env. Energy Cons. Community Health Other General Total
Mean 0.46 0.22 0.28 0.41 0.24 0.47 1.33 3.41
Median 0 0 0 0 0 0 1 2
Min 0 0 0 0 0 0 0 0
Max 6 6 6 7 6 4 7 36
StDev 0.87 0.72 0.92 1.18 0.80 0.89 1.33 5.33
Range 6 6 6 7 6 4 7 36
Emp.
2009 Env. Energy Cons. Community Health Other General Total
Mean 0.43 0.21 0.27 0.37 0.20 0.41 1.25 3.17
Median 0 0 0 0 0 0 1 2
Min 0 0 0 0 0 0 0 0
Max 7 7 8 7 6 4 8 37
StDev 0.84 0.81 0.95 1.07 0.69 0.78 1.33 5.11
Range 7 7 8 7 6 4 8 37
social responsibility (CSR) initiatives and responding to these demands. These findings are in line with the view of
Michelon, Boesso, and Kumar (2013). Even though most companies accept the need to conduct CSR activities to
establish better relationships with stakeholders, a question which arises is whether these initiatives lead to better
financial performance.
4.2 Descriptive Statistics of Regression Variables
Table 4 reports the descriptive statistics of regression variables. As indicated before, we use ROA as the dependent
variable for this study. We also include several control variables that might affect a company’s financial performance.
First, we include the variable SIZE defined as the natural logarithm of the firm’s total sales. The average SIZE
variable is 19.049 with a minimum of 14.115 and a maximum of 25.741. LIQUIDITY is measured by the firm’s
current ratio calculated as the ratio of its current assets divided by its current liabilities. The average liability for this
firm is below one. This variable RISK is proxied by the beta coefficient with an average value of 0.671. The variable
R&D refers to the research and development expenditures divided by net sales and average is 0.05 with the lowest

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standard deviation. INT is a dummy which takes the value of 1 for firms which derive some of their revenues from
international sales and 0 otherwise. LEVERAGE is measured by the ratio of total interest-bearing debt to total assets
while the variable GROWTH refers to the percentage change in net sales compared to the previous year. Average
leverage is 0.481 while the average growth rate is 14.7 percent.
Table 4. Descriptive Statistics
This table provides the descriptive statistics of variables used in regression analysis.
Variable Obs Mean Std. Dev. Min Max
ROA 1023 0.026 0.192 -4.452 1.005
CSR depth (sentences) 1023 39.695 58.373 0 597
CSR depth (pages) 1023 3.485 5.435 0 40
CSR breadth 1153 2.654 2.158 0 7
SIZE 1023 19.049 1.894 14.115 25.741
LIQUIDITY 1023 0.867 1.254 0.005 16.967
LEVERAGE 1023 0.481 0.596 0 12.563
R&D 1023 0.005 0.032 0 0.634
GROWTH 962 0.147 1.441 -1 26.2
INT 1023 0.587 0.493 0 1
RISK 1002 0.671 0.216 -0.122 1.221
4.3 Regression Results
Table 5 below contains results for stepwise regression analysis. In each of the cases, the Hausman specification test
points to a violation of the assumptions of the random effects model, therefore we prefer fixed effects. In columns 1
to 7 of Table 5, we introduce the control variables to investigate their impact on ROA.
In the first column, we measure the impact of SIZE, measured as the natural log of sales, on profitability. The
coefficient is 0.012 and statistically significant at 1 percent level. This indicates that there is a positive relationship
between size and firm profitability, larger firms experience higher profits. In the following columns, we add
LIQUIDITY, LEVERAGE, R&D, GROWTH, INT, and RISK variables into the analysis respectively. Three of the
variables, SIZE, LIQUIDITY, and GROWTH have a positive relationship with firm profitability. While the
coefficients of first two are statistically significant at 1 percent level, GROWTH is weakly significant at 5 percent
level. LEVERAGE and RISK variables, on the other hand, are inversely related to the profitability, and their
coefficients are statistically significant at 1 percent level. Firms with higher leverage and higher beta coefficients
experience a lower return on assets. Finally, R&D variable does have any significant relationship with profitability.
In the last three columns of Table 5, we report the relationship between CSR disclosure and the financial
performance of firms while including control variables. First, the signs and significance of the control variables
remain the same when CSR measures are introduced into the models. We used three different CSR disclosure
(CSRD) measures: The first measure is related to the depth of CSRD and is calculated as the total number of
sentences the company devotes to the seven CSR dimensions in its annual report. The second CSRD measure
defined as the total number of pages devoted to CSR, instead of the number of sentences. CSR breadth, on the other
hand, is defined as the number of CSR dimensions that the company refers to in its annual report.
Our findings show that CSR depth measured by the number of pages is inversely related to our profit measure of
ROA. The finding is statistically significant at 5% level with R2 of 0.24. When we use CSR depth (Sentences)
instead of CSR depth (pages), we find similar results. CSR depth (sentence) variable still has negative coefficient and
is statistically significant at 5% with an R2 value of 0.26. Other control variables remain statistically significant.
Finally, when we use the number of dimensions referred in the company annual report (CSR breadth) as our
independent variable, we continue to have a mildly significant coefficient.
So regardless of the CSRD measure we employ, we find a negative relationship between CSRD and financial
performance, meaning that firms which disclose more information about CSR initiatives in their annual reports have
a lower return on assets. McGuire, Sundgren, and Schneeweis (1988), Rahman, Zain, and Al-Haj (2011), Siregar and
Bachtiar (2010), and Walley and Whitehead (1994), among others, also report similar findings.

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Table 5. CSRD and Financial Performance

This table provides the results of stepwise regression analysis using ROA as the dependent variable.

***, **, and * denote significance on 1%, 5% and 10% respectively. t-statistics are reported in parentheses.
5. Conclusion and Discussion
The relationship between a firm's CRS and its financial performance has been getting the attention of both academics
and practitioners. A clear evidence of a relationship or lack of it is an important issue for management. If socially
responsible activities add value to the firm, the firm may be encouraged to pursue such activities.
The focus of this paper is to investigate the relationship between firm performance and CRS. Our approach focuses
on the content analysis of annual reports/websites of Turkish firms during the period of 2009-2011 for any socially
responsible activities. The use of content analysis has the advantage of being objective as the results are independent
of the particular research. We use three different CSR disclosure (CSRD) measures: the depth of CSRD (the total
number of sentences the company devotes to the seven CSR dimensions in its annual report), depth of CSRD (the
total number of pages devoted to CSR), and CSRD breadth (the number of CSR dimensions that the company refers
to in its annual report).
Our findings show a negative relationship between CSRD variables and financial performance, meaning that firms
which disclose more information about CSR initiatives in their annual reports have a lower return on assets. The
findings remain the same whether CSR is analyzed using either variation of depth or breadth. While these findings
are inconsistent with the findings reported for developed markets, it is line with and is consistent with several other
studies (e.g., McGuire et al. 1988; Rahman et al., 2011; Siregar and Bachtiar 2010; Walley and Whitehead 1994).
These findings imply socially responsible activities may not be value adding activities for Turkish firms that may be
encouraged to pursue such activities more selectively.
Finally, our step regression analysis show that larger and more liquid firms have higher profitability than smaller and
less liquid firms. Highly levered firms and firms with higher beta coefficients, on the other hand, experience lower
profitability. Finally, research and development expenditures do not have a significant relationship with profitability.

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